Kalpanaben Vadilal Shah Vs ITO (ITAT Ahmedabad)
Vague Insight Data: ITAT Quashes Reassessment on Unverified Info; Reassessment Void Ab Initio: ITAT Cites AO’s Failure to Verify Data; Bogus LTCG/STCG Reopening: ITAT Rules Vague Reasons Invalidates Assessment
Assessee’s reassessment was initiated u/s 147 on the basis of Insight Portal data alleging bogus LTCG/STCG of ₹58.71 lakh in shares of Kushal Tradelink Pvt. Ltd., leading the AO to add ₹1.40 crore u/s 68 as unexplained credits. CIT(A) upheld the addition.
Before ITAT, Assessee contended that:
- The reasons recorded were vague & generic, not specifying whether the transaction was LTCG or STCG, nor identifying the scrip;
- AO relied blindly on Insight Portal information without verifying from her return or records; &
- The entire reopening was based on borrowed satisfaction, lacking any live link between material & belief of escapement.
ITAT observed that the reasons merely repeated phrases like “bogus LTCG/STCL” without clarity, revealing no application of mind. AO had failed to notice that Assessee had already declared STCG of ₹47.35 lakh in her return & not the figure of ₹58.71 lakh mentioned in the “reasons”. This mismatch proved mechanical satisfaction.
Following its coordinate bench decision in Hansaben Girishbhai Shah v. DCIT (ITA No. 1279/Ahd/2024, order dated 26.08.2025), ITAT reiterated that reopening on vague Insight data without independent verification violates Section 147, since the belief must be based on tangible material, not suspicion.
