Someshwar Nandkishor Tapde Vs ITO (ITAT Pune)
Pune ITAT Quashes Reassessment Based on Vague Search Information and Deletes ₹51.35 Lakh Addition
The assessee appealed against the order of the Commissioner of Income Tax (Appeals) for AY 2017-18 arising from an assessment under sections 147 read with 144B. The assessee contended that the notice under section 148 was issued solely on the basis of vague information allegedly based on Mr. Sachin Nahar’s statement, without identifying the alleged lenders, dates, terms, seized documents, or any statement specifically linking the assessee to the alleged cash loan of ₹50,00,000. The assessee also filed an affidavit denying any acquaintance with Mr. Sachin Nahar, lodged a police complaint, sought copies of relied-upon documents and cross-examination, and challenged the addition of ₹51,35,000. The Tribunal examined the recorded reasons and found that they contained only a general allegation without naming the alleged lenders, referring to any seized or impounded documents, citing any statement of Mr. Sachin Nahar, or explaining the basis for the alleged loan amount. It held that the Assessing Officer had not applied his mind, that the approval was mechanical, and, following the cited Delhi and Bombay High Court decisions, quashed the notice issued under section 148. It further directed deletion of the addition of ₹51,35,000 as no supporting material had been brought on record, and allowed the appeal.
Pune ITAT quashed the reassessment proceedings initiated against the assessee after holding that the reasons recorded under section 148 were based merely on vague information received from the Investigation Wing without any independent application of mind by the Assessing Officer.
The reopening was triggered solely on the basis of an alleged statement of one Mr. Sachin Nahar, who was said to have acted as a broker for cash loans. The reasons recorded merely alleged that the assessee had obtained a cash loan of ₹50 lakh through him and paid interest of ₹1.35 lakh, but did not disclose the identity of the alleged lender, the dates of the transactions, any seized document, or even the specific statement relied upon. The Tribunal observed that the reasons lacked any live nexus between the information received and the formation of belief that income had escaped assessment, rendering the reopening legally unsustainable.
Relying on the decisions of the Delhi High Court in Well Trans Logistics India (P.) Ltd. and the Bombay High Court in Shodiman Investments (P.) Ltd., the Tribunal reiterated that an Assessing Officer cannot reopen an assessment on borrowed satisfaction or vague investigation inputs. There must be independent enquiry and tangible material establishing a rational connection between the information received and the belief of escapement of income.
On merits also, the Tribunal found that the assessee had consistently denied knowing Mr. Sachin Nahar, had filed an affidavit and even lodged a police complaint alleging misuse of his name. Despite this, the Revenue failed to produce any seized document, statement, or corroborative evidence linking the assessee with the alleged cash loan transaction. The addition of ₹51.35 lakh was therefore held to be without any supporting material and was directed to be deleted.
Cases Discussed
