Tribunal quashes reassessment orders, cites lack of reasons and borrowed satisfaction. Recomputation directed.

The Tribunal quashed the reassessment orders for AY 2009-10 and 2010-11 due to the Assessing Officer's failure to provide reasons for reopening assessments, as required by section 148(2) of the Income Tax Act. For AY 2010-11, the reassessment was annulled as it was based on borrowed satisfaction from the Investigation Wing. Additionally, the Tribunal directed the AO to recompute agricultural income for AYs 2013-14 to 2015-16, excluding income from the sale of goats, and limited the ad hoc disallowance of expenses to 5% for the same years.

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Issues Involved:
1. Validity of the notice issued under section 148 of the Income Tax Act.
2. Reopening of assessment based on borrowed satisfaction.
3. Estimation of agricultural income.
4. Ad hoc disallowance of expenses debited to the profit and loss account.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:
The assessee challenged the reopening of assessment on the grounds that the reasons recorded for reopening were never provided by the Assessing Officer (AO). The Tribunal admitted the additional ground of appeal as it was purely legal and did not require additional facts. The Tribunal noted that the AO failed to provide the reasons for reopening the assessment, which is a prerequisite as mandated by section 148(2) of the Act. This failure was in violation of the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. [259 ITR 19]. Consequently, the reassessment order was quashed as bad in law.

2. Reopening of Assessment Based on Borrowed Satisfaction:
For the assessment year 2010-11, the assessee argued that the AO relied solely on information from the Investigation Wing without conducting any independent inquiry, thus basing the reopening on borrowed satisfaction. The Tribunal found that the AO did not make any independent inquiry and relied on the Investigation Wing's information, which was incorrect regarding the date of transfer of agricultural land. The Tribunal held that the reasons recorded were based on borrowed satisfaction and not the AO's own, leading to the quashing of the reassessment order for AY 2010-11.

3. Estimation of Agricultural Income:
For the assessment years 2013-14 to 2015-16, the assessee contested the Ld. CIT(A)'s estimation of net agricultural income at 40% of the gross agricultural income. The Tribunal found that the Ld. CIT(A)'s estimation was based on assumptions without any supporting evidence. The Tribunal observed that the agricultural income for AYs 2011-12 and 2012-13 had been accepted by the Revenue, and there was no substantial variation in expenses across the years. The Tribunal directed the AO to exclude income from the sale of goats and goat mindvi from the agricultural income and recompute the income accordingly.

4. Ad Hoc Disallowance of Expenses Debited to the Profit and Loss Account:
The assessee challenged the 10% ad hoc disallowance of total purchases and other expenses. The Tribunal noted that the AO had not rejected the books of account and had not provided any specific basis for the disallowance. The AO's field inquiries were not confronted with the assessee, violating the principles of natural justice. The Tribunal held that restricting the disallowance to 5% would be just and equitable.

Conclusion:
- Appeals for AY 2009-10 and 2010-11 were allowed, quashing the reassessment orders.
- Appeals for AY 2013-14, 2014-15, and 2015-16 were partly allowed, directing the AO to recompute the agricultural income and limiting the disallowance of expenses to 5%.

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