Reassessment validity depends on primary material and genuine application of mind; borrowed satisfaction invalidates consequential additions.

Reassessment under sections 147/148 is challenged on whether the reasons recorded and reliance on Explanation 2 (deemed information from search) plus prior approval were supported by material specific to the assessee. The dominant legal point is that a reassessment requires satisfaction founded on primary, relevant material and genuine application of mind; a satisfaction borrowed or mechanically recorded is invalid. Because the Assessing Officer allegedly proceeded on an erroneous, document-free premise of third-party purchase and lacked primary material, the reassessment was vitiated and the consequent addition based on that defective satisfaction could not be sustained.

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Issues: Whether the reassessment proceedings initiated under section 147/148 of the Income-tax Act, 1961 (including Explanation 2 to section 148 and related approvals) and the consequential addition of Rs. 2,51,73,000/- under section 69 are valid in light of the materials relied upon by the Assessing Officer.

Analysis: The Tribunal examined the reasons recorded for initiation of proceedings under section 147/148, the applicability of Explanation 2 to section 148 regarding deemed information from search and seizure, and the prior approval granted by the specified authority. The Tribunal reviewed the material relied upon by the Assessing Officer and found that the Assessing Officer had recorded satisfaction alleging purchase from a third party (Jagdish Sharma) without primary documents to substantiate that factual premise, whereas on record the assessee had purchased the property from M/s. Safal Goyal Realty LLP for Rs. 2,29,27,000/-. The Tribunal analysed whether the satisfaction was based on material specific to the assessee or amounted to a borrowed or mechanically recorded satisfaction lacking application of mind, and considered the effect of such defective satisfaction on the validity of reassessment and any consequent addition under section 69.

Conclusion: The reassessment proceedings were vitiated because the Assessing Officer's recorded satisfaction was erroneous and devoid of primary material, reflecting borrowed satisfaction and lack of application of mind; consequently the addition under section 69 based on that defective satisfaction cannot be sustained. The appeal is allowed in favour of the assessee.

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