Reassessment based on unverified reasons and completed share gifts before the taxing provision applied could not support the addition.

Reassessment was held unsustainable where the recorded reasons were undated, based on unverified information, and showed no independent enquiry or application of mind by the Assessing Officer, so jurisdiction to reopen could not stand. The addition under section 56(2)(vii)(c) for alleged receipt of gifted shares was also found unjustified because the shares had already been gifted and transferred before the taxing provision became applicable, and later execution of gift deeds did not alter the completed transfer. The impugned addition was therefore deleted.

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Issues: (i) whether the reassessment was valid in law, and (ii) whether the addition made under section 56(2)(vii)(c) on alleged receipt of gifted shares in the relevant assessment year was sustainable.

Issue (i): whether the reassessment was valid in law

Analysis: The reasons recorded for reopening were found to be undated and based on unverified information, without any independent enquiry or verification by the Assessing Officer. The reopening was therefore treated as resting on incorrect facts and reflecting non-application of mind, which rendered the assumption of jurisdiction unsustainable.

Conclusion: The reassessment was invalid and liable to be quashed.

Issue (ii): whether the addition made under section 56(2)(vii)(c) on alleged receipt of gifted shares in the relevant assessment year was sustainable

Analysis: The shares were held to have been gifted and transferred by the donors on 09.04.2009 and 30.04.2009, and the later execution of gift deeds on stamp paper did not alter the completed nature of the transfer. On this reasoning, the gift stood completed before the provision taxing such receipts became applicable, and the Assessing Officer had also not carried out any meaningful enquiry to dislodge the assessee's evidence. The addition was therefore not justified for the year under consideration.

Conclusion: The addition under section 56(2)(vii)(c) was unsustainable and had to be deleted.

Final Conclusion: The appeal succeeded, the reassessment was quashed, and the impugned addition was deleted.

Ratio Decidendi: Reassessment cannot be sustained where the recorded reasons are undated, unsupported by independent verification, and show non-application of mind, and a completed gift of shares effected before the applicable taxing provision came into force cannot be brought to tax merely because later formalities were completed.

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