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of <h1>Income-tax reassessment over alleged land purchase and unsecured loans: s.147 reasons lacked nexus; s.68 cash-credit addition deleted.</h1> Reopening under s.147 was examined on whether the recorded reasons disclosed a live link between alleged discrepancies and escapement of income. The ITAT ... Reopening of assessment u/s 147 - Addition u/s 68 for unexplained cash credit received - reasons recorded fail to establish a direct nexus between the alleged discrepancies in the transactions and the escapement of income - HELD THAT:- Without a clear and direct connection between the facts and the alleged escapement of income, the reasons recorded remains speculative, therefore, the reopening cannot be justified. Re-assessment proceedings were initiated u/s 147 of the Act on alleged purchase of land, however, the additions made by the A.O. is nothing to do with the reasons recorded as A.O. made addition u/s 68 of the Act on account of unexplained credits received from M/s Sunrise Prop Build Pvt. Ltd. Addition u/s 68 - Assessee not only produced cogent documents in order to discharge the onus cast upon u/s 68 of the Act, but also repaid the loan. Therefore, in the case of Dazzling constructions (P.) Ltd. [2025 (3) TMI 1380 - ITAT DELHI] we delete the additions made by the A.O. which has been confirmed by the Ld. CIT(A) Issues: (i) Whether reassessment proceedings initiated under section 147/148 were valid where reasons recorded purportedly relied on information from search/reports and whether those reasons satisfy legal requirements; (ii) Whether additions under section 68 (and section 69/69C where applicable) on account of alleged unexplained credits/investments were sustainable where assessee produced documents and repaid the amounts.Issue (i): Whether the reasons recorded for reopening the assessments met the statutory requirement of a tangible material nexus and independent application of mind, or were vitiated as 'borrowed satisfaction' and thus invalidating reassessment proceedings.Analysis: The Tribunal examined the reasons recorded and found they consisted largely of conclusions and reproduced material from investigation reports without specific details linking the factual material to escapement of income. The reasons did not identify specific transactions, amounts, dates, or inquiry reports confronted to the assessee, and the AO did not undertake independent enquiries or verification. The Tribunal applied authoritative precedents holding that reasons must show a live nexus between tangible material and formation of belief and that mere reproduction of investigation findings amounts to borrowed satisfaction.Conclusion: In favour of Assessee. The reopening was held invalid as the reasons recorded lacked tangible nexus and independent application of mind, rendering the reassessment proceedings unsustainable.Issue (ii): Whether additions made under section 68 (and section 69/69C) in respect of alleged unexplained credits and investments were justified where the assessee produced identity, financial documents and evidence of repayment.Analysis: On merits the Tribunal considered the documentary evidence furnished by the assessee including bank statements, audited financials, confirmations, ITRs of the remitters and evidence of subsequent repayment. The Tribunal followed co-ordinate decisions that, where the assessee establishes trail of transactions and repayment, and lender's financial standing is demonstrable, the primary onus under section 68 is discharged and additions based solely on perceived suspicion are not sustainable.Conclusion: In favour of Assessee. The additions under section 68 (and related additions under sections 69/69C where claimed) were deleted as the assessee discharged the onus and the transactions were shown to be genuine.Final Conclusion: The Tribunal's rulings nullify the reassessment foundation where reasons recorded are legally deficient and, independently, permit deletion of unexplained credit/investment additions where the assessee establishes identity, creditworthiness and repayment, resulting in overall relief to the assessee in the appeals.Ratio Decidendi: Reopening under section 147/148 is invalid if the reasons recorded are conclusions reproducing investigation material without independent application of mind or tangible nexus to escapement of income; and under section 68 the assessee discharges the primary onus by producing credible documentary evidence of identity, creditworthiness and repayment, entitling deletion of additions based on mere suspicion.
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