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Issues: (i) Whether reopening of assessment under section 147/148 is valid where the Assessing Officer recorded only cryptic reasons reproducing investigation report (borrowed satisfaction) without independent application of mind; (ii) Whether the assessment order dated 31.03.2022 is barred by limitation where it left the control of the Assessing Officer after the limitation period and was dispatched/served beyond the statutory date.
Issue (i): Whether the reopening of assessment was vitiated by borrowed satisfaction and absence of independent application of mind by the Assessing Officer.
Analysis: The reasons recorded by the Assessing Officer consist of brief reproduction of information received from the investigation wing alleging receipt of amounts from non-existent entities and conclude that reopening is required. The recorded reasons do not demonstrate a live link between the tangible material relied upon and formation of a reason to believe that income has escaped assessment. The reasons are cryptic, vague and amount to repetition of the investigation report without independent assessment or objective criteria applied by the Assessing Officer. Authorities establishing that reasons must show the link between material and belief and that borrowed satisfaction is impermissible were applied to the facts.
Conclusion: The reopening under section 147/notice under section 148 is invalid on account of borrowed satisfaction and lack of independent application of mind; conclusion in favour of the assessee.
Issue (ii): Whether the assessment order dated 31.03.2022 is barred by limitation because it did not leave the control of the Assessing Officer within the limitation period.
Analysis: The assessment order, though dated 31.03.2022, was dispatched by the Assessing Officer only on 02.04.2022 and served thereafter, thereby remaining within the control of the Assessing Officer beyond the last date of limitation (31.03.2022). Established principles require that an order must leave the control of the authority within the limitation period to be valid and effective; dispatch/service after the limitation period renders the assessment time-barred.
Conclusion: The assessment order is barred by limitation and is quashed; conclusion in favour of the assessee.
Final Conclusion: The cross-objection is allowed on the grounds of invalid reopening (borrowed satisfaction) and assessment being time-barred; the Revenue's appeal against the CIT(A)'s order is rendered infructuous and is dismissed.
Ratio Decidendi: Reopening under section 147/notice under section 148 is invalid where the Assessing Officer records only reproduction of investigation material without demonstrating an independent application of mind linking tangible material to a reason to believe that income has escaped assessment; additionally, an assessment order is time-barred if it does not leave the control of the Assessing Officer within the statutory limitation period.
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