2026 (1) TMI 871 - AT - Income Tax

Reopening u/s147 based solely on Insight Portal data invalid for lacking independent nexus; reassessment quashed

Whether reopening under s.147 was valid: the Tribunal found the AO failed to form an independent 'reasons to believe' and instead relied solely on ... Reopening of assessment u/s 147 - reasons to believe - borrowed satisfaction v/s independent application of mind - bogus LTCG - link between the material available on record and the information received - information so available in the Insight Portal relied upon HELD THAT:- We are of the view that in the instant case, re-opening of the assessment was done by the AO on incorrect appreciation of facts as he has failed to provide any link between the material available on record and the information received and solely proceeded on the basis of information so available in the Insight Portal. Accordingly, we find no infirmity in the order of ld. CIT(A) in holding the initiation of reassessment proceedings as invalid and quashing the consequent reassessment order passed u/s 147 of the Act which order is hereby upheld. With respect to Revenue’s ground of appeal regarding non-adjudicating the issue of bogus LTCG on merits, we find that once the vary basis of proceedings i.e. re-opening of the assessment is hereby quashed - Decided in favour of assessee. Issues: Whether reopening of assessment under Section 147 read with Section 148 of the Income-tax Act, 1961 based on information pushed through the Insight Portal (Investigation Wing report) without specific tangible material and without independent application of mind by the Assessing Officer was valid.Analysis: The Tribunal examined the reasons recorded by the Assessing Officer and the material relied upon, including the information flagged on the Insight Portal and the investigation reports. Applicable legal principles require that reasons to believe under Section 147 must reflect a nexus or live link between the tangible material available and the belief that income has escaped assessment; mere reproduction of investigation reports or reliance on information without independent inquiry amounts to a borrowed satisfaction. The Tribunal considered authorities establishing that reasons must disclose sufficient details of transactions or other tangible material so the assessee can meaningfully meet the basis of reopening. On the facts, the reasons reproduced only a conclusory allegation of fictitious LTCG of Rs. 2,28,22,400/-, omitted transaction-specific particulars (script, quantity, broker, dates), and failed to provide the underlying investigation material to the assessee; the AO also made additions on a different figure (Rs. 3,55,88,404/-) without reconciling or establishing nexus. Thus the reasons were held vague, incomplete and lacking independent application of mind, and the reassessment proceedings were vitiated.Conclusion: The reopening of assessment under Section 147/148 was invalid and the reassessment proceedings and consequential order are quashed; this result is in favour of the assessee.