Reopening of assessment based on anti-corruption report invalidated for borrowed belief; reassessment order quashed, appeal allowed

Reopening of assessment under tax reassessment provisions was invalidated because the assessing officer acted on borrowed belief from an anti-corruption agency report without independent application of mind or any verification. The assessing officer made no inquiry into alleged disproportionate assets attributed to the assessee and did not cross-check the third-party information, rendering the jurisdictional exercise defective; consequently the reassessment order founded on that reopening was quashed and the assessees appeal allowed.

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Issues: Whether the reassessment initiated under Section 147 read with Section 144B of the Income-tax Act, 1961 was validly initiated, specifically whether the Assessing Officer had a reasoned, independent belief of escapement of income or merely acted on a borrowed belief based on ACB information.

Analysis: For valid assumption of jurisdiction under Section 147, the Assessing Officer must have a reasonable belief of escapement of income which is his own and must record reasons demonstrating application of mind to the information in his possession. The reasons must identify or point to the income alleged to have escaped assessment and should not simply reproduce information received from third parties without verification. In the present matter, the recorded reasons reproduced ACB material without specifying the nature or particulars of the alleged disproportionate assets, did not identify the specific income said to have escaped assessment, and showed no independent inquiry or verification by the Assessing Officer. The Tribunal applied the settled legal requirement that a belief borrowed from another agency, without application of mind or identification of the escaped income, is insufficient to confer jurisdiction to reopen assessment. The Tribunal also followed a coordinate-bench decision addressing identical factual deficiencies in the reasons recorded.

Conclusion: The reassessment proceedings initiated under Section 147 read with Section 144B were invalid for lack of independent, reasoned belief; the assessment order made pursuant to that reopening is quashed and the appeal is allowed in favour of the assessee.

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