Reopening of assessment based on seized records and statements lacks corroboration, notice quashed for assessee

Reopening of assessment was challenged on adequacy of reasons to believe; HC examined whether seized documents and third-party statements created a live link to the assessee and found they did not, noting seized register did not name the assessee or co-owner and transactional inconsistencies undermined the inference of unrecorded cash. The Assessing Officers valuation discrepancy alone, without independent corroborative material tying the petitioner to alleged 'on money' payments, was insufficient, and the impugned notice for reopening was quashed in favour of the assessee by the HC.

---

---

Issues: Whether the notice dated 30.03.2025 issued under Section 148 of the Income-tax Act, 1961 reopening the assessment for AY 2022-23 is valid where the revenue's case rests on a seized broker's register and statements without independent corroborative material linking the assessee to the alleged on-money transaction.

Analysis: The Court examined the material relied upon by the Assessing Officer: a register seized from a broker during a search and statements of the searched person which record an entry dated 11.08.2017 referring to Survey No. 465 and unit rates. The register does not name the petitioner and the statement of the searched person disclaims knowledge of current sale status, indicating client documents may be present but not ownership or transaction details tied to the petitioner. The authorities supplied satisfaction and approval notes and disposed of objections, but no independent corroborative evidence was placed on record to establish a live link between the petitioner and the alleged clandestine cash/on-money receipt. The Court noted the subsequent factual sequence conversion of land, gifting of 70% share in 2021, and petitioners sale of 30% in 2021 which does not align with the 2017 register entry asserted to show an intention to sell the entire plot at the recorded unit price. In absence of material connecting the petitioner to the purported higher valuation or on-money payment, the statutory requirement for reopening under Section 148 was not satisfied.

Conclusion: The impugned notice dated 30.03.2025 under Section 148 is quashed and set aside; the writ petition is allowed in favour of the assessee.

Ratio Decidendi: Reopening under Section 148 requires independent material establishing a live link between the assessee and alleged undisclosed income; reliance solely on a seized register and searched person's statements, without corroborative evidence naming or connecting the assessee, is insufficient to sustain a notice for reassessment.

---