Validity of reassessment proceedings: notice invalid if fresh satisfaction rests on new uncommunicated grounds; unexplained credits deleted where documentation proves genuineness.

Reassessment initiated after a section 148 notice is invalid where the subsequent satisfaction recorded under section 148A(d) rests on different factual grounds than those underlying the original notice and the assessee was not confronted with the new grounds, because natural justice requires opportunity to meet the revised basis. Separately, additions under section 68 as unexplained credits were deleted where the assessee produced share transfer deeds, confirmations, bank statements, audited financials and tax returns proving receipt through banking channels and the identity, genuineness and creditworthiness of counterparties, shifting the onus to revenue to prove fabrication or lack of creditworthiness.

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Issues: (i) Whether the reassessment initiated by issuing notice under section 148 after recording satisfaction under section 148A(d) is valid where the satisfaction recorded in 148A(d) raised issues different from those on which the original notice under section 148 was issued; (ii) Whether additions of Rs. 12,00,00,000/- under section 68 as unexplained cash credits (sale consideration for shares) can be sustained where the assessee produced share transfer deeds, confirmations, bank statements, audited financial statements and ITRs to establish the nature of the receipts and identity, genuineness and creditworthiness of buyers.

Issue (i): Whether reassessment proceedings are valid when the AO's satisfaction recorded under section 148A(d) relates to different grounds than those stated in the earlier section 148 notice.

Analysis: The reassessment was initiated after information under section 148(b) and a notice under section 148; later, information was supplied under section 148A(b) and a satisfaction was recorded under section 148A(d) on a different factual basis. The assessee argued it was not confronted with the new basis and that this violated principles of natural justice. The record shows that the information initially supplied formed the basis for issuance of notice under section 148 and that the final satisfaction under section 148A(d) recorded different issues without prior confrontation.

Conclusion: The reassessment notice and proceedings recorded pursuant to section 148A(d) and consequent section 148 are invalid insofar as the satisfaction was recorded on issues different from those on which the original section 148 notice was issued, without giving the assessee opportunity on the new grounds.

Issue (ii): Whether the addition of Rs. 12,00,00,000/- under section 68 as unexplained cash credits can be sustained despite documentary evidence of sale of shares and evidence of identity, genuineness and creditworthiness of the buyers.

Analysis: The assessee produced share transfer deeds, confirmations, bank statements, audited financial statements and ITRs showing sale of non-current investment (shares) and receipt of consideration through banking channels. The AO treated the receipts as share capital/issue of shares and made additions under section 68. The assessee had declared the transactions and offered taxable capital gains where applicable. The authorities did not establish any fabrication of documents, cash deposit prior to transfers, or lack of creditworthiness; nor did the AO pursue adequate inquiries of remaining parties. Judicial precedents require that once the assessee discharges the primary burden by proving identity, genuineness and creditworthiness, the onus shifts to revenue to prove otherwise, and mere suspicion is insufficient to sustain additions under section 68.

Conclusion: The addition of Rs. 12,00,00,000/- under section 68 is not sustainable; the assessee has satisfactorily established the nature of receipts as sale consideration and the identity, genuineness and creditworthiness of the buyers, and the addition is deleted.

Final Conclusion: The appeal is allowed in entirety: the reassessment notice is invalid to the extent indicated and the addition of Rs. 12,00,00,000/- under section 68 is deleted, resulting in allowance of the assessee's appeal.

Ratio Decidendi: Where an assessee establishes by cogent documentary evidence the nature of receipts as sale consideration and proves the identity, genuineness and creditworthiness of the counterparties and the receipts are recorded in books and received through banking channels, additions under section 68 cannot be sustained unless the Revenue independently and convincingly proves fabrication or lack of creditworthiness.

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