Reopening of assessment quashed where no independent material contradicted the taxpayer's bank records and books submitted.

Reopening of assessment under the reopening provisions was invalid where the Assessing Officer relied on external-portal information without adducing independent contradictory material to rebut the assessee's bank statements and books; accordingly the formation of a reason to believe was not sustained and consequent additions for alleged fictitious loans were deleted. The same legal and factual conclusion applies to both assessment years because issues were identical: absence of evidence linking the named entry operator to receipts meant notices issued and assessments completed on that basis were set aside and appeals allowed for the assessee.

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Issues: Whether the reopening of assessment and consequent addition on account of alleged fictitious loan/accommodation entry (as basis for issuing notice under section 148) was valid for the assessment years 2014-15 and 2015-16.

Analysis: The appeals concern reopening under the provisions of the Income-tax Act, 1961 where the Assessing Officer recorded reason to believe based on information on an external portal alleging receipt of fictitious loans from an identified entry operator. The assessee denied the alleged transactions, sought disclosure of the material relied upon and furnished bank statements and books showing no receipt from the named persons and details of unsecured loans reflecting different parties. The Tribunal examined whether material existed to controvert the assessee's documentary evidence and to sustain the formation of a reason to believe and the additions made in consequence. Considering the record, there was no evidence on file establishing receipt of the alleged amounts from the named entry operator or related entities, and the Assessing Officer had not brought forward contradictory material to rebut the assessee's evidence. The issues in both years being identical, the factual and legal analysis applies mutatis mutandis to both appeals.

Conclusion: The reopening of assessment and the notice issued under section 148, and the assessments completed thereunder, are quashed for both assessment years; the additions on account of alleged fictitious loans are deleted and the appeals are allowed in favour of the assessee.

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