Reassessment on penny stock information needs assessee-specific material and live nexus, not borrowed satisfaction alone.

Reopening under sections 147 and 148 requires the Assessing Officer to form an independent belief on material having a live link with the assessee; general information about penny stock manipulation, without assessee-specific evidence, does not satisfy that jurisdictional threshold. The note also states that additions treating share-sale proceeds as unexplained money under section 69A, alleging commission under section 69C, and making consequential interest additions cannot stand where there is no evidence linking the assessee to a sham transaction or any commission payment. The stated ratio is that third-party information alone is insufficient unless supported by material showing escapement of income in the assessee's case.

---

---

Issues: (i) Whether reopening of assessment under sections 147 and 148 of the Income-tax Act, 1961 was valid when it rested only on general information about a penny stock and did not show assessee-specific material or an independent nexus. (ii) Whether the additions made towards alleged unexplained sale consideration under section 69A, alleged commission under section 69C, and consequential interest addition could survive on merits.

Issue (i): Whether reopening of assessment under sections 147 and 148 of the Income-tax Act, 1961 was valid when it rested only on general information about a penny stock and did not show assessee-specific material or an independent nexus.

Analysis: The reassessment was founded on information regarding manipulation in the scrip and on general allegations that beneficiaries had obtained bogus gains. The record did not show any specific material linking the assessee, his broker, or his transactions to the alleged accommodation entry network. The reasons recorded were based on borrowed satisfaction and lacked an independent formation of belief on the basis of material relatable to the assessee. In the absence of a live-link between the information and the assessee's case, the jurisdictional requirement for reopening was not met.

Conclusion: The reopening was invalid and bad in law, and the reassessment could not be sustained.

Issue (ii): Whether the additions made towards alleged unexplained sale consideration under section 69A, alleged commission under section 69C, and consequential interest addition could survive on merits.

Analysis: The addition of the entire sale consideration treated the share-sale proceeds as unexplained money without proving that the assessee's transactions were sham or that the assessee was part of any rigging scheme. No evidence showed receipt or payment of commission by the assessee, and the alleged commission addition was unsupported. Once the reassessment itself failed, the consequential interest addition also could not stand.

Conclusion: The additions under sections 69A and 69C, together with the consequential interest addition, were deleted.

Final Conclusion: The assessment reopening was quashed and all additions made in the reassessment were deleted, resulting in relief to the assessee.

Ratio Decidendi: Reassessment cannot be sustained on the basis of general third-party information alone unless the Assessing Officer forms an independent belief, supported by material having a live-link with the assessee, that income has escaped assessment.

---