Reassessment must rest on independent material; documentary evidence defeated bogus purchase addition and section 69C levy.

Reassessment requires an independently formed belief on relevant material, not borrowed satisfaction or unverified information; on these facts, the notice and reassessment order were invalid because the assessee had produced invoices, bank records, transport documents, e-way bills, GST returns and stock details, and the adverse material was not properly supplied or dealt with. The addition for alleged bogus purchases under section 69C also failed because the purchases were recorded, payments were through banking channels, sales were not disputed, the books were not rejected, and the source of expenditure was explained by documentary evidence. The consequential levy under section 115BBE was therefore unsustainable, and the assessment was annulled.

---

---

Issues: (i) Whether the reassessment notice and the order passed under the reassessment procedure were valid in law. (ii) Whether the addition of the alleged bogus purchases under section 69C and the consequential tax under section 115BBE were sustainable.

Issue (i): Whether the reassessment notice and the order passed under the reassessment procedure were valid in law.

Analysis: The record showed that the assessee had furnished purchase invoices, bank statements, transport documents, e-way bills, GST returns, quantitative stock details, and the buyer's confirmation. The reopening was founded on information from the Insight Portal and DGGI material, but the assessment record itself contained corroborative facts supporting the transactions. The reassessment mechanism requires an independently formed belief on the basis of material showing escapement of income, not a conclusion based merely on borrowed satisfaction or unverified information. The material relied upon was not shown to have been supplied in a manner consistent with the statutory procedure, and the assessee's explanation was not properly dealt with before issuance of notice.

Conclusion: The reassessment notice and the order under the reassessment procedure were held to be invalid and unsustainable in law, in favour of the assessee.

Issue (ii): Whether the addition of the alleged bogus purchases under section 69C and the consequential tax under section 115BBE were sustainable.

Analysis: The purchases were recorded in the regular books, supported by banking-channel payments, transport evidence, GST documents, and confirmation of the downstream buyer. The sales of the goods were not disputed, the books were not rejected, and no adverse material directly discrediting the assessee's evidence was brought on record. Section 69C applies where the source of expenditure is unexplained or the explanation is found unsatisfactory; on the facts, the expenditure was explained through documentary evidence and the source of payment was not shown to be unexplained. The mere reversal of input tax credit and allegations against the supplier were not sufficient to treat the entire purchase amount as unexplained expenditure.

Conclusion: The addition under section 69C and the consequential levy under section 115BBE were held to be unsustainable, in favour of the assessee.

Final Conclusion: The appeal succeeded in full, the reassessment was annulled, and the impugned addition was deleted.

Ratio Decidendi: Reassessment must rest on an independently formed belief based on relevant material, and an addition under section 69C can be made only when the expenditure or its source remains unexplained on the evidence before the authority.

---