Reassessment based on wrong facts fails where the recorded reason and addition do not match the same share capital transaction.

Reassessment was invalid because the recorded reasons referred to share capital from one entity, while the addition was made in respect of funds received from another company. The reassessment records showed no independent application of mind by the AO and only a mechanical reliance on the investigation report, so the required live link between information and alleged escapement was absent. Since reopening was based on one issue but no addition was made on that issue, the addition on a different issue could not be sustained. The assessee succeeded before the ITAT Delhi.

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Issues: Whether the reassessment was valid when the recorded reasons referred to receipt of share capital from one entity, while the addition was made in respect of receipt from another entity, and whether such addition could be sustained.

Analysis: The recorded reasons were founded on an alleged transaction with an entity that was not the actual recipient of funds. The assessment records and audited statements showed that the assessee had received share capital and share premium from a different company, and the original assessment had already examined that transaction. The reasons recorded did not disclose any independent application of mind by the Assessing Officer and reflected mere adoption of the investigation report. In such circumstances, the reassessment lacked the necessary live link between the information and the alleged escapement. Further, where reopening is founded on one issue but no addition is made on that very issue, an addition on a different issue cannot be sustained.

Conclusion: The reassessment was invalid and the addition could not be sustained; the assessee succeeded.

Ratio Decidendi: Reassessment must rest on the Assessing Officer's own formation of belief based on the correct facts, and an addition on an issue not forming the basis of reopening cannot survive where the recorded reason itself is incorrect or unexamined.

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