Reassessment reopening based on alleged accommodation entry commission failed where reasons lacked tangible material and direct evidence.

Reopening of assessment under sections 147 and 148 based on identical reasons alleging undisclosed commission income from accommodation entries was unsustainable because the recorded material did not show direct evidence of actual commission income. Statements recorded during search, without corroborative tangible material, were insufficient, and the reasons for reopening had to stand on their own without later supplementation. The reassessment initiation was therefore treated as resting on conjecture and surmise rather than legally sustainable material, and the reopening was quashed in favour of the assessee.

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Issues: Whether the reopening of assessment under sections 147 and 148 of the Income-tax Act, 1961, based on identical reasons alleging undisclosed commission income from accommodation entries, was valid.

Analysis: The reassessment reasons proceeded on a uniform assumption that commission income at 1% of the alleged banking transactions had escaped assessment. The recorded material did not disclose any direct evidence of actual commission income, and the reliance placed on statements recorded during search was held insufficient in the absence of corroborative tangible material. The reasons for reopening were required to stand on their own and could not be supplemented by subsequent justification. On that basis, the initiation of reassessment proceedings was found to rest on conjecture and surmise rather than on legally sustainable material.

Conclusion: The reopening under sections 147 and 148 was held invalid and was quashed, in favour of the assessee.

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