Reassessment invalid where reopening lacked factual basis, third-party material was untested, and natural justice safeguards were breached.

Reassessment under sections 147 and 148 was held unsustainable where the reopening rested on an incorrect factual premise, lacked any live nexus with the assessee, and was unsupported by tangible material connecting the assessee to the alleged cash transaction. The section 69 addition for alleged cash over and above recorded consideration also failed because it was based on un-confronted third-party material, while banking records, allotment documents and loan disbursement evidence supported recorded payment. The reassessment was further vitiated by want of mandatory approval and breach of natural justice, as adverse material was not supplied for rebuttal. The reassessment order and related addition were therefore not sustained.

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Issues: (i) Whether the reassessment proceedings under sections 147 and 148 were sustainable when the reopening was founded on an incorrect factual premise and without a live nexus to the assessee; (ii) whether the addition under section 69 for alleged cash payment over and above the recorded sale consideration could be sustained on un-confronted third-party material and without corroborative evidence; (iii) whether the reassessment was vitiated for want of mandatory approval and for breach of natural justice.

Issue (i): Whether the reassessment proceedings under sections 147 and 148 were sustainable when the reopening was founded on an incorrect factual premise and without a live nexus to the assessee.

Analysis: The reopening proceeded on the assumption that the property had been purchased from the searched Omaxe group, whereas the documentary record showed purchase from another entity. No material was brought to establish any nexus between the assessee and the alleged incriminating material. The jurisdictional foundation was therefore based on a factual error and lacked tangible material connecting the assessee to the alleged cash transaction.

Conclusion: The reassessment proceedings were not sustainable in law.

Issue (ii): Whether the addition under section 69 for alleged cash payment over and above the recorded sale consideration could be sustained on un-confronted third-party material and without corroborative evidence.

Analysis: The addition rested on excel-sheet entries and statements that were never supplied to the assessee for rebuttal. The record showed payment through banking channels, supported by the allotment agreement, loan disbursement certificate and bank details. In the absence of direct or corroborative evidence, and with the adverse material remaining untested, the addition rested on conjecture and preponderance of probabilities rather than proof.

Conclusion: The addition under section 69 was unsustainable and liable to be deleted.

Issue (iii): Whether the reassessment was vitiated for want of mandatory approval and for breach of natural justice.

Analysis: The assessee's challenge to the absence of the required approval before completion of reassessment was not controverted by the Revenue. The material relied upon against the assessee was also not confronted, denying an effective opportunity of rebuttal. The statutory safeguards governing reassessment had not been strictly followed.

Conclusion: The reassessment suffered from jurisdictional infirmity and breach of natural justice.

Final Conclusion: The reassessment order could not be sustained and the addition made on account of alleged cash payment failed, resulting in relief to the assessee.

Ratio Decidendi: A reassessment based on an incorrect factual premise, unsupported by a live nexus or corroborative evidence, and founded on material not confronted to the assessee, is invalid and any addition so made cannot be sustained.

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