Reassessment notice validity hinges on supplied material, verified information, corroborated third-party evidence, and strict limitation.

Reassessment under the new regime depends on supply of the material actually relied upon, so an assessee can make an effective reply under section 148A(b). Flagged risk-management or investigation-wing inputs do not by themselves justify reopening unless the Assessing Officer independently verifies and corroborates them. Additions based on third-party papers, loose sheets or statements require corroboration and fair cross-examination; untested material and presumptions under section 292C cannot be used against a third party searched elsewhere. The note also addresses limitation under section 149, including expiry of the applicable three-year and six-year periods and rejection of the view that time runs from the last section 148A(b) notice.

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Issues: (i) Whether reassessment proceedings initiated under section 148A(b) and section 148 were valid when the material relied upon was not furnished to the assessee; (ii) whether information from the risk management system and investigation wing could sustain reopening without independent verification and corroboration; (iii) whether additions under section 69A and section 69C based on third-party documents and statements could be sustained in the absence of cross-examination and supporting evidence; and (iv) whether the reassessment notices for the relevant assessment years were barred by limitation.

Issue (i): Whether reassessment proceedings initiated under section 148A(b) and section 148 were valid when the material relied upon was not furnished to the assessee.

Analysis: The notice under section 148A(b) was issued without supplying the information, reports, rukkas, and other material relied upon. The assessee had specifically sought the underlying material, but the request was not addressed. The reassessment machinery under sections 148A and 148 requires that the assessee be put to notice on the basis of the information actually relied upon, so that an effective reply can be filed.

Conclusion: The reassessment proceedings were held invalid on this ground and the finding of the first appellate authority was upheld.

Issue (ii): Whether information from the risk management system and investigation wing could sustain reopening without independent verification and corroboration.

Analysis: The deeming of flagged information as "information" for reopening does not dispense with the Assessing Officer's obligation to verify it, seek independent corroboration, and pass a reasoned order after considering objections. Mere portal-based or investigation-wing inputs, without live nexus or verification, were held insufficient to justify reopening.

Conclusion: Reopening based only on such unverified information was held unsustainable.

Issue (iii): Whether additions under section 69A and section 69C based on third-party documents and statements could be sustained in the absence of cross-examination and supporting evidence.

Analysis: The materials relied upon were third-party papers, loose sheets, statements, and alleged rukkas from the search of finance brokers. The assessee was not shown to be named in those statements as lender or borrower, no meaningful corroboration was brought on record, and cross-examination of the relied-upon persons was not allowed. Such third-party material, without corroboration, was treated as insufficient for making additions, and the presumption under section 292C was held inapplicable against a third party searched elsewhere.

Conclusion: The additions under sections 69A and 69C were rightly deleted.

Issue (iv): Whether the reassessment notices for the relevant assessment years were barred by limitation.

Analysis: For one assessment year, the notice under section 148 was issued after expiry of the applicable six-year period under section 149(1)(b). For the other, the notice was beyond the three-year period under section 149(1)(a), and the conditions for invoking the extended limitation were not satisfied. The view that limitation could run from the date of the last section 148A(b) notice was rejected.

Conclusion: The reassessment notices and consequent assessments for the relevant years were barred by limitation.

Final Conclusion: The Revenue's appeals failed in their entirety, while the assessee's rule 27 application succeeded on the limitation issue for the later years, leaving the reassessment additions and notices unsustainable.

Ratio Decidendi: A reassessment notice under section 148A(b) is invalid unless the assessee is supplied the material relied upon, and portal or investigation-wing information must be independently verified and corroborated before it can sustain reopening or additions based on third-party documents.

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