ITAT Ahmedabad quashes reassessment u/s 147 where AO relied only on vague Insight-portal data; consequential order u/s 143(3) r.w.s. 147 set aside.
Meetu Kumari | Sep 4, 2025 |
ITAT Quashes Reopening u/s 147 Based on Vague Insight-Portal Information; Consequential Assessment Set Aside
The appeal arose from reassessment proceedings initiated u/s 147 r.w.s. 148 for AY 2017–18. The Assessing Officer relied on the Insight-portal information following a search on “Kaushal Group,” alleging that the assessee had availed accommodation entries of Rs 64,05,601. Based on this, reasons were recorded and notice u/s 148 was issued. The assessee objected, pointing out that only trades in shares of Kaushal Ltd. were undertaken, duly disclosed in the return u/s 139(1). It was emphasised that the short-term capital gain from such trades had already been examined in the original scrutiny assessment u/s 143(3), and that the AO had proceeded on vague and factually incorrect assumptions without correlating the portal data with records.
Main Issue: Whether reassessment proceedings u/s 147 could be sustained when based solely on general Insight-portal information without a specific nexus to the assessee’s transactions.
ITAT’s Ruling: The Tribunal held that the facts on record were general and non-specific and did not point to any specific transaction. As the AO did not cross-check the portal inputs with the assessment record and the reasons recorded were factually unfounded, the reopening was not made on a valid “reason to believe.” Reiterating Section 147 needs more than suspicion, it held that the reassessment was bad in law. On this footing, the order u/s 143(3) r.w.s. 147 was quashed. The alternative plea regarding Section 153C was left open.
The Tribunal said that reopening solely on vague information without verification of assessee’s records was invalid. Relying on ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) and CIT v. Paramjit Kaur (2008) 311 ITR 38 (P&H), it held that “reason to believe” must be based on material nexus and not suspicion. Since reasons recorded were factually incorrect and no live link with escapement existed, the reassessment proceedings were quashed. The appeal was allowed.
To Read Full Judgment, Download PDF Given Below
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