High Court Struck Down Reopening of Assessment on basis of Insight Portal
The petitioners challenged reassessment proceedings initiated under Section 148 for AYs 2013–14 and 2014–15, alleging receipt of on-money from the sale of agricultural land and engagement in bogus subcontracts with another company. The AO relied on data uploaded on the Insight Portal and documents seized from a third party. In prior rounds of litigation, objections were either not disposed of or rejected without addressing the petitioners’ claims. Notably, the co-owner’s return for the same land sale was accepted by the department without any addition. The AO had also passed the impugned assessment orders on the same day as the interim stay was granted by the HC. Therefore, the challenge was included with the current petitions.
Main issue: Whether the reassessment notices and subsequent orders under Section 147/144B were valid when based only on vague, third-party information lacking any tangible material or live nexus to the petitioners.
HC’s Decision: The High Court allowed the petitions, ruling that the AO had no concrete evidence directly linking the petitioners to any unaccounted income or bogus contracts. The Court found the so-called “reasons to believe” were vague, based only on entries from the Insight Portal and third-party documents without any incriminating evidence against the petitioners themselves. It was stressed that even though co-owners were alleged to have received on-money, no addition was made in the other case attached with this matter, which undermined the very basis for reassessment.
Relying on established precedents like CIT v. Kelvinator of India Ltd. and Sagar Enterprises v. ACIT, the Court reiterated that reassessment cannot be upheld without clarity, specificity, and a direct connection between the petitioner and the alleged income escapement.
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