Reassessment under section 147 valid based on investigation wing information, statements, and enquiries indicating accommodation entries, where AO applies independent mind, establishes live link and tangible material, rejecting claims of borrowed satisfaction or fishing enquiry.

ORDER

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

This appeal has been filed by the assessee against order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”), dated 10.01.2025, passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), for the Assessment Year (AY) 2016-17.

2. The assessee has raised following grounds of appeal:-

“In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding validity of assessment order passed u/s 147 r.w.s 144 of the Act by the Ld. Assessing Officer which is void and deserves to be quashed.

2. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding proceedings initiated u/s 147 which are based on incorrect reasons wherein the Ld. AO has also failed to specify the nature of the transaction for which present case has been reopened. The Ld. CIT(A) has erred in not adjudicating the argument raised by the appellant. The Ld. CIT(A) ought to have appreciated that proceedings cannot be reopened on the basis of incorrect reasons.

3. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in upholding proceeding initiated u/s 147 which are merely on the basis of borrowed satisfaction and without independent application of mind by the Assessing Officer. Such proceedings are bad in law and deserves to be quashed.

4. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in holding that the present case passes test of "tangible material" as there existed new information before the AO, before initiation of proceedings u/s 147 when such proceedings are initiated merely on the basis of change of opinion since entire details were duly available on record of AO during the course of proceedings u/s 143(3) of the Act and there is no fresh and tangible material before the AO at the time of initiating alleged proceedings. The present proceedings initiated u/s 147 of the Act deserves to be quashed.

5. In law and in the facts and circumstances of appellants case, the Ld. CIT(A) erred in holding that there is live link between information and formation of belief is established by the AO when there is no formation of belief by the AO and present proceedings are initiated merely on surmises and without any concrete evidence against the appellant.”

3. In this case, the assessee filed its return of income on 23.03.2017 declaring total income of Rs. 85,690/-. The assessment was reopened pursuant to notice issued u/s 148 dated 31.03.2021 on the basis of information received from the Investigation Wing that the assessee had received accommodation entries in the garb of unsecured loans from M/s Orange Tradex Pvt. Ltd. amounting to Rs. 586,98,84,146/- and from M/s Krrish Enterprise amounting to Rs. 636,95,45,652/-. The assessment was completed u/s 147 r.w.s. 144B on 23.03.2022 determining total income at Rs. 1,223,91,15,486/- by making addition u/s 68 of the Act.

4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the validity of reopening holding that tangible material in the form of Investigation Wing report, statement of Shri Chandresh Vyas and field enquiry constituted sufficient basis for formation of belief. On merits, the Ld. CIT(A), after considering the substantial additional evidences including affidavit of Shri Chandresh Vyas and voluminous financial documents which were filed for the first time during appellate proceedings before Ld