Reopening under section 147 invalid if based on borrowed satisfaction from investigation wing without AO's independent application of mind demonstrating live link to non-disclosure of material facts, especially beyond 4 years post-scrutiny assessment.

ORDER

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27 (hereinafter referred to as the “Ld. CIT(A)”] dated 30.10.2025 for the AY 2011-12.

2. The issue raised in ground no.1 and 4 is against the order of ld. CIT (A) upholding the reopening of assessment u/s 147 read with section 148 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) which is based upon the borrowed satisfaction and therefore, the same is invalid and same may be quashed.

2.1. The facts in brief are that the assessee filed the return of income on 27.08.2011, showing total income at ₹65,917/-. The assessee is engaged in the business of basmati rice production and wind power generation. A search action u/s 132(1) of the Act was conducted on the assessee on 27.3.2014 and accordingly the assessment was framed u/s 153A/143(3) of the Act vide order dated 27.03.2014, assessing the total income at ₹4,50,773/-. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.03.2018. The assessee complied with the said notices by filing the return of income on 25.04.2018, declaring the same income as was declared in the original return of income. Thereafter, the statutory notices along with questionnaire were issued and duly served upon the assessee. According to the observations of the AO , the assessee did not comply with the various notices issued by the AO and finally, a show cause notice was issued to the assessee as to why ₹12,51,00,000/- received by the assessee from the bank account of M/s Pahargoomiah Exports Ltd. should be treated as unexplained cash credit. The assessee filed objections in response to show cause notice challenging the reopening of assessment vide letter dated 29.11.2018. The ld. AO disposed off the objections filed by the assessee vide order dated 16.12.2018. The assessee again filed the objections to the reasons recorded for reopening on 19.12.2018. Finally, the ld. AO treated the money received by the assessee during the financial year of ₹13,64,00,000( ₹ 12,51,00,000/- + ₹ 1,13,00,000/- as unexplained cash credit u/s 68 of the Act and added the same to the income of the assessee in the assessment framed dated 28.12.2018.

2.2. In the appellate proceedings, the ld. CIT (A) dismissed the appeal of the assessee.

2.3. The ld. AR vehemently submitted that the AO has made wrong observation in the assessment order that the assessee did not comply with the notices issued whereas as matter of fact the assessee replied all the notices by referring to the replies filed before the AO which are available in the paper book. The ld. AR further argued by referring to the reasons recorded, a copy of which is available at page no.23 to 27 of the paper book ,that there is no live link between tangible material and formation of belief by the ld. Assessing Officer to the effect that income has escaped assessment. The ld. AR submitted that except the information received from the investigation wing, the ld. AO had no other material in his possession which even remotely suggests that income has escaped assessment. The ld. AR submitted that as evident from the reasons recorded by the AO that there is no independent application of mind or independent enquiry conducted by the ld. AO before forming the reasons to believe that income has escaped assessment. The ld. AR submitted that the ld. AO has at the most reasons to suspect and not reasons to believe. The ld. AR submitted that the reasons to belief is the basic pre-condition to assume the jurisdiction u/s 147 of the Act while the ld. AO in the present case has straightway jumped to the conclusion rather first forming reasons to believe that the income has escaped assessment. The l