Reopening Based on Insight Portal Information Without Seized Material is Invalid: ITAT

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that a reassessment initiated merely on the basis of information uploaded on the Income Tax Department's Insight Portal, without examination of actual seized documents, was legally unsustainable and deleted an addition of ₹5.33 lakh made under Section 69 of the Income Tax Act on account of alleged "on-money" payment for purchase of a flat. The bench of Vinay Bhamore (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) relied on the judgment of the Bombay High Court in Principal CIT v. Shodiman Investments Pvt. Ltd., which held that reassessment proceedings must be supported by a live nexus between the material available with the Assessing Officer and the belief that income has escaped assessment. Reopening based merely on information received from another authority, without independent application of mind, is impermissible. The assessee, a retired salaried employee, had filed her return of income for Assessment Year 2020-21 declaring total income of ₹4.98 lakh. Subsequently, the Assessing Officer (AO) reopened the assessment under Section 148 based on information received through the Income Tax Department's Insight Portal. According to the information, a search conducted under Section 132 in the case of the Bhoomi Group had allegedly revealed that the assessee, along with her husband and son, paid ₹16.60 lakh as unaccounted "on-money" while purchasing a flat in the Midas Bhoomi Harmony project in Mumbai. On the basis of this information, the AO reopened the assessment and ultimately added ₹5.33 lakh, representing the assessee's one-third share of the alleged cash payment, under Section 69 of the Act. Before the Tribunal, the assessee argued that the reassessment proceedings suffered from multiple legal defects. It was contended that the reopening was based on an erroneous assumption regarding the search proceedings, that the approval granted under Section 151 was mechanical, and that the assessee was never provided copies of the relied-upon documents or an opportunity to cross-examine the persons whose statements were relied upon. The assessee also denied making any cash payment and submitted bank statements, purchase documents and other supporting evidence during reassessment proceedings. However, despite repeated requests, copies of seized documents and cross-examination opportunities were not provided. The Tribunal closely examined the material relied upon by the Assessing Officer and found serious deficiencies. It noted that the primary document reproduced in the assessment order was not an original seized document but appeared to be a scanned and altered extract. The document did not contain the assessee's name, did not mention any cash payment, and did not even clearly identify the project or property in question. The Tribunal described the document as a "dumb document" incapable of establishing undisclosed cash transactions. The Bench further observed that the AO had relied heavily on a chart prepared by departmental officers based on certain search materials rather than on the actual seized documents themselves. Such a chart, the Tribunal held, could not be treated as primary evidence. Significantly, the Tribunal found that even the statement of the developer's representative, relied upon by the Department, did not specifically allege that the assessee had paid any cash consideration. After evaluating the record, the Tribunal concluded that the addition under Section 69 was entirely unsupported by evidence. The Bench held that neither the documents nor the statements produced by the Department established any undisclosed cash payment by the assessee. In the absence of credible evidence, the addition of ₹5.33 lakh could not be sustained and was directed to be deleted. The Tribunal also examined the legality of the reassessment proceedings themselves. It found that the reasons recorded by the Assessing Officer were based solely on information available on the Insight Portal in the form of a departmental chart. The AO had not obtained or examined the actual seized documents before forming a belief that income had escaped assessment. The Tribunal has observed that the reopening was therefore founded on secondary information rather than tangible material directly linking the assessee to undisclosed income. The Bench observed that the AO had effectively acted on "borrowed satisfaction" without independently verifying the underlying evidence. Applying this principle, the ITAT held that the reasons recorded in the present case did not refer to any specific seized document available with the AO and were based only on a chart uploaded on the Insight Portal. Consequently, the notice issued under Section 148 was held to be bad in law. Allowing the assessee's appeal in part, the Pune ITAT held that the reassessment proceedings initiated under Section 148 were invalid as they were based on insufficient and unverified material. The Assessing Officer failed to demonstrate any tangible evidence linking the assessee to alleged cash payments. The addition of ₹5.33 lakh under Section 69 for alleged "on-money" payment was unsustainable and liable to be deleted. Case Details Case Title: Suneeta Ramesh Korgaonkar Versus ITO Citation: JURISHOUR-1562-ITA-2026(PUN) Case No.: ITA No. 2752/PUN/2025 Date: 29-05-2026 Counsel For Appellant: Bhuvanesh Kankani Counsel For Respondent: Sandeep Sathe, JCIT-DR Click Here To Read Order Read More: TOLA Extensions Doesn’t Apply to Black Money Act Proceedings: ITAT

Reopening Based on Insight Portal Information Without Seized Material is Invalid: ITAT

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