S. 148 (old provisions) – initiation on the basis of third party search – reasons for reopening recorded as “null” – material relied upon not provided to the Petitioner – held, no reason to believe – no tangible material available – thus, failure to establish live-link with such tangible material – procedure prescribed under GKN Driveshafts (India) ltd. not followed – reassesment set aside – penalty u/s 271D for alleged violation of 269SS also set aside.

Notice u/s 148 was issued under the old provisions of Income-tax Act, 1961 on the basis of a third party search. Despite requesting for the same, the Petitioner was not provided with the reasons for reopening but a notice u/s 143(2) was issued where the reasons were recorded as “null”. A query was raised for the first time with respect to alleged receipt of cash loans of Rs. 85 Lakhs in a notice u/s 142(1). The Petitioner’s request for furnishing the materials relied upon was also not acceded to. Held that there was no formation of belief by the AO and therefore, there was no tangible material on the basis of which income could have been said to have escaped assessment. Even if it is assumed that there was tangible material available, which was not disclosed, the AO failed to establish a live link with such tangible material. In absence of any new tangible material, the reassessment is nothing but attempt to review the earlier order. The contention of the Revenue of availability of an alternate remedy by way of appeal was rejected on the ground that the AO had not only failed to satisfy the jurisdictional conditions for invoking section 147/148 of the Act but also failed to comply the directions laid down in GKN Driveshafts (India) Ltd. Thus, reassessment proceedings are set aside and penalty proceedings initiated u/s 271D for alleged violation of section 269SS are also set aside.