Reassessment Based on Borrowed Belief from ACB Report Invalid: ITAT Quashes S.147 & S. [Read Order]
The Tribunal observed that the reopening was based on borrowed satisfaction from an Anti-Corruption Bureau (ACB) report and lacked independent application of mind. Consequently, the Tribunal also annulled revisionary orders passed under Section 263, ruling that no revision can be made on a jurisdictionally invalid assessment.
![Reassessment Based on Borrowed Belief from ACB Report Invalid: ITAT Quashes S.147 & S. [Read Order]](https://images.taxscan.in/h-upload/2025/11/12/2104658-reassessment-borrowed-belief-acb-report-invalid-itat-taxscan.webp "Reassessment Based on Borrowed Belief from ACB Report Invalid: ITAT Quashes S.147 & S. [Read Order]")
In a consolidated decision covering AYs 2014-19, the Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) held that reassessment proceedings initiated against the assessee were vitiated as it was based on Anti Corruption Bureau’s (ACB) report alleging disproportionate assets (DA) held by the assessee and his family.
The AO reopened assessments under Section 147 for all four years based on a letter from the ACB dated 19.02.2021, which reported disproportionate assets in the name of Mr Arpanbhai Virambhai Desai and six family members, following a criminal complaint under the Prevention of Corruption Act.
The AO recorded identical reasons across years, citing cash deposits, property purchases, and a total DA figure of ₹3.02 crore, but failed to specify the nature, source, or ownership details of the alleged assets.
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For AYs 2014-15 and 2015-16, reassessment orders were subsequently revised by the Principal Commissioner of Income Tax (PCIT) under Section 263. For AYs 2017-18 and 2018-19, the reassessment orders were passed under Section 147 read with Section 144C.
The Tribunal examined the recorded reasons and found that the AO had not identified any specific income that had escaped assessment. It was observed that the reasons merely reproduced figures from the ACB report without verifying or analysing the underlying transactions.
The bench further observed that there was no description or identification of the immovable property allegedly purchased in cash. Also, the AO explicitly stated that no further inquiry was needed, indicating a mechanical reliance on third-party information.
Relying on the Gujarat High Court’s decision in Kantibhai Dharamsinhbhai Narola v. ACIT, the Tribunal observed that reassessment requires the AO to form a reasonable belief based on his own application of mind. Borrowing satisfaction from external reports, without independent scrutiny, renders the assumption of jurisdiction invalid.
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Accordingly, the two-member bench of Sidhartha Nautiyal (Judicial Member) and Ananpurna Gupta (Accountant Member) held that the reassessment orders for AYs 2014-15 and 2015-16 were void ab initio and quashed them.
It further ruled that the PCIT could not exercise revisionary powers under Section 263 on an invalid order, stating precedents from Mumbai and Pune Benches, which held that revision cannot cure foundational jurisdictional defects.
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