Reassessment Based Solely On Vague Anonymous Tax Evasion

Reassessment Based Solely On Vague Anonymous Tax Evasion Petition Without Credible Material Is Invalid

Issue

Whether reassessment proceedings under Section 148, founded solely on a vague and unverified Tax Evasion Petition lacking specific details, are legally sustainable when the Assessing Officer has not applied independent mind to tangible material.

Facts

The assessee-company filed its return of income for Assessment Year 2018-19.
Prior to reassessment, the Assessing Officer issued a notice under Section 133(6) seeking details regarding investment in immovable property.
In response to the Section 133(6) notice, the assessee submitted its computation of income, bank statements, memorandum of association, sale deed, and vendor ledgers.
Subsequently, the Assessing Officer initiated reassessment proceedings by issuing a show-cause notice under Section 148A(b) and passing an order under Section 148A(d).
The reopening was based solely on an anonymous, unverified Tax Evasion Petition received in the name of one of the directors alleging transfer of benami properties.
The petition lacked crucial particulars such as nature, location, valuation, date, mode of acquisition, or alleged source of funds.

Decision

Held, yes. Reassessment proceedings cannot be initiated on the basis of vague, unverified, or borrowed information; the Assessing Officer must possess tangible and credible material suggesting escapement of income after independent application of mind.
Held, yes. In the complete absence of vital facts, the statutory jurisdictional threshold for reopening an assessment remained wholly unmet, rendering the impugned reassessment order unsustainable in law.

Key Takeaways

Credible Material Requirement: Reassessment proceedings under Section 148/148A require tangible, credible material establishing a direct link to escaped income, rather than bare allegations.
Anonymous Petitions Insufficient: An unverified, anonymous Tax Evasion Petition (TEP) lacking specific details (like property location, value, or transaction dates) cannot form the sole foundation for reopening an assessment.
Independent Application of Mind: The Assessing Officer cannot mechanically rely on third-party complaints; independent verification and application of mind are mandatory prerequisites before initiating reassessment.

IN THE ITAT DELHI BENCH ‘G’

Urvara Agro (P.) Ltd.

Income-tax Officer

ANUBHAV SHARMA, Judicial Member
and Manish Agarwal, Accountant Member

IT Appeal No. 1374 (Delhi) of 2026
[Assessment year 2018-19]

SEPTEMBER 25, 2026

Ms. Meenal Goel, CA and Ms. Tanya Upreti, Adv. for the Appellant. Ravinder Singh Yadav, Sr. DR for the Respondent.

ORDER

Anubhav Sharma, Judicial Member. – This appeal is preferred by the assessee against the order dated 02.02.2026 of the Ld. National Faceless Appeal Centre, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/NFAC/S/250/2025-26/1085445372(1) arising out of the assessment order dated 28.03.2023 u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by NFAC Delhi for AY: 2018-19.

2. Heard and perused the records. The return of assesse was filed u/s 139 declaring total income of Rs.8,88,600/- and prior to the proceedings assessing officer had issued notice u/s 133(6) of the Act dated 11.03.2022 by which information was sought with regard to investment in immovable property by the assesse which was responded by letter dated 14.03.2022 along with documents including computation of income, bank statements, memorandum of association, sales deed and the ledger of vendor parties. Thereafter, re-assessment proceedings were initiated in which again aforesaid documentary evidences were filed but ld. AO was not satisfied and made an addition of Rs.42,62,151/-as unexplained investment u/s 69B of the Act which has been sustained by ld. CIT(A) for which assesse is in appeal and before us the foremost contention of ld. Counsel was that the assumption of jurisdiction u/s 148 of the Act is itself vitiated as on the basis of unverified Tax Evasion Petition (TEP) alleging transfer of certain immovable (Benami) properties in the name of assesse the case was reopened.

3. We find that at page No. 274 of the paper book copy of annexure attached to notice under clause (b) of Section 148A of the Act has been provided and if we examine the same we find that the reassessment proceedings have been solely initiated on the basis of anonymous and unverified TEP received in the name of one of the directors Vishwas Tripathi. As we consider the show cause notice u/s 148A(b) available at page No. 273-275 and the copy of order dated 30.03.2022 passed u/s 148A(d) of the Act available at page No. 266-268 of the paper book, it can be seen that not even there is a disclosure of nature of properties as to if the same were residential, commercial or agricultural and there no detail of location, valuation, date of acquisition, mode of acquisition or alleged source of investment coming up either from the information which is said to be “credible information” or any separate findings. In order under clause (d) of Section 148A of the Act it is observed by ld. AO that assesse had failed to explain the source of investment as out of small profit of the company invest was made and merely showing assets in its ITR does not make the transaction authentic, however, we find that what is the nature of asset itself is not reflected.

4. These facts and the content or information coming out of all these facts would not at all constitute information so as to justify allege that the same provide a live link to the reasons for recording a satisfaction of escapement of income to issue show cause notice u/s 148A(b) of the Act or the order passed u/s 148A(d) of the Act.

5. Though ld. DR has vehemently defended the proposition laid down by ld. Counsel on the basis that sale deed does not reflect all the facts so the reasons are sufficient. However, we are of the considered view that if the reopening is on the basis of anonymous and unverified TEP there should be some material gathered independently, specially if allegation is of the nature in the case of assesse that there was transfer of certain immovable (Benami) properties. And more so if the case of the department is that provisions of Section 69B are being invoked, which is part of the deeming provisions of the Act, then, there should also be an indication as to how assesse has in fact made an expenditure an amount over and above what is recorded in the books. However, there seems to be complete absence of vital facts.

6. In this context, the reliance of ld. Counsel for the appellant on the decision of Hon’ble Delhi High Court in Raj Birbal v. ACIT [W.P. (C) 11910/2018, dated 17-5-2023] squarely applies to the case of assesse wherein Hon’ble High Court has held as follows:

“17. As alluded to hereinabove, the AO had no material available with him for triggering the reassessment proceeding against the petitioner. The only material, if it can be called that, which was available with the AO, was the TEP. There were no documents available which could have formed the basis for initiating reassessment proceeding against the petitioner.

17. Bald assertions in the TEP that the petitioner had claimed bogus expenses towards salary and other heads, in our view, was not sufficient for commencement of the reassessment proceeding u/s 147 r.w.s148 of the Act.”

(Emphasis Supplied)

7. The aforesaid proposition stands authoritatively settled by the Hon’ble jurisdictional Delhi High Court in the matter of Pradyot K. Misra v. ACIT (Delhi), wherein the Hon’ble Court held that reassessment founded substantially on a TEP, without furnishing the underlying material to the Assessee or affording an effective opportunity to rebut the same, is unsustainable in law. Similar view has been reiterated by the co-ordinate bench in the matter of Ashok Arora v. ITO [ITA No.1894/Del./2012, dated 18-5-2016], relevant findings for which are as under:

“10. Now, adverting to the case at hand, in view of the law laid down by the Hon ble Supreme Court in Chhugamal Rajpal v. S.P. Chaliha (supra) and Hon ble jurisdictional High Court in G & G Pharma Limited (supra) discussed in the preceding paras, we are of the considered view that initiation of the proceedings W/s 147 of the Act by the AO in this case on the basis of tax evasion petition are itself bad in law as the AO has not satisfied himself before initiating the proceedings that income of the Assessee has escaped assessment for the following reasons:-

(i) that AO has merely proceeded to initiate proceedings u/s 147 of the Act on the basis of tax evasion petition that the Assessee has provided loan of Rs.2,50,000/- and Rs.3,00,000/- to Mr. Deepak and Mr. Sanjay respectively;

(ii) that the AO has merely forwarded the intimation contained in the tax evasion petition to the Assessee without recording any reasons whatsoever;

(Emphasis Supplied)

8. Thus we are of considered view that the jurisdictional threshold prescribed by the statute remains wholly unmet and where the settled law is that reassessment proceedings cannot be initiated on the basis of vague, unverified or borrowed information and the Assessing Officer must possess tangible and credible material which, after applying his own mind independently suggests escapement of income in the hands of the Assessee, the reopening in case of assessee is not sustainable in law. In the light of aforesaid discussion we are inclined to sustain the ground No. 2 to 4. Accordingly, the appeal of assesse is allowed. The impugned assessment order is quashed.