SUHAS HIRACHAND MEHTA,DAPOI, RATNAGIRI vs. INCOME TAX OFFICER, WARD 1, RATNAGIRI, RATNAGIRI

Without touching merits of the case, we note that, information received through AIR etc., stating cash deposits of ₹6,74,000/- in a bank account by the assessee alone formed a basis for invocation of reassessment jurisdiction u/s 148 of the Act. It is glaringly evident on record that, the action of re-opening amply demonstrates lack of enquiry by the Ld. AO before exercising the jurisdiction to reopen the case u/s 148 of the Act. Further the information relating to cash deposit into bank account received through AIR was very much available on record during the unexpired period of regular assessment and hence such information in our considered view cannot ispo-facto part-take the character of fresh material giving rise to form a basis for forming an opinion in assuming jurisdiction u/s 148 of the Act. Conversely any information coming to light upon the expiry of period within which regular assessment u/s 143(3) of the Act can only trigger issuance of notice u/s 148 of the Act and can elementarily support the invocation of reassessment proceedings subject to forming of belief thereon upon conclusive enquiry thereunto.

In the present case, we prima-facie find that, the reason to believe that the cash deposit escaped assessment is found to have formed without any enquiry into the transaction reported in AIR and without bringing any deprecative/cogent material to showcase that the said bank deposits per-se represents escaped income of the assessee. Further in the absence of any material vis-à-vis findings of the Ld. AO suggesting that, information was indeed duly analysed, and required enquiries were conducted before forming a belief to invoke the reassessment jurisdiction, the reopening of the same u/s 148 of the Act is found misplaced. In our considered view, re-opening in the present case without first inquiring into and forming belief for recording reasons can well be treated to be reason to suspect which is not sufficient for reopening the case u/s 148 of the Act. While coming to record reasons to believe escapement merely relying upon financial information cannot be treated as good enough to reopen the case. There can be multiple ITAT-Pune Page 3 of 4 capital sources of cash deposits available to any assessee and unless and until it is brought out in the reasons as to how such cash deposit represents escaped income or investment same cannot give justification to reopen the case u/s 148 of the Act.

It is a well settled law that, the reasons for formation of belief must have rational connection with or relevant bearing on the formation of the belief. Whereas in the absence of nexus between prima facie inference arrived in assuming/recording reasons and information vis-a-vis material much less tangible, credible, cogent and relevant to form a reason to believe could not be a basis to assume jurisdiction, hence cannot be relied upon. Thus, in our considered view the impugned re-opening proceedings initiated were purely based on surmises, conjectures and suspicion and therefore, the same are without jurisdiction; that the reasons believed/recorded (if any) are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement therefore deserve to be quashed in the light of ‘ITO Vs Lakhmani Mewal Das’ [103 ITR 437 (SC)].

Since the legal ground is adjudicated in favour of appellant, other grounds turned out to be academic in nature, therefore delving unto deem unwarranted.

The appeal of the assessee in result stands ALLOWED In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Wednesday, 24th July, 2024.