Khazana Stores Private Limited Vs ITO (ITAT Ahmedabad)
“Reason to Suspect” Is Not “Reason to Believe”: ITAT Ahmedabad Quashes 147 Reopening Based Only on Cash Deposit Alerts
ITAT Ahmedabad “D” Bench, in Khazana Stores Pvt. Ltd. vs ITO (ITA No. 1506/Ahd/2025, AY 2017-18, order dated 23-12-2025), quashed the reassessment u/s 147 and deleted the addition of ₹59.05 lakh u/s 69A r.w.s. 115BBE, holding that the reopening was without jurisdiction and based on complete non-application of mind.
The AO reopened the assessment solely on Insight Portal / Investigation Wing information alleging cash deposits of ₹4.00 crore, without correlating the data with the assessee’s books or return of income. Tribunal noted that the actual cash deposits were only ₹2.48 crore, and the assessee had already declared ₹48.99 lakh as income. Mere bank deposits, without any material showing they represent income, cannot constitute “reason to believe”.
ITAT found that the reopening was done in haste, even admitting that the prescribed reopening format was not followed due to paucity of time. The information itself was factually incorrect, and there was neither independent satisfaction nor tangible material to show escapement of income. The Tribunal emphasised that every receipt is not income, and “reason to believe” cannot be replaced by suspicion, alerts, or unverified data dumps.
Consequently, the reassessment was held bad in law, and since the reopening itself failed, the addition on demonetisation-period cash deposits was deleted without examining merits.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
