Narsimha Trading Co. Vs ITO (Gujarat High Court)
Gujarat High Court held that reopening of assessment under section 148 of the Income Tax Act in absence of any tangible material to arrive at primafacie reason to believe that income has escaped assessment is unsustainable in law and hence liable to be quashed.
Facts- By this petition under Article 226 of the Constitution of India, the petitioner has challenged the assumption of the jurisdiction by the respondent-Assessing Officer to issue notice dated 30.03.2021 for reopening assessment for the Assessment Year 2017-18 under section 148 of the Income Tax Act,1961.
Notably, the petitioner filed objections on 31.07.2021 explaining that the cash deposited during demonetization period is not Rs. 56,07,000/- as stated in the reasons recorded but it was Rs. 80,07,000/-. The petitioner also provided reconciliation of cash sales and cash deposits in the said reply. However, the respondent-Assessing Officer, by order dated 27.10.2021, observing that the petitioner did not furnish any supporting and corroborative evidence showing direct nexus of cash deposited during the demonetization with the amount received from the customers, rejected the case of the petitioner.
Conclusion- In absence of any independent application of mind by the respondent- Assessing Officer and in absence of any live link between the information received and the material available record, the impugned notice cannot be sustained. Merely because the Assessing Officer wishes to verify veracity of cash deposit cannot be the basis for reopening for making roving and fishing inquiry by reassessment even in case where the return was not scrutinized before acceptance originally. Therefore, respondent assessing officer could not have assumed jurisdiction to issue the impugned notice for reopening.
