Rajiv Kumar Vs DCIT (ITAT Delhi)
“Cash Deposit Remains Unverified” Is Not a Reason to Believe Income Escaped Assessment: Delhi ITAT Quashes Reopening
Information about a bank deposit may call for examination, but an Assessing Officer cannot treat an unverified deposit as escaped income without recording a rational link between the information and that conclusion. Applying this principle, the Delhi ITAT quashed the reassessment in Rajiv Kumar v. DCIT, ITA No. 3538/Del/2026, for AY 2011–12. The order was pronounced on 29 September 2026.
The Only Reason Recorded for Reopening
The assessee had filed a return declaring income of ₹10,78,290. The AO subsequently received AIR/CIB information showing cash deposits of ₹22,50,000 in the assessee’s Axis Bank savings account. In the reasons recorded for reopening, the AO compared the deposit with the returned income and stated that the nature and source of the cash deposits remained “unverified”. He then concluded that ₹22,50,000 had escaped assessment.
After obtaining approval, the AO issued a notice under Section 148 on 28 March 2018. The assessee responded with a return and participated in the reassessment proceedings. The eventual order, dated 27 December 2018, added the Axis Bank deposits as unexplained money under Section 69A. It also made additions of ₹23 lakh and ₹14,48,599 concerning credits in other bank accounts, and ₹36,17,955 towards long-term capital gains on mutual fund units.
The CIT(A) upheld the reassessment. The assessee then challenged both the jurisdiction to reopen and the additions before the Tribunal.
Information Requiring Verification Versus Belief of Escapement
The assessee’s central submission was that the AO’s own words exposed the weakness in the recorded reasons. A deposit whose source “remains unverified” presents a question to be examined. It does not, without more, establish a basis to believe that the whole deposit represents income that escaped assessment.
The assessee also pointed out that the recorded reasons referred only to the AIR/CIB information and the difference between the bank deposit and returned income. They did not refer to any enquiry with the bank or the assessee, or identify other material connecting the deposit to undisclosed taxable income. A savings bank deposit can arise from several sources; the amount of a deposit and the amount of income returned are different measures.
A separate objection was raised against the approval under Section 151, which was said to have been recorded in the words “Yes I am satisfied”. The Tribunal, however, did not need to decide that ground. Its decision rested on the inadequacy of the reasons for reopening.
What the Tribunal Decided
The ITAT examined the reasons as recorded by the AO. It noted that the sole material mentioned was AIR/CIB information concerning the ₹22,50,000 deposit, compared with the returned income. The AO had described the deposit as unverified, while the reasons referred to no enquiry, notice to the bank or assessee, or additional material.
The Bench followed the Delhi Tribunal’s decision in East Delhi Leasing Pvt. Ltd. v. ITO, which had applied the Supreme Court’s ruling in ITO v. Lakhmani Mewal Das. The governing requirement is a rational connection or live link between the material available to the AO and the belief that income chargeable to tax has escaped assessment. The adequacy of supporting material is a different question; there must first be material capable of supporting the statutory belief.
On the facts before it, the Tribunal held that the AO had invalidly assumed jurisdiction under Sections 147 and 148. It set aside the reassessment and allowed the assessee’s appeal.
What the Order Does Not Decide
The ruling should be read for its precise point. The Tribunal did not hold that cash deposits can never justify reopening. Its conclusion concerned these recorded reasons, which moved directly from information about a deposit whose source was unverified to a belief that the full amount had escaped assessment.
Nor did the Tribunal decide whether the assessee had satisfactorily explained the ₹22,50,000, the other bank credits or the mutual fund transaction. Once it quashed the reassessment, those grounds became unnecessary to decide and were left open. The objections to the Section 151 approval were likewise not adjudicated.
Author’s Comment
The decision draws a useful line between a reason to verify and a reason to believe. An information report is a starting point. Before issuing a reopening notice under the provisions applicable to this case, the AO had to record how the information supported an inference of escaped income, rather than merely identify a bank transaction that required explanation.
For an assessee challenging an older reassessment, the most important document may therefore be the reasons recorded before the notice was issued. Those reasons must speak for themselves. In Rajiv Kumar, the AO’s description of the cash deposit as “unverified” was central: it showed that verification remained to be done, while the recorded conclusion treated the entire deposit as escaped income. On that jurisdictional defect, the Delhi ITAT quashed the reassessment without entering the merits of the additions.
Cases Discussed
- East Delhi Leasing Pvt. Ltd. Vs ITO, ITA No. 7917/Del/2019, decided on 10.04.2024 (ITAT Delhi) — The Tribunal expressly followed this coordinate Bench decision holding that absence of a live link between the material and the belief of escapement invalidates assumption of jurisdiction under Section 147.
- ITO Vs Lakhmani Mewal Das, (1976) 103 ITR 437 (Supreme Court) — Applied for the requirement that the reasons for belief must have a rational connection or direct nexus with the material and that vague, indefinite, remote or far-fetched material cannot sustain reopening.
- PCIT Vs Sheetal Dushyant Chaturvedi, 134 taxmann.com 327 (Bombay High Court); SLP dismissed, (2022) 285 Taxman 85 (Supreme Court) — Referred to for the proposition that assessment cannot be reopened for fishing and roving enquiries.
- Vipin Khanna Vs CIT, 255 ITR 220 (Punjab & Haryana High Court) — Referred to in the precedent followed by the Tribunal concerning impermissible fishing and roving enquiries.
- Ranbaxy Laboratories Ltd. Vs CIT, 200 Taxman 242 (Delhi High Court) — Referred to as the jurisdictional High Court authority supporting the principle applied while quashing the reassessment.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the assessee is against the order dated 25.02.2026 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [hereinafter referred to as “the CIT(A)”] u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of assessment order dated 27.12.2018 of the Ld. Assessing officer / ACIT, Circle 65(1), New Delhi (hereinafter referred to as ‘the AO’) u/s 147 r.w.s. 143(3) of the Act for A.Y.2011-12.
2. Brief facts of the case are that the assessee filed return of income of Rs. 10,78,290/-. The case was reopened u/s 147 of the Act with following reasons:
“This office is in possession of AIR/CIB information in the case of the assessee that he has deposited an amount of Rs. 22,50,000/- in cash in his saving bank a/c in Axis Bank, Sector-18, Noida.
From the details available on ITD the assessee has filed his ITR for A.Y. 2011-12 of Rs. 10,78,290/- only. Therefore, the nature and source of cash deposits of Rs. 22,50,000/- remains unverified.
In view of the foregoing facts and observations above, I have reason to believe that the sum of Rs. 22,50,000/- has escaped the assessment for A.Y. 2011-12.
As per the above facts and observations, it is apparent that the income chargeable to tax that has escaped assessment in this case is more than one lakh rupees and as such, the condition for issuance of notice u/s 148 contained in section 149(2) of the IT Act, 1961 is fulfilled.”
2.1 A notice u/s 148 of the Act dated 28.03.2018 after obtaining necessary approval u/s 151(1) of the act was issued. In response to notice u/s 148 of the Act, the assessee filed return of income on 14.08.2018 declaring total income of Rs. 13,28,290/- including agricultural income of Rs. 2,50,000/-. Various notices u/s 142(1) of the act were issued. The assessee submitted requisite information/ documents. Ld. AO vide order dated 27.12.2018 made addition in the impugned order reads as under:
(i) Rs. 22,50,000/- u/s 69A of the Act, treating cash deposits in Axis Bank as unexplained money;
(ii) Rs. 23,00,000/- u/s 68 of the Act, treating a credit entry in ICICI Bank as unexplained cash credit;
(iii) Rs. 14,48,599/- u/s 68 of the Act, treating credit entries in HDFC Bank as unexplained cash credit;
(iv) Rs. 36,17,955/- as Long Term Capital Gains from sale of ICICI Prudential Mutual Fund units u/s 45 of the Act.
2.2 Against order dated 27.12.2018 of ld. AO, the assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 25.02.2026.
3. Being aggrieved, the appellant/assessee preferred present appeal on following grounds:
“1. On the facts and circumstances of the case, the Appeal Order passed by the learned CIT(A) u/s 250 of the Income Tax Act 1961 is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, that the learned CIT(A) erred in confirming the addition of Rs 22,50,000 under Section 69A of the Act, ignoring that the Appellant had duly explained the nature and source of the cash deposits and that the addition was made without proper appreciation of facts and evidence.
3. On the facts and circumstances of the case, that the learned CIT(A) erred in confirming the addition of Rs 23,00,000 under Section 68 of the Act without properly appreciating the explanation, supporting documents, identity, genuineness and creditworthiness relating to the said credit.
4. On the facts and circumstances of the case, that the learned CIT(A) erred in confirming the addition of Rs. 14,48,599 under Section 68 of the Act, though the said receipt was identifiable and duly explained and could not be treated as unexplained cash credit.
5. On the facts and circumstances of the case, that the learned CIT(A) erred in confirming the addition of Rs. 36,17,955 under Section 45 of the Act as capital gains on gross receipt basis without considering the reduction of purchase cost of the Insurance Policy.
6. On the facts and circumstances of the case, Ld. CIT(A) as well as AO erred on facts as well as in law, has made additions without rejecting books of accounts of the Assessee as well as no defect in the books of accounts whatsoever was pointed out while passing impugned appeal as well as assessment order.
7. On the facts and circumstances of the case, that impugned Appeal order/ additions made are arbitrary/ unjustified/ unfair/ contrary to facts on record, illegal, and deserved to be quashed on various legal and factual grounds.
8. On the facts and circumstances of the case, that the learned CIT(A) has erred in upholding the validity of reassessment proceedings initiated under Sections 147/148 of the Income tax Act, 1961, which were illegal, without jurisdiction, bad in law and void ab initio.
9. On the facts and circumstances of the case, that the learned CIT(A) failed to appreciate that the reasons recorded for reopening did not disclose any valid reason to believe based on tangible material having a live nexus with escapement of income, and the reopening was merely based on suspicion arising from bank deposits.
10. On the facts and circumstances of the case, that the learned CIT(A) erred in law in not appreciating that mere information of cash deposits in bank accounts, without independent enquiry or application of mind, cannot constitute valid basis for assumption of jurisdiction under Section 147 of the Act.
11. On the facts and circumstances of the case, that the Ld. AO has failed to obtain proper approval under Section 151 of the Act from the competent authority, and hence the reassessment proceedings are vitiated for want of valid sanction.
12. That in any case and in any view of the matter, reopening of the assessment and making of various additions in the reassessment order is not legally valid on various factual and legal grounds. Therefore, impugned reassessment order deserves to be quashed and each of the additions made therein deserved to be quashed/ deleted on law and facts and Ld. CIT(A) erred in law as well as on facts in not doing so.
13. On the facts and circumstances of the case, that the learned CIT(A) erred in rejecting the Appellant’s application for admission of additional evidence under Rule 46A of the Income-tax Rules, 1962, despite sufficient cause and despite the evidence going to the root of the matter, thereby causing grave prejudice to the Appellant.
14. That the impugned order passed by the learned CIT(A) is non-speaking, arbitrary, contrary to facts and law and therefore liable to be set aside.
15. That the Appellant craves leave to add, alter, amend, withdraw or substitute any of the above Grounds of Appeal at or before the time of hearing.”
4. Ld. Authorized Representative for appellant/assessee regarding ground of appeal No. 8 and 9 submitted written submissions as under:
“1. The AO reopened the case u/s 148 for one reason only that the assessee had deposited Rs. 22,50,000/- in cash in his savings account, which he himself recorded as “unverified”. The Pr. CIT approved it with a bare “Yes I am satisfied” That is suspicion and not “reason to believe” and the law does not allow an assessment to be reopened on suspicion.
2. Notice u/s 148 dated 28.03.2018 for AY 2011-12. The only material in the reasons (PB 14-15) is AIR/CIB information of cash deposits of Rs. 22,50,000 in the Axis Bank savings account, compared with returned income of Rs. 10,78,290, with the recital that the deposit “remains unverified”. No enquiry, no notice to the bank or the assessee, no other material. The AIR/CIB information was never supplied to the assessee.
3. The CIT(A) upheld the reopening holding that the gap between the deposit and returned income is a “live nexus”, and that the template sanction suffices, relying on Experion Developers (P) Ltd. (2020) 422 ITR 355 (Del) and Pr. CIT v. Agroha Fincap Ltd. (2025) 179 taxmann.com 185 (Del).
4. In the case of Bir Bahadur Singh Sijwali v. IΤΟ (2015) 68 SOT 197 (Del-Trib), on identical AIR facts, the Tribunal held that such an opinion “proceeds on the fallacious assumption that the bank deposits constitute undisclosed income… reassessment cannot be resorted to only to examine the facts… unless there is a reason to believe, rather than suspect”; consistently followed in Mahavir Parsad (ITA 924/Del/2015), Tajendra Kumar Ghai (ITA 970-971/Del/2017), Munni Devi (ITA 3534/Del/2014), Arvind Yadav (ITA 1508/Del/2017), Inder Jeet (ITA 2740/Del/2018) and Ashok Kumar (ITA 1384 & 2647/Del/2018). The CIT(A)’s arithmetic comparison of deposit with income is precisely this fallacy
5. Reliance is placed in this regard on the Apex Court decision in Pr. CIT vs. Sheetal Dushyant Chaturvedi (2022) 285 Taxman 85. It is submitted that the approach of the AO, therefore, is erroneous and is not in conformity with the provisions of law and opposed to the Apex Court’s view. Verification is a process distinct and separate from the exercise of reassessment to determine the escaped tax.
6. A perusal of the reasons recorded by the AO would show that on the mere suggestion of the AIB that cash deposit may have income escaping assessment the reassessment proceedings have been initiated by the AO in the belief of escapement of income of the Assessee. Apparently as between the information received and the inference drawn by the AO there is no live- link or a nexus. They are indubitably disparate. The belief recorded by the AO suffers from a serious unbridgeable disconnect rendering it redundant, superfluous and unactionable. Absence of live link between the material on record and the satisfaction recorded completely mutilates the validity of the AO’s belief and subsequent action. The Delhi High Court in CIT vs. Supreme Polypropylene Private Ltd. (2013) 35 Taxman.com rules such cases it that way to be invalid.
7. Reasons are tested as recorded, they cannot be improved by the CIT(A) Northern Exim (P) Ltd. v. DCIT (2013) 357 ITR 586 (Del); Hindustan Lever Lid. v. R.B. Wadkar (2004) 268 ITR 332 (Bom). The CIT(A)’s “live nexus” reasoning is a supplementation of the reasons, which is impermissible.
8. Belief, not suspicion; tangible material with a live link. Sheo Nath Singh v. AAC (1971) 82 ITR 147 (SC); ITO v. LakhmaniMewal Das (1976) 103 ITR 437 (SC), material must have a rational connection and live link with escapement, not a remote or vague one; CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), tangible material is the check against arbitrary reopening, Chhugamal Rajpal v. S.P Chaliha (1971) 79 ITR 603 (SC) – information that only calls for “investigation” is not a reason. A deposit that “remains unverified” is, in the AO’s own words, is a reason to verify and not a reason to believe.
9. In the case of Ashish NatvarlalVashi Vs ITO (ITA No.3522/AHD/2016- ITAT Surat) has held that:
“15. It is Besides, mere cash deposit in the bank account would not disclose escapement of income. The assessee might have deposited the cash out of his sale of capital asset, sale of property and sale of investment, agricultural income etc. Therefore, we are inclined to hold the reassessment proceedings under section 147 of the Act as bad in law and hence, we quash the reassessment proceedings.”
10. In East Delhi Leasing P. Ltd v. ITO (ITA No.7917/Del./2019- ITAT Delhi), the Hon’ble Tribunal has held that
“4.9 More importantly it needs to be appreciated that the exact message (verbatim) as received by the AO from the Investigation Wing concurring this case has not been brought by the AO on the records of the case. The material on the basis of which the AO recorded the satisfaction of Assessee’s income escaping assessment remains ambiguous, undefined and unstated. The Investigation Wing simply stated that the fact of rotation of funds could have escaped verification in assessment. That report did not anyway suggest any definite escapement of income. In the absence of that crucial finding, which indeed is the relevant and tangible material to propose any escapement of income, nothing can be said confidently as to the factum of escapement of any income of the Assessee through the rotation of funds as reported. It is with reference to the contents of that material contained in the report of the Investigation Wing that the nexus of the reasons for the AO’s formation of the belief of escapement of income of the Assessee would have to be tested. Absent that foundational material the test would without doubt fail.”
11. That mere cash deposit is not income. Deposits in a savings account may come from past savings, agricultural receipts, sale of assets, loans or exempt receipts. The Delhi High Court in CIT v. Indo Arab Air Services (2016) 283 CTR 92 (Del) held that mere information of huge cash deposits in bank accounts cannot give a prima facie belief of escapement.
8. That no independent enquiry equals borrowed satisfaction. Acting on information without applying mind vitiates reopening: Signature Hotels (P) Ltd. v. ITO (2011) 338 ITR 51 (Del); CIT v. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del); Pr. CIT v. Meenakshi Overseas (P) Ltd. (2017) 395 ITR 677 (Del); Pr. CIT v. RMG Polyvinyl (1) Ltd. (2017) 396 ITR 5 (Del). Recently, Chandni J. Ahuja v. UOI (Bom HC, WP 231/2016, dt. 01.03.2024) quashed reopening on CIB data where the Department itself said the matter needed verification a “fishing enquiry”. Further, the AIR/CIB report referred to in the reasons was never furnished, contrary to SABH Infrastructure Ltd. v. ACIT (2017) 398 ITR 198 (Del).
9. That the Revenue’s likely reliance is misplaced.ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC) and Raymond Woollen Mills Ltd. v. ΙΤΟ (1999) 236 ΙTR 34 (SC) only bar an enquiry into the sufficiency of material; the existence of material having a live link with escapement is always justiciable (Lakhmani Mewal Das, supra). Here no such material exists beyond an unverified deposit.
Ground No. 9:
10. Section 151 is a quasi-judicial safeguard, not a formality. ChhugamalRajpal (SC, supra) struck down reopening where the Commissioner merely wrote “Yes”. The identical words “Yes, I am satisfied” were held mechanical in CIT v. S. Goyanka Lime & Chemical Ltd. (2015) 231 Taxman 73 (MP), SLP dismissed (2015) 237 Taxman 378 (SC). Also Pr. CIT v. N.C. Cables Ltd. (2017) 391 ITR 11 (Del); United Electrical Co. (P) Ltd. v. CIT (2002) 258 ITR 317 (Del); Central India Electric Supply Co. ν. ΙΤΟ (2011) 333 ITR 237 (Del); Pr. CIT v. Pioneer Town Planners (P) Ltd. (Del HC, ITA 91/2019, dt. 20.02.2024); ΙΤΟ v. Virat Credit & Holdings (P) Ltd. (ITA 89/2012, ITAT Delhi).
11. The judgements given in Experion and Agroha Fincap do not help the Revenue: In both, the reasons were founded on concrete investigation material (in Agroha, search findings of Rs. 25 lakh accommodation entries from a named entry-operator group). Experion itself distinguished United Electrical because there the reopening had no material foundation. The present case is squarely based on United Electrical Co. P. Ltd. v. Commissioner of Income-Tax (2002), not Experion: when the reasons on their face disclose only an unverified deposit, an authority that had truly applied its mind could never have been “satisfied”. The sanction therefore proves its own non-application of mind and falls with the reasons (see also BIC Cello (India) (P) Ltd. v. ACIT, Bom HC, 2024). A Supreme Court ruling (Chhugamal Rajpal) and an SLP dismissal on identical wording (S. Goyanka) must prevail.”
5. Ld. Departmental Representative relied on impugned order.
6. From examination of record in light of aforesaid rival contention, it is crystal clear that the ld. CIT(A) vide order dated 25.02.2026 upheld the validity of reassessment proceedings initiated u/s 147/148 of the Act. Grounds of Appeal Nos. 8 & 9 regarding the reopening of case u/s 148 of the Act.
6.1 Ld. AO recorded following reasons for reopening:
“This office is in possession of AIR/CIB information in the case of the assessee that he has deposited an amount of Rs. 22,50,000/- in cash in his saving bank a/c in Axis Bank, Sector-18, Noida.
From the details available on ITD the assessee has filed his ITR for A.Y. 2011-12 of Rs. 10,78,290/- only. Therefore, the nature and source of cash deposits of Rs. 22,50,000/- remains unverified.
In view of the foregoing facts and observations above, I have reason to believe that the sum of Rs. 22,50,000/- has escaped the assessment for A.Y. 2011-12.
As per the above facts and observations, it is apparent that the income chargeable to tax that has escaped assessment in this case is more than one lakh rupees and as such, the condition for issuance of notice u/s 148 contained in section 149(2) of the IT Act, 1961 is fulfilled.”
6.2 Ld. AO in the reason mentioned word “unverified” ld. PCIT approved the reason by mentioning “yes I am satisfied”. The only material referred in reasons is page no. 14 and 15 of paper book is AIR/CIB information of cash deposit of Rs. 22,50,000/- in Axis Bank account compared with returned income of Rs. 10,78,290/- with the recital that the deposit remained “unverified”. No enquiry, no notice to bank or the assessee or any other material was referred.
6.3 A Co-ordinate Bench in East Delhi Leasing Pvt. Ltd. vs. ITO, ITA No. 7917/Del/2019 decided on 10.04.2024, in para No. 8 to 10 observed as under:
“8. A perusal of the reasons recorded by the ld. AO would show that on the mere suggestion of the investigation wing of the rotation of funds escaping assessment, the reassessment proceedings have been initiated by the ld. AO in the belief of escapement of income of the assessee. Apparently as between the information received and the inference drawn by the ld. AO, there is absolutely no live link or nexus which would enable him to form a belief that income of the assessee had escaped assessment warranting reopening u/s 147 of the Act. Absence of live link between the material on record and the satisfaction recoded completely mutilates the validity of the action of the ld. AO. It is with reference to the contents of the material contained in the report of the investigation wing that the nexus of the reasons for the ld. AO’s formation of belief of escapement of income of the assessee would have to be tested. Absent that foundational material, the test would without doubt fail. Reliance has been rightly placed by the ld. AR before us on the decision of Hon’ble Supreme Court in the case of ITO vs Lakhmani Mewal Das reported in 103 ITR 437 (SC) , wherein at page 448, the Hon’ble Apex Court held as under:-
“As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words “definite information” which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the information is wholly vague, indefinite, far-fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretense.
The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are “reason to believe” and not “reason to suspect”. The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter’s failure or omission to disclose fully and truly all material fact was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned judges in the High Court, in our opinion, were not in error in holding that the said material could not have led escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs.
(Emphasis supplied by us hereinabove)”
9. It is equally trite law that an assessment cannot be reopened for making fishing and roving enquiries. Reliance in this regard is placed on the decision of Hon’ble Bombay High Court in the case of PCIT vs Sheetal Dushyant Chaturvedi reported in 134 taxmann.com 327 (Bom) wherein the Special Leave Petition (SLP) preferred by the revenue before the Hon’ble Supreme Court was dismissed in 285 Taxman 85 (SC). Similar views were taken in the following cases:-
a) Decision of Hon’ble Punjab & Haryana High Court in the case of Vipin Khanna vs CIT reported in 255 ITR 220 (P&H).
b) Decision of Hon’ble Jurisdictional High Court in the case of Ranbaxy Laboratories Ltd vs CIT reported in 200 taxman 242 (Del).
10. In view of the aforesaid observations and respectfully following the various judicial precedents relied upon hereinabove, we have no hesitation to quash the reassessment on the ground that the ld. AO had invalidly assumed jurisdiction u/s 147 of the Act in the facts and circumstances of the instant case. Since the entire reassessment is quashed, the other grounds raised by the assessee on merits of the addition need not be adjudicated and they are left open.”
7. In view of above material facts and following judicial precedents, the reassessment proceedings u/s 147/148 of the Act being illegal are set aside. Ground of Appeal Nos. 8 and 9 are accepted. Ground of Appeal Nos. 1 to 7 and 10 to 15 are left open.
8. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 29.09.2026
