TMI Blog2018 (11) TMI 1953X X X X Extracts X X X X X X X X Extracts X X X X ..... g the view that income had escaped assessment, overlooking that the sources of the deposits need not necessarily be the income of the assessee; and that as such, the reasons recorded were not sufficient to believe escapement of income; that rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s 148 of the Act. The reasons recorded by the AO for issuance of notice u/s 148 of the Act are held to be invalid, being reasons not sufficient to form belief of escapement of income, based on vague information. All proceedings pursuant thereto are thus annulled and cancelled. Assessee appeal allowed. - SHRI A.D JAIN, VICE PRESIDENT For the Appellant : Shri Rakesh Garg, Advocate For the Respondent : Shri C.K. Singh, DR ORDER This is assessee s appeal for Assessment Year 2009-10, taking the following grounds: 1. The Ld. CIT[A] has erred in law and facts in conforming addition of cash deposit in assessee's SB A/c's amounting to Rs. 40,23,661/- as income of the assessee ignoring the fact that bank accounts were operated fraudulently by fabrication of signature of the assessee and subject matter of Chargesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pursuant thereto are bad in law; that it is a case of a roving and fishing enquiry, which is not permissible in law; that merely on the basis of AIR information, it cannot be concluded that there is escapement of income. 6. On the other hand, the ld. DR has contended that it was the AIR information, which formed the basis of the AO s belief of escapement of income of the assessee, amounting to Rs. 28,18,210/-, representing cash deposits in the savings bank account of the assessee; that the source of such deposits, the nature thereof and the extent of business were not explained, the assessee having not filed any return of income; that therefore, the AO s formation of belief of escapement of income is justified; and that the AO was, as such, correct in issuing the notice u/s 148 of the Act to the assessee. 7. Heard. The facts are not disputed. A bare perusal of the reasons recorded for issuance of notice u/s 148 of the Act, shows that the only material available before the AO was the AIR information of the assessee having deposited an amount of Rs. 28.11 lakhs in his savings bank account. The assessee was issued a notice u/s 148 of the Act in pursuance to the aforesaid reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Hindusan Lever Ltd. vs. R.B. Wadkar , 268 ITR 332 (Bom.), to hold that the reasons recorded for reopening the assessment are to be examined on a standalone basis and nothing can be added to the reasons. It was also observed that the reasons must point out to an income escaping assessment and not merely need of an enquiry which may result in detection of an income escaping assessment. It was observed that it is necessary that there must be something which indicates, even if it does not establish, the escapement of income from assessment; that it is only on that basis that the AO can form a prima-facie belief that an income has escaped assessment; that merely because some further investigations have not been carried out, which, if made, could have led to detection of an income escaping assessment, this can not be reason enough to hold the view that the income has escaped assessment; and that there has to be some kind of cause and effect of relationship between the reasons recorded and the income escaping assessment. The observations of the Hon ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das , 103 ITR 437 (SC), were reproduced, as under: the reasons for the forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escapement assessment. 48. The Tribunal concluded thus: but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does not lead to income being taxed in the hands of the assessee. Learned Departmental Representative has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen is existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. There cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather than desirability of further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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