The ITO, Ward-1, Gandhinagar V. Shri Ashokkumar Bhavanbhai Patel, Gandhinagar

ITA 1427/AHD/2019

AI Insights

This case involves cross-appeals by the Income Tax Officer (ITO), Ward-1, Gandhinagar, and Shri Ashokkumar Bhavanbhai Patel against the orders of the Commissioner of Income-tax (Appeals), Gandhinagar. The appeals pertained to reassessment proceedings for the assessment years 2010-11 to 2012-13, initiated under section 147 of the Income Tax Act, 1961, due to alleged escapement of income from unexplained cash deposits in the assessee's bank account. The Tribunal examined whether the AO had sufficient reasons to believe that income had escaped assessment, focusing on the adequacy of the reasons recorded for reopening the assessments. The Tribunal concluded that the mere fact of cash deposits did not suffice to establish a belief of escapement of income, leading to the quashing of the reassessment orders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133573 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-12-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 10-09-2019
• Other Referred Cases: Mariyam Ismail Rajwani vs ITO, Smt. A. Sridevi vs ITO, Bir Bahadur Singh Sijwal vs ITO, ITO vs Lakhmani Mewal Das, Hindustan Lever Ltd. vs RB Wadekar, Phool Chand Bajrang Lal vs ITO, Mithila Credit Services Limited vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Source of fund; Reassessment proceedings; Set aside
• Section: 147; 148; 142(1); 143(1); 142(2A)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.1425 to 1427/Ahd/2019 Assessment Year :2010-11, 2011-12 and 2012-13 ITO, Ward-1 Gandhinagar. Vs. Shri Ashokkumar Bhavanbhai Patel 4-3. Sector 8B Gandhinagar. PAN : ANXPP 2639 J ITA No.1461 to 1463/Ahd/2019 Assessment Year : 2010-11, 2011-12 and 2012-13 Shri Ashokkumar Bhavanbhai Patel 4-3. Sector 8B Gandhinagar. Vs. ITO, Ward-1 Gandhinagar. (Applicant) (Responent) Assesseeby : Shri Rajesh Shah, AR Revenue by : Shri A.P. Singh, CIT & Pooja Parekh, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 1 4 / 1 2 / 2 0 2 2 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 0 6 / 0 3 / 2 0 2 3 आदेश/O R D E R PER BENCH These are cross-appeals filed by the Revenue and assessee against orders passed by the Commissioner of Income-tax (Appeals), Gandhinagar, Ahmedabad [hereinafter referred to as “the ld.CIT(A)”] dated 1.7.2019, 11-7-2019 and 12-7-2019, under section 250(6)of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] pertaining to the Asst.Years 2010-11 to 2012-13 respectively. ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 2 2. It was pointed out that all the appeals arose from orders passed in reassessment proceedings initiated on the assessee in the impugned years ,as per the provision of section 147 of the Act, which reassessment proceedings were initiated for identical reasons, being escapement of income on account of cash found deposited in the bank account of the assessee. That all assessments resulted in treating the cash deposits as unexplained and thus income of the assessee from undisclosed sources alongwith several other additions made. The ld.counsel for the assessee contended that the facts and circumstances leading to the additions in all the cases were identical, and therefore, all the appeals be taken up together for hearing and adjudication. The ld.DR fairly agreed to this, and therefore all the appeals were heard together and are being disposed of by this common consolidated order. 3. The ld.counsel for the assessee pointed out that in the appeals filed by the assessee for each of the assessment years involved in ITA No.1461 to 1463/Ahd/2019, the assessee has challenged the validity of the assessment framed under section 147 of the Act. Therefore, the appeals of the assessee were taken up first for hearing. ITA No.1461 to 1463/Ahd/2019,Assessees Appeals A.Y 2010-11 to 2012-13 4. The assessee has in all the appeals raised identical legal ground challenging validity of the assessment framed under section 147 of the Act in ground no.1. For the sake of brevity and convenience, we arereproducingGround No.1 raised by the assessee in ITA No.1461/Ahd/2014for A.Y 2010-11as under: ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 3 “l. That the reopening of the assessment u/s 147 of the I. T. Act to verify cash deposits amounting to Rs. 15,80,000/- with HDFC Bank which the assessee had not offered as an income for taxation in the ITR is absolutely bad-in-law and also because every receipt is not necessarily an income as per the judicial decisions, the re-opening of the assessment and the consequential assessment order passed be cancelled.” 5. The ld.counsel for the assessee contended that his arguments against validity of assessment framed was that reasons recorded by the AO for reopening of the case of the assessee could not have been lead to belief of escapement of income at all. In this regard, he drew our attention to reasons recorded by the AO in each of the assessment years. Taking us first to PB page no.48 filed before us, dated 1.4.2021 which was reasons recorded by the AO for reopening of the case of the assessee pertaining to Asst.Year 2010-11. He then took us to PB Page No.50 containing reasons for reopening of the assessment for Asst.Year 2011-12 and PB Page No.52 containing the reasons recorded for reopening of the assessment for Asst.Year 2012-13. They read as under: ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 4 ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 5 6. Referring to the above, he pointed out that the reasons were identically recorded noting that there was cash found deposited in the bank account of the assessee; that the assessee though had filed return of income but had not disclosed the source of fund for depositing such amounts, and therefore, the assessee had failed to disclose fully and truly all incomes for taxation, and further to verify the source of income, the AO formed reason to believe that income chargeable to tax has escaped assessment. 7. The ld.counsel for the assessee contended that the solitary fact of cash deposited in the bank account of the assessee could not have lead to formation of belief to escapement of income, more particularly, when the reasons for reopening categorically stated that reopening was resorted to verify the source of income and the transaction. He pointed out that in aforementioned facts and circumstances, as noted in reasons, the ld.AO could not be stated to have formed belief of escapement of income, and therefore, reopening done by the assessee was bad in law. He thereafter contended that this plea had been raised by him before the Ld.CIT(A) also and in support reliance had been placed on the decision of the ITAT Ahmedabad Bench *in the case of Mariyam Ismail Rajwani vs ITO in ITA No. 676 /Ahd/2016 dated 09/08/2016.Ld.Counsel for the assessee pointed out that the Ld.CIT(A) dismissed this contention at para 5.2 to 5.11 of his order and while doing so distinguished the decision relied upon by the assessee in support of his contention at para 5.5 (ii) of the order as under: “In this decision, the Hon'ble ITAT, SMC Bench, Ahmedabad has allowed the appeal of the assessee stating that mere cash deposit in the bank ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 6 account will not be the basis of reopening of the case. Here it is pertinent to mention that the appellant has been very irregular in compliance of his legal obligations as far as Income Tax provisions are concerned. The entire sequence of events has been narrated by the AO in his letter dated 31-07- 2017 by specifically mentioning the failure on the part of the appellant in true disclosure of the particulars of his income. The subsequent enquiries made by the AO justifies this action which is being discussed in this order.” He pointed out that theld.CIT(A) has distinguished the said case stating that consequent event narrated by the AO in his letter dated 31.3.2017 specifically mentioning the failure on the part of the assessee in making true disclosure of the particulars of his income ,justified his action. He drew our attention to this letter which was separately filed before us on 1.9.2022. He pointed out fromthesame that there was nothing specifically pointed out in the said letter relating to failure on the part of the assessee to make true disclosure of particulars of income. In fact,he pointed out that in the said letter, the AO had accepted the fact that the assessee did file his return of income for two years i.e.Asst.Year 2010-11 and 2011-12, but has not disclosed the source of fund for depositing such amounts in the bank accounts. He thereafter stated that rest of the letter only referred to non- compliance by the assessee to file return in response to the notice under section 148 of the Act. He stated, therefore, that the distinction pointed out by the ld.CIT(A) with the decision of the ITAT, Ahmedabad Bench in the case of Mariyam Ismai lRajwani Vs. ITO in ITA No.676/Ahd/2016 dated 9.8.2016 was not applicable. 8. He thereafter drew our attention to para 5.6 of the order. He pointed out that theld.CIT(A) had relied on the decision of Hon’ble Madras High Court in the case of Smt.A. Sridevi (supra) while ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 7 upholding the sufficiency of reasons recorded for reopening the case of the assessee as under: “5.6 Having perused all the relevant decisions relied upon by the appellant and treating the same as distinguishable, it is held that none of the relied upon 'case is applicable to the facts of the appellant's case as discussed in detail while dealing with these grounds of the appeal. Here, the appellant has challenged the reassessment notice mainly on the ground that it was issued only on cash deposits in the bank account and there is no reason to believe that how cash deposits represent income from undisclosed sources. It was argued that all receipts are not income and all incomes are not taxable income. The appellant has relied heavily on the decision of Hon'ble Ahmedabad ITAT in the case of Smt. Mariyam Ismail Rajwani. However, the ratio of said decision cannot be made applicable in view of recent decision of Hon'ble Madras high court in the case of SmtA Sridevi [2018] 100 taxmann.com 434 wherein it is held as under: " 69, read with sections 147 and 149, of the Income-tax Act, 1961 – Unexplained investment (Loans/advances) - Assessment year 2009- 10 - Assessee filed her return of income which was processed under section 143(1) - Subsequently, case was reopened by issuing a notice under section 148 and, further, reassessment order was passed making addition in respect of unexplained cash credit - Later on, Income Tax Officer, once again reopened assessment by issuing notice under section 148 - Reason furnished for reopening of assessment was that assessee had given certain advance to one, 'SN' for purchase of property and source of amount so paid was not : explained - Assessee raised an objection that there was full and true disclosure of all material facts as when earlier reassessment proceedings took place; she had filed all necessary details including cash flow, which reflected payments made to SN as advance, and, therefore, reopening of assessment was not permissible - It was noted that merely because a cash flow statement was appended by assessee it could not be taken to be established that assessee had made full and true disclosure of advance paid to SN - Further, assessee had not filed balance sheet or statement of affairs related to such advance - Even when reassessment proceedings were commenced by issuance of notice, assessee did not file a fresh return of income, but informed Assessing Officer to treat return of income filed as return in response to notice under section 147 - Whether, on facts, it could not be said that there was full and true disclosure made by assessee pertaining to transactions with SN and; therefore, impugned reassessment proceeding was justified - Held, yes [Paras 17, 20 and 21] [In favour of revenue]" The Hon'ble High court in above case held that where the reassessment proceedings were initiated against assessee on the ground that the assessee had advanced several crores of rupees to a party but source of such amount was not explained, since the assessee had not filed balance sheet or statement of affairs related to such advance, impugned reassessment proceedings were justified. Considering above facts, above ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 8 plea raised by the appellant is rejected. The AO has issued notice u/s 148 of the Act as per provisions of the Act and consequential reassessment order cannot be held to be invalid as claimed by appellant.” 9. He stated that facts and circumstances of this case were completely distinguishable from the facts of Mariyam IsmaIl Rajwani (supra) since in that case the issue was regarding addition made in respect of unexplained cash credit which was not disclosed in the financial statement filed by the assessee, and therefore, the formation of belief by the AO of escapement of income was held to be in order. 10. The ld.DR, on the other hand, drew our attention to para 5.2 to 5.4 of the CIT(A)’s order and finding at para 5.4 to 5.6 distinguishing the case law relied upon the assessee and the decision relied upon by the ld.CIT(A) to uphold sufficiency of reasons for assumption of jurisdiction to reopen the case of the assessee. 11. We have heard rival contentions and have carefully gone through orders of the authorities below; the reasons recorded in all three cases before us, and also decision relied upon both the assessee and the ld.CIT(A) while adjudicating the issue. 12. We find merit in the contentions of the ld.counsel for the assessee that the information with the AO was not sufficient to form belief of escapement of income and thus the jurisdiction assumed to reopen the cases of the assessee for the impugned years by the AO was not in accordance with law. As is evident from the reasons recorded by the AO for reopening the case of the assessee, the only information in the possession of the AO was cash found deposited in the bank account of the assessee amounting to Rs.15,80,000/- for Asst.Year. 2010-11; ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 9 Rs.12,16,500 for Asst.Year 2011-12 and Rs.18,46,500/- for Asst.Year 2012-13 along with fact that for Asst.Year 2010-11 and A.Y 2011-12 the assessee had filed return of income. Thereafter, he proceeded to state that the assessee has not disclosed source of fund for depositing cash in the bank account of the assessee; that there was failure to fully and truly disclose all income for taxation. 13. Firstly, the AO has not mentioned in his reasons recorded where and how such disclosure was mandatorily required to be made by the assessee. The Ld.DR was also unable to point out the same and the Ld.Counsel for the assessee maintained that no such disclosure was required to be made in the return of income filed. In the absence of any requirement to disclose source of deposit, the non disclosure of the same cannot lead to the inference that assessee has failed to make any material disclosure, leave alone disclosure of particulars relating to the income of the assessee. With no mandate to disclose source of deposit, the sole information of cash deposited in the bank account of the assessee, we hold, could by no stretch have lead to the formation of belief of escapement of income .At best it could have lead to a suspicion, but not a belief of escapement of income. The fact that the AO sets out in his reason that the case is being reopened to verify the source of cash deposits cements our findings that the information only lead to a suspicion of escapement of income and not belief. This fine distinction between a belief and suspicion of escapement of income has been aptly brought out in the case of Mariyam Ismail (supra) where, relying upon the decision of the ITAT in the case of Bir Bahadur Singh Sijwal Vs ITO (2015) 68 SOT 197 URO (Del),pointing out that facts, which if established to be correct, ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 10 will have a cause and effect relationship with income escaping assessment, the said facts would lead to belief of escapement of income. While facts,if established to be correct, would only lead to further inquiries which may lead to detection of escapement of income, such facts would only lead to suspicion of escapement of income. The said decision also makes reference to the observations of the Hon’ble Apex Court in the iconic decision of ITO vs Lakhmani Mewal Das (1976) 103 ITR 437 (SC), that reasons for formation of belief must have rational connection with the formation of belief- that there must be direct nexus between material coming to the notice of the AO and the formation of belief of escapement of income.That not any and every material howsoever vague,or distant would warrant formation of belief of escapement of income.The relevant portion of the order is reproduced hereunder: “5. Having heard the rival contentions, and having perused the material on record, I see no reasons to take any other view of the matter than the view taken by the division bench, in the case of Bir Bahadur Singh Sijwali (supra), as follows :- “3. This assessment was reopened, as noted in the reasons recorded for reopening the assessment- furnished to the assessee vide Assessing Officer’s letter dated 25th April 2012, on the following ground: During the financial year 2007-08, the assessee has made transaction of Rs 10,24,100 (deposits in cash) in his saving bank account but no return of income was filed by the assessee. As such, it was reason to believe that there is an escapement of income at Rs 10,24,100 on the part of the assessee. Therefore, in the light of the above fact that the income chargeable to tax for the assessment year 2008-09 has escaped assessment within meanings of section 147 of the Income Tax Act, notice was issued under section 148 on 14.9.2009 which was served upon the assessee through his counsel Sri Arun Kumar Agarwal, Advocate, on 14/09/2009. ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 11 4. The short question that we are required to adjudicate is whether or not, on the basis of the above reasons, reassessment proceedings can be lawfully initiated. This aspect of the matter was not examined by the CIT(A), but, as is the settled legal position in the light of Hon’ble Supreme Court’s judgment in the case of National Thermal Power Co. Ltd Vs CIT [(1198) 223 ITR 383], the assessee is not precluded from raising this legal issue at this stage, on the ground that the same has not been raised before the authorities below. Learned Departmental Representative, in all fairness, did not raise this technicality either. We, therefore, proceed to examine this issue on merits. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. A plain look at the reasons for reopening the assessment, as produced before us, show that these reasons were recorded after the notice was served on 14th September 2009 as a mention about the fact of service of notice is set out in the recorded reasons itself. It is only elementary that the reasons are to be recorded before issuance of notice, and in the absence of any reasons for reopening having been recorded prior to reopening of assessment, the reassessment proceedings fail for this short reason alone. Hon’ble Bombay High Court, in the case of Prashant S. Joshi vs. ITO [(2010) 230 CTR (Bom) 232.] has observed: "The AO must have reasons to believe that such is the case (i.e. any income chargeable to tax has escaped assessment for a particular year) before he proceeds to issue notice under s. 147". In other words, when no reasons are recorded for reopening the assessment prior to issuance of notice, the reassessment proceedings must fail for that reason alone. However, for the reasons we will set out now, the conclusions will be no different even if it is presumed that this communication, extracts from which are reproduced before, only conveys the reasons already recorded prior to issuance of notice. 7. It is well settled in law that reasons, as recorded for reopening the reassessment, are to be examined on a standalone basis. Nothing can be added to the reasons so recorded, nor anything can be deleted from the reasons so recorded. Hon’ble Bombay High Court, in the case of Hindustan Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR 332], has, inter alia, observed that "..........It is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded. It is for the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons." Their Lordships added that "The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence....". Therefore, the reasons are to be examined only on the basis of the reasons as recorded. The next important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment, all that is ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 12 necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of income having escaped assessment is proved to the hilt. What is, however, necessary is that there must be something which indicates, even if not establishes, the escapement of income from assessment. It is only on this basis that the Assessing Officer can form the belief that an income has escaped assessment. Merely because some further investigations have not been carried out, which, if made, could have led to detection to an income escaping assessment, cannot be reason enough to hold the view that income has escaped assessment. It is also important to bear in mind the subtle but important distinction between factors which indicate an income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. While dealing with this aspect of the matter, it is useful to bear in mind the following observations made by Hon’ble Supreme Court in the case of ITO Vs LakhmaniMewal Das [(1976) 103 ITR 437], “the reasons for the formation of the belief must have 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 ITO and the formation of this 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 sufficiency or adequacy of the material and substitute its own opinion for that of the ITO 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. 8. Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs 10,24,100 have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 13 negative. The Assessing Officer has opined that an income of Rs 10,24,100 has escaped assessment of income because the assessee has Rs 10,24,100 in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the 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 escaped assessment. 9. Learned Departmental Representative has referred to a number of judicial precedents in support of her stand that even deposits in the bank account, as having come to the notice of the Assessing Officer through AIR, can be reason enough for holding the belief that income has escaped assessment. She has relied upon the decisions in the cases of CIT Vs Nova Promoters &Finlease Pvt Ltd [(2012)342 ITR 169] but then none of the questions before Hon’ble High Court had anything to do with reopening of assessment and this decision can not, therefore, be taken as an authority on the legal issue which did not even come up for specific adjudication before Their Lordships. As for her reliance on Hon’ble Supreme Court’s judgment in the case of Phool Chand Bajrang Lal Vs ITO [(1993) 203 ITR 456], that was case in which Their Lordships concluded that the AO “rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assessment” and we are unable to see anything on the facts of the present case which are materially similar to the facts of the said case. As regards her reliance on the decision of a coordinate bench in the case of Mithila Credit Services Limited Vs ITO (ITA No. 1078/Del/2013; order dated 23.5.2014), it is important to bear in mind the fact that it was a case in which the Assessing Officer had reopened the assessment on the basis of receipt of information from Directorate of Investigation, and, as noted by the Assessing Officer in the reasons recorded for reopening the assessment, “the name of the assessee figures as one of the beneficiaries of these alleged bogus transactions” in the information given by the directorate. If the assessee was a beneficiary of such a scam, the income was indeed to have been taxed in its hands 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 as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, 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 probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn. ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 14 10. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.” 14. In the present case,the mere information of cash deposit, we hold, could not by itself have lead to formation of belief of escapement of income. The decision in the case of Mariyam Ismail (supra) and Bir Bahadur Sijwal (supra) being rendered in identical backdrop of facts holding cash deposits being insufficient information to lead to belief of escapement of income, the said decisions squarely apply to the present case. 15. Further, as per the reasons recorded, the assessee had filed his return of income for Asst.Year 2010-11 and 2011-12. The AO formed belief of escapement of income amounting to Rs.12,16,500/- and Rs.18,46,500/- for the said two years. In his reason recorded, the AO has not even mentioned the income which the assessee had returned to tax in these years. We fail to understand that without taking note of the quantum of income returned to tax, how could the AO have formed belief of escapement of income to the extent of cash found deposited in the bank account of the assessee. In the circumstances, the return of income disclosed sufficient income returned to tax so as to justify cash deposited in the bank account of the assessee, there could not have been any possibility of formation of belief of escapement of income. 16. Further, we find that even as per the reasons recorded, the reopening was resorted to by the AO to verify source of cash deposited. It is settled law that reopening cannot be resorted to make fishing and roving inquiries and for verification purpose. ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 15 For the above reasons, therefore, we hold that the reasons recorded for reopening of the case of the assessee were not sufficient to form belief of escapement of income and jurisdiction assumed by the AO, therefore, to frame assessment under section 147 of the Act was bad in law. The order passed, as a consequence, in all three appeals by the AO, is held to be invalidly passed and accordingly set aside. 17. Before we conclude, we may add that the decision relied upon by the ld.CIT(A) in the case of Sridevi(supra) to distinguish the decision of ITAT, Ahmedabad in the case of Mariyam Ismail Rajwani (supra) is clearly distinguishable on facts. As rightly pointed out by the ld.counsel for the assessee, in the facts of the said case, the escapement of income was vis-à-vis unexplained loans and advances particulars relating to which, had not been disclosed truly and fully in the financial statement of the assessee. In the present case, the case of the AO is that the assessee was required to disclose the source of cash deposited in the return of income, while the fact is that there is no such requirement in law to disclose such information. Therefore, the said decision of Hon’ble Madras High Court is not applicable to the facts of the present case and has been incorrectly applied by the ld.CIT(A) while upholding sufficiency of the reasons recorded in the present case. 18. The ld.CIT(A), we have noted, while dismissing the assessee’s contention of insufficiency of reasons while challenging validity of jurisdiction assumed by AO to reopen the case of the assessee, and while distinguishing decision of Mariyam Ismail Rajwani (supra) ,has relied on the fact that the assessee is very irregular in compliance of his legal obligations as far as income-tax provisions are concerned, and sequence of events narrated by the AO in his letter dated ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 16 31.7.2017 specifically mentioned the failure of the assessee to disclose particulars of income and further that subsequent inquiries by the AO justified this action. The letter dated 31.7.2017 has been placed before us in PB filed on 1.9.2022 at page no.57 onwards, have been gone through by us. A perusal of the same reveals that the AO has merely reiterated contents of his reasons recorded, and thereafter dealt with non- compliant attitude of the assessee in the re-assessment proceedings initiated, pointing out that various notices issued to the assessee under section 148, 142(1) etc. remained un-complied with, as also, the assessee had not cooperated in special audit directed in its case u/s 142(2A) of the Act. Moreover, the ld.CIT(A) also makes some mentions of the subsequent events justifying the reopening. In this regard, basis of assumption of jurisdiction is the belief of the AO based on information in his possession that income has escaped assessment. It is this reason to believe so, that gives him jurisdiction to reopen the case of the assessee. Therefore, this information at the time of formation of belief of the AO, which is relevant and is to be tested for its sufficient or insufficiency for the formation of belief of escapement of income. Nothing can be added to it nor deleted from it, and no subsequent events can be taken into consideration for strengthening reasons for formation of belief of escapement of income. Hon’ble Bombay High Court in the case of Hindustan Lever Ltd. Vs. RB Wadekar (2004) 268 ITR 332 has observed that the reasons are required to be read as recorded by the AO; no substitution or deletion is possible. Event subsequent to the reopening in the present case taken note by the ld.CIT(A) for upholding the validity of the assumption of jurisdiction by the AO, we hold, only added to the reasons recorded, and therefore, they ITA No.1425 to 1427/Ahd/2019 ITA No.1461 to 1463/Ahd/2019 17 cannot be considered for strengthening the reasons of the AO. This basis of the ld.CIT(A) for holding the validity of the assumption of jurisdiction by the AO is therefore rejected. In view of the above we hold that the jurisdiction assumed by the AO to reopen the case of the assessee in all the years impugned before us, was invalid. Assessment orders passed for all the years are accordingly set aside. 19. Since we have set aside the assessment order passed as invalid, the rest of the grounds raised by the assessee are not needed to be adjudicated, being a mere academic exercise. Further, the appeals of the Revenue also become infructuous since the assessment order itself has been set aside. 20. In the result, all appeals of the assessee are allowed in above terms; while all appeals of the Revenue are dismissed. Order pronounced in the Court on 6 th March, 2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 06/03/2023