AI Insights
The case involves an appeal by Rama Shanker Pareek against the order of the CIT(A), which had set aside the assessment to the file of the Assessing Officer (AO) for a fresh assessment. The original assessment was based on the belief that the assessee had sold a property and not disclosed the capital gains, along with unexplained cash deposits in his bank account. The Tribunal found that the reasons for reopening the assessment were incorrect and vague, and the necessary procedural requirements, such as the approval from the competent authority, were not met. The Tribunal also highlighted that the additions made by the AO were not in line with the reasons recorded for the reassessment.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 668659 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-06-2025
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2010-2011
Judgement Text
"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 253/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2010-11 Rama Shanker Pareek, Ward No. 9, Hospital Road, Chaksu, Jaipur. cuke Vs. Income Tax Officer, Ward No. 7(2) Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABZPP7158C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Shrawan Kumar Gupta, Advocate jktLo dh vksjls@Revenue by : Shri Gautam Singh Choudhary, Addl.CIT lquokbZ dh rkjh[k@Date of Hearing : 08/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 24/06/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. CIT(A), National Faceless Appeal Centre (in short “NFAC”) Delhi dated 09.12.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2010-11. The assessee has raised the following grounds of appeal :- “1. The impugned order u/s 147 r.w.s.144 of the I. T. Act, 1961 dated 13.11.2017 as well as the action or proceedings u/s 147/144 are illegal, bad in law, barred by limitation, without jurisdiction, without approval/satisfaction from the proper or competent authority, against the principle of natural justice and various other reasons or and further contrary to the real facts of the case hence the same may kindly be quashed. 2 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. 2. The ld. CIT (A) has grossly erred in law as well as on the facts of the case in set- aside the assessment to AO for making a fresh assessment without deciding our legal grounds and other grounds of appeal when all the details were available before him. Hence the order of the ld. CIT (A) are bad in law, invalid, illegal and on facts of the case, for and various other reasons and hence the same may kindly be quashed. 3. Rs. 4,28,000/-: The ld. CIT (A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 4,28,000/- made by the ld. AO on account of cash deposits in the bank account as unexplained investment u/s 69C, also erred in not considering the material and details available on record in their true perspective and sense. Hence the addition so made by the ld. AO and confirmed by the ld. CIT (A) is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A,B&C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 5. That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.” 2. The brief facts of the case are that the assessee is a Government Ayurvedic Doctor and having income from salary and other sources. For the year under consideration, the assessee has filed his return of income on 27.07.2010 declaring the total income of Rs. 3,46,497/- after deduction under section 80C. On receipt of information from ITO (Hq.) vide his letter no. 657 dated 02.07.2015 (PB Pages 3- 4), the AO recorded reason on 27.03.2017 mentioning that “ As per information, the assessee has sold the plot no.72, Gayatri Nagar at Rs. 20,00,000/- on 04.11.2009 through the sale deed which was executed by the Sub-Registrar VIII, 3 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. Jaipur. The assessee has filed his ITR and not disclosed capital gain on this transaction. The property was a capital assets. I have reasons to believe that the income of the assessee of Rs. 20,00,000/- for the assessment year 2010-11 has escaped assessment within the meaning of the provisions of section 147 of the Income Tax Act, 1961. The approval may be given for initiation assessment proceeding u/s 147 of the Income Tax Act, 1961.” On the basis of this information, the AO issued notice under section 148 on 30.03.2017 stating that “Whereas I have reasons to believe that your income chargeable to tax for the assessment year 2010-11 escaped assessment within the meaning of section 147 of the Income Tax Act, 1961 ……….” and requiring the assessee to furnish return of income within 30 days from the service of the notice. As per the assessee, the notice has not been served on the assessee or not received by the assessee. In response to notice u/s 148 the assessee has again filed the return on the same income i.e. Rs. 3,46,497/- on dated 20.09.2017. Thereafter the AO has issued the notice u/s 142(1), in response thereto, the assessee along with his Counsel appeared and filed the details as the assessee has not sold any property but he has purchased the Plot No. 72 at Gyatri Nagar-B, Maharani Farm Durgapura Jaipur from Smt. Rahchna Jain for Rs. 20,00,000/- on dated 04.11.2009. Thereafter, the AO has asked the source of purchase of the property. In response, the assessee has submitted that he had taken the housing loan of Rs. 14.50 lakh 4 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. from LIC Housing Finance Ltd. and remaining amount through bank account. Thereafter, the AO noted that the assessee has made cash deposit of Rs. 4,28,000/- in the bank account on the different dates. The AO asked the source of cash deposit in the bank account. In response thereto, the assessee has stated that the same was out of his and family’s past savings. The AO was not satisfied with the explanation and alleged that the assessee has failed to furnish the explanation in respect of the cash deposit in the bank account. The AO completed the assessment by making the addition of Rs. 4,28,000/- under section 69C on account of unexplained investment made in the property. 3. Aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A) challenging the legality, validity and proceedings under section 147/148 and also challenged the assessment order as invalid illegal and addition on account of cash deposit of Rs. 4,28,000/-. Before the ld. CIT (A), the assessee filed detailed written submissions along with documents as well as additional evidences. The ld. CIT (A) without considering the details submitted and without giving any finding on the legal issues as well as on the merit of the case, set aside the case to the file of the AO for fresh assessment by stating as under :- “ 7. In view of the aforesaid facts of the case like the AO having passed the assessment order as per best judgement case and in view of the newly inserted proviso to section 251(1)(a), I am of the considered view that it would be proper to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment. Accordingly, I set aside the assessment and refer the 5 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. case back to the Assessing Officer for making a fresh assessment. The AO is further directed to provide sufficient and reasonable opportunity of being heard to the assessee. 8. In the result, the assessment order passed by the AO is set aside back to the file of the AO.” 4. Aggrieved by the order of the CIT(A), the assessee preferred appeal before the ld. Us. Before us, the ld. AR of the assessee reiterated the submissions as were made before the appellate authority, and further submitted his written submissions which are being reproduced hereunder :- “SUBMISSIONS: 1. Incorrect or wrong Reasons: At the very outset it is submitted that the reasons recorded itself was wrong, incorrect and without material on record at the time of recording of reasons. Because in the reasons recorded the ld. AO mentioned that “Information has been received from the ITO(Hq) his vide letter No.657 dated 02.07.2015. As per information the assessee has sold the plot No. 72 Gyatri Nagar at Rs.20,00,000/- on 04.11.2009 through the sale deed which was executed by the Sub-Registrar VIII, Jaipur. The assessee has filde his ITR and not disclose capital gain on this transaction The Property was a capital assets. Therefore, I have reason to believe that income of the assessee of Rs.20,00,000/- escaped.” However the assessee has not sold any property and admittedly he had purchased the property. Thus when the very reasons are wrong or incorrect then all the proceedings are invalid. As per information and material before the ld. AO the correct reasons should be as under: “Information has been received from the ITO(Hq) his vide letter No.657 dated 02.07.2015. As per information the assessee has purchased the plot No. 72 Gyatri Nagar at Rs.20,00,000/- on 04.11.2009 through the sale deed which was executed by the Sub-Registrar VIII, Jaipur. The assessee has filed his ITR and not disclose source of investment. And not exapleid the source of cash deposit of Rs.4,28,000/-. Therefore, I have reason to believe that income of the assessee of Rs.20,00,000/- or 4,28,000/ - has escaped.” 1.2 Hence when the reason for reopening itself wrong, incorrect and without material and altogether reverse then all the proceedings are void –ab-initio and liable to be quashed. 6 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. 1.2.1 On this preposition we would like to draw your kind attention on direct decision Honble Gujrat High Court in the case of Mumtaz Hazi Mohamad Memon v/s ITO 408 ITR 268(Guj.) on the very same issue, wherein the Honble Court has held that “11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1,18,95,000/- and two; that the assessee had not filed the return and that therefore his 1/3rd share out of the sale proceeds was not offered to tax. Both these factual grounds are totally incorrect as is now virtually admitted by the Revenue. It is undisputed that the assessee had actually filed the return of income for the said assessment year and income also offered his share of the declared sale consideration to tax as capital gain. The Assessing Officer may have dispute with respect to computation of such capital gain, he cannot simply dispute the fact that the assessee did file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of Rs. 1,18,95,000/- as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was Rs. 50 lakhs. 12. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is Rs. 50 lakhs but the registering authority has valued the property on the date of sale at Rs. 1,18,95,000/- for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited are that the assessee filed no return and that 1/3rd share of the assessee from the actual sale consideration of Rs. 1,18,95,000/- therefore, was not brought to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage the impugned notice. Through the affidavit-in-reply a faint attempt has been made to entirely shift the centre of the reasons to a completely new theory viz. the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was Rs. 50 lakhs and that the assessee had by filing the return offered his share of such proceeds by way of capital gain.” 1.2.2 In the case of Vijay Harish Chandra Patel vs. ITO 400 ITR 167(Guj.) (2018) where it has been held that” When very basis for reopening no longer survives, 7 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. assumption of jurisdiction u/s 147 by AO by issuing notice u/s 148 was without authority of law and could not be sustained. However the ld. AO nowhere stated that what documents he was having with him at the time of recording the reason for the information that there was cash deposits of Rs.55,00,000/-. Hence the observation are wrong and baseless and her own and liable to be ignored. 2.2.3 Recently the Honble ITAT Jaipur Bench Jaipur in the case of Smt. Sushila Chahch v/s ITO in ITA No. 683/Jp/2019 dt. 30.03.2021 has quashed the notice as well as assessment order under the same facts and circumstances of the case copy of order is enclosed. Where it has been held that” In light of aforesaid discussion and following the decision referred supra, where the very foundation for reopening the case is vitiated given that the assessee has filed her return of income disclosing the transaction of sale of immovable property for the specified consideration and offering the same to tax, there cannot be any reasons to believe that income has escaped assessment for the very same transaction the assumption of jurisdiction u/s 147 cannot be sustained and the subsequent proceedings are hereby directed to be set-aside. Also refer Shri Narain Dutt Sharma vs ITO (ITA No.203/JP/2017 dated 07.02.2018). 1.2.5 Also refer recent decision of Honble Delhi High Court in the case of Catchy Prop-Build(P.)Ltd v/s ACIT [2022] 145 taxman.com 510 (Delhi) dt.17.10.2022. 1.2.6 In the case of Rames Bhojprasad Gupta vs. ITO ITA No. 476/SRT/2019, Feb 7, 2022 (2022) 64 CCH 0090 SuratTrib it has been held That Reassessment— Reopening of assessment—AO on basis of AIR information noted that assessee made deposit in his bank account in PNB—AO recorded that in response to notice under section 148; assessee neither filed return of income nor responded— Assessing Officer ultimately by-passing assessment order made addition on account of undisclosed cash deposits PNB'—Assessing Officer also disallowed disallowance under Chapter-VI-A by taking view that no such deduction claimed in original return of income and no evidence to substantiate such deductions were filed—CIT(A) observed that pattern of withdrawal support contention of assessee is that deposit in bank were pertaining to business of its scrap—Accordingly, accepted transaction—CIT(A) on basis of pattern of deposit and withdrawal in PNB concluded that assessee shifted a part of his business turnover to undisclosed bank account—CIT(A) calculated profit on account of undisclosed sales, credit in bank account and accordingly worked out addition and directed Assessing Officer that while computing income of assessee—Held, Assessing Officer recorded that assessee filed return in his return of income and revised return of income, as \"It was also noted by undersigned that assessee had returned income of Rs.3,56,170/- in his return of income and in revised return of income, 8 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. assessee returned income of Rs.5,00,660—Thus, during re-assessment, Assessing Officer was very well aware i.e., return was filed by assessee—AO recorded that on verification of details in ITD, it was seen that assessee has not filed return and assessee has not complied with verification letter—Assessing Officer has not recorded as to how said notice was served upon assessee or not—Reasons recorded was provided by AO vide letter dated 21.09.2017 which was received by assessee on 23.09.2017 and subsequently assessment order passed on 29.09.2017 by taking view that despite repeated notice and show cause assessee was not made proper compliance—On similar ground of reasons of reopening wherein Assessing Officer recorded that assessee has not filed return and in fact, return was filed by assessee, re-assessment were held as invalid by co-ordinate Bench of this Tribunal, in case of Rinakumar A. Shah ( ITA No. 172/AHD/2017 holding that Assessing Officer may have dispute with respect to computation of such capital gain, he cannot simply dispute fact that assessee did not file return— Entire reasoning recorded by AO for initiation of reassessment proceeding and issuance of notice under section 148 was on wrong and incorrect facts that assessee has never filed return of income, and in fact, it was filed—Initiation of reassessment proceeding u/s.147 and notice under section 148 and all subsequent proceedings and orders have been issued, conducted, passed without having valid jurisdiction, and therefore, same are bad-in-law and hence, same is quashed— CIT(A) estimated income @ 51.84% on account of undisclosed sales—Assessee claimed that he has shown book net book profit @ 11.45% and in subsequent year Assessing Officer has made addition @ 10% of net profit in assessment order passed under section 143(3—It is settled law that only profit element embedded in undisclosed sale or purchases is to be added not substantial part of transaction— When in subsequent assessment year in AY 2011-12, AO himself made addition only @ 10% of net profit in assessment order passed under section 143(3); book profit shown by assessee @ 11.45% for year under consideration was reasonable and justified—Therefore, assessee also succeeded on merit—Assssee’s appeal allowed. 1.2.7 The Honble Jurisdictional Raj. High Court in the case of ABDUL MAJEED vs. INCOME TAX OFFICER in D.B. Civil Writ Petition No. 7853/2022 Jun 29, 2022(2022) 114 CCH 0245 RajHC (2022) 216 DTR 0305 (Raj), (2022) 327 CTR 0733 (Raj) it has been held “ Reassessment—Issuance of notice under section 148 after proceedings under Section 148A (d)—Writ petition seeks to assail correctness and validity of order passed by respondent, whereby, after initiating proceedings under Section 148A (d) on formation of an opinion that income chargeable to tax has escaped assessment, authority proceeded to issue notice under Section 148—Respondent issued notice under clause (b) of Section 148A on basis of certain information which suggested that income chargeable to tax for assessment year 2015-2016 has escaped assessment within meaning of Section 147—Notice stated that assessee did not disclose this amount of cash deposit during relevant financial year and, therefore, on that basis, proceedings are required to be initiated—Competent authority proceeded to pass an order for 9 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. issuance of notice under Section 148—Thereafter, a notice under Section 148 has been issued to petitioner-assessee—Held, After amendment carried out in income tax under Finance Act, 2021, even before proceedings under Section 148 could be drawn, law requires an order to be passed under Section 148A by conducting an enquiry in manner provided under Section 148A and satisfaction to be arrived at on basis of material available on record that income chargeable to tax has escaped assessment for relevant assessment year—Provision is explicitly clear that Assessing Officer shall, before issuing any notice under Section 148, conduct enquiry, details of which have been contained in Sub Clause (a) (b) & (c), which requires seeking prior approval of specified authority with respect to information; providing an opportunity of being heard to assessee and consideration of reply of assessee—Sub-Clause (d) of Section 148A mandates that after conducting enquiry by affording an opportunity of hearing and consideration of reply, authority shall decide, on basis of material available on record, including reply of assessee, whether or not it is a fit case for issuance of notice under Section148, by passing an order—Notice which was issued to petitioner-assessee by invoking jurisdiction under Section 148A(d) by authority was based on information regarding undisclosed cash deposits reflected by various transactions, which according to authority, was more than Rs.52,00,000—However, when petitioner-assessee filed his reply, he clearly disclosed that total amount of cash deposits in bank by him was only Rs.19,39,000/- and not Rs.52,75,000/- as alleged in notice—Assessee along with his reply annexed complete bank statements showing all debit and credit transactions—Total transactions, which have been shown, do not exceed amount as has been stated by petitioner-assessee—While considering reply and bank statements, competent authority did not dispute transactions, which were placed before it along with reply filed by petitioner- assessee—Therefore, very basis of initiation of proceedings that income exceeding more than Rs.50,00,000/- had escaped assessment, was factually not correct—But then, authority thereafter, without disputing transactions, proceeded to pass an order for issuance of notice under Section 148—Provisions contained in Section 148A (d) referred to hereinabove, clearly show that decision has to be taken on basis of material available on record—Material available on record before authority did not disclose any cash deposit or any other transactions which can be said to have escaped assessment, which was more than Rs.50,00,000—Had it been a case of opening of case within a period of three years having elapsed from end of relevant assessment year, order of authority could be well justified on touch stone of legal requirement as embodied under Section 148A—However, in present case, undisputedly it is a case where more than three years have elapsed from end of relevant assessment year—In that case, in order to initiate proceeding under Sections 148, it is not only required to be shown that some income chargeable to tax has escaped assessment, but also that it amounts to or is likely to amount to Rs.50,00,000/- or more than for that year—Only on basis that cash deposits of Rs. 19,39,000/- chargeable to tax have escaped assessment, without anything more, authority was not justified in jumping to conclusion that assessee may have more bank accounts—If such an interpretation is placed on provision of Section 148A 10 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. (d) with reference to expression ‘material available on record’, then in that case, it will open flood gate and even without availability of any material, authority would be initiating proceedings under Section 148, which will completely frustrate object of incorporation of Section 148A in Act—It is well settled principle of interpretation that taxing statute is required to be construed strictly— Impugned order and proceedings are unsustainable in law—Assessee’s petition allowed”. Also refer Rajhans Processor v/s UOI in DB c Civit Writ Petition No. 16985/2021 dt. 05.01.2023 of Raj. High Court. In the case of Vijay Harish chandra Patel vs. ITO 400 ITR 167(Guj.) (2018) where it has been held that” When very basis for reopening no longer survives, assumption of jurisdiction u/s 147 by AO by issuing notice u/s 148 was without authority of law and could not be sustained. 2. No addition made on the reasons recorded u/s 148: As the ld. AO issued the notice u/s 148 on the reasons recorded as per assessment order that “Information has been received from the IT(Hq) his vide letter No.657 dated 02.07.2015. As per information the assessee has sold the plot No. 72 Gyatri Nagar at Rs.20,00,000/- on 04.11.2009 through the sale deed which was executed by the Sub-Registrar VIII, Jaipur. The assessee has filed his ITR and not disclose capital gain on this transaction The Property was a capital asets.. Therefore, I have reason to believe that income of the assessee of Rs.20,00,000/- escaped.” However on perusal of the assessment order it has been come to know that the ld. AO has not made any addition on the issue or on the issue recorded in the reason for reopening the case and he has made different addition on account of cash deposit in the bank account. Which is illegal and the assessment order is liable to be quashed for this kindly refer following decision. 2.1 In the case of CIT vs. Shri Ram Singh 306 ITR 0343(Raj.)the Hon’ble High Court Of Rajasthan Held that It is only when, in proceedings under s. 147 the AO assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had \"reason to believe\" to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under s. 147. To put it in other words, if in the course of proceedings under s. 147, the AO were to come to conclusion, that any income chargeable to tax, which, according to his \"reason to believe\", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the AO may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under s. 147. It is a different story that 11 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. for such other income, the AO may have recourse to such other remedies, as may be available to him under law, but then, once it is found, that the income, regarding which he had \"reason to believe\" to have escaped assessment, is not found to have escaped assessment, the AO is required to withhold his hands, at that only. Once the AO came to the conclusion, that the income, with respect to which he had entertained \"reason to believe\" to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment.—CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) concurred with. 2.2. In the case of CIT vs. Jet Airways (I) LTD331 ITR 0236(Bom):HeldReassessment—Scope—Items unconnected with escapement for which notice was issued—When Expln. 3 to s. 147 was introduced, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain Courts that the AO has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment—However, Expln. 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of s. 147—AO has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings—However, if after issuing a notice under s. 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him to independently assess some other income—If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee 2.3. In the case of Ranbaxy Laboratories Ltd. vs. CIT 336 ITR 0136(Del) held that The crux of s. 147 is the escapement of income which may be assessed or reassessed as well as any other income chargeable to tax which has escaped assessment and which comes to the notice of the AO subsequently in the course of proceedings under this section. Explanation 3 makes it clear that the AO may assess or reassess the income in respect of issue which has escaped assessment, if such issue comes to his notice in the course of proceedings under this section even though said issue did not find mention in the reasons recorded and the notice issued under s. 148. Since there was confusion prevailing with regard to the powers of the AO to assess or reassess on the issues for which no reasons were recorded, Expln. 3 came to be inserted as clarificatory. Now, after the insertion ofExpln. 3, the position is that the AO may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under s. 147 though the reasons for such issue were not included in the reasons 12 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. recorded in the notice under s. 148(2) on the basis of which he had initiated proceedings under s. 147.—Vipan Khanna vs. CIT (2002) 175 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H) and Travancore Cements Ltd. vs. Asstt. CIT (2008) 219 CTR (Ker) 359 : (2008) 305 ITR 170 (Ker) held no longer good law. The heading of s. 147 is \"Income escaping assessment\" and that of s. 148 \"Issue of notice where income escaped assessment\". Sec. 148 is supplementary and complimentary to s. 147. Sub-s. (2) of s. 148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of notice to the assessee before the AO proceeds to assess, reassess or recomputed escaped income. Sec. 147 mandates recording of reasons to believe by the AO that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the AO that on assuming jurisdiction under s. 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before AO during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under s. 148.— CIT vs. Jet Airways (I) Ltd. (2011) 239 CTR (Bom) 183 : (2011) 52 DTR (Bom) 71 : (2011) 331 ITR 236 (Bom) concurred with. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the AO proceeded to reduce the claim of deduction under ss. 80HH and 80-I which as per above discussion was not permissible. Had the AO proceeded to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of the discussion as above, he would have been justified as per Expln. 3 to reduce the claim of deduction under ss. 80HH and 80-I as well. In view of the above discussions, the Tribunal was right in holding that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. 2.4. In the case of CIT vs. Dr. Devendra Gupta336 ITR 0059(Raj): held Reassessment—Scope—Addition in respect of items other than the one on which 13 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. notice in given—Income alleged to have escaped assessment in reasons recorded not having been actually found to 2.5 Recently the Honble ITAT Jaipur Bench in the case of Shri Shambhu Dayal Saraf v/s IT in ITA No. 558/Jp/2013 dt02.07.2018 58 TW 355(Jp), has also held the same view copy of order is enclosed In the case of Saraf GramodyogSansthan vs. ITO108 ITD 115(Agra)it has been held that Further, AO had referred to wrong bank account number in the reasons recorded by him—Sec. 292B cannot take care of any mistake in recording the reasons because that section refers to \"return of income, assessment, notice, summons or other proceedings\"—It does not refer to the reasons recorded by the AO—Any invalid proceedings for assumption of jurisdiction cannot be corrected by s. 292B (e) Also refer AVG Construction Pvt. Ltd v/s ITO Ward 6(2) Jaipur in ITA no. 90/Jp/2020 dt. 02.09.2021 under the same facts and circumstances copy is enclosed. (f) Recently the Honble ITAT Jaipur Bench in the case of Shri Shambhu Dayal Saraf v/s IT in ITA No. 558/Jp/2013 dt 02.07.2018 58 TW 355(Jp), has also held the same view copy of order is enclosed (g) Also refer latest decision of this Honble ITAT in the case of Pappu Qureshi v/s ITO in ITA No. 314//Jp/2019 dt. 28.04.2020 Sec. 292B is no applicable: S. 292B could not be invoked to correct a foundational/substantial error as it was meant so as to meet jurisdictional requirement—Therefore, both impugned notice and impugned order were quashed and set aside—It was made clear that this order would not prohibit Revenue from issuing a fresh notice for reassessment, if requirement of Ss 147/148 were satisfied, including limitation period therein Kindly refer Sumit Balkrishan Gupta v/s ACIT 104 CCH379(Bom.HC)(2019). Thus, cannot be said that it is an irregularity curable u/s. 292B— (h) In the case of Saraf GramodyogSansthan vs. ITO108 ITD 115(Agra)it has been held that Further, AO had referred to wrong bank account number in the reasons recorded by him—Sec. 292B cannot take care of any mistake in recording the reasons because that section refers to \"return of income, assessment, notice, summons or other proceedings\"—It does not refer to the reasons recorded by the AO—Any invalid proceedings for assumption of jurisdiction cannot be corrected by s. 292B 14 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. (i) In the case of Vikram Singh vs. Income Tax Officer (2021) 63 CCH 0044 Lucknow TribReassessment—Escapement of income—Case of assessee was reopened u/s. 147 for deposits in bank amounting Rs.11,00,000—Held, Bombay High Court in case of CIT vs. Jet Airways (I) Ltd., 331 ITR 236 has held that sec. 147 has this effect that AO has to assess or reassess income (\"such income\") which escaped assessment and which was basis of formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during course of proceedings— However, if after issuing a notice under s. 148, he accepted contention of assessee and holds that income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income—If he intends to do so, a fresh notice under s. 148 would be necessary, legality of which would be tested in event of a challenge by assessee—In view of above facts and circumstances and in view of judicial precedent—Assessee’s ground allowed. (j) In the case of CIT(EXEMPTION) vs. B.P. Poddar Foundation For EducationSep 13, 2022 (2022) 115 CCH 0026 KolHCReassessment—Reopening of assessment—Assessee filed return of income declaring a total income of Rs. NIL—Return was processed under Section 143 (1—A survey was conducted from which it was found that assessee has deposited money with NIL—It was further seen that said company is a specified person of assessee—According to Assessing Officer, assessee is hit by Section 13(1)(c)(ii) and Section 13(1)(d) for such reason assessment was reopened under Section 147—Assessing Officer observed that from impugned documents it was seen that assessee had deposited sums with N and both these companies are specified persons of assessee—Therefore, Assessing Officer held that these amounts are to be taxed separately at Maximum Marginal Rate in terms of proviso to Section 164(2)—Total amount was treated as income by invoking Section 13(1)(b) read with Section 11(5)—Amount said to have received as donation was added back to income of assessee under Section 69A—CIT(A) affirmed view taken by Assessing Officer except for granting partial relief such as with regard to claim for carry forward of depreciation etc— Tribunal after taking note of factual position, more particularly, that addition which was made in reassessment proceedings having been deleted by CIT(A) reassessment on heads which were not part of reasons recorded for reopening assessment is not sustainable—Held, in case of GKN Driveshafts (India) Ltd. Versus Income-Tax Officer and Ors., (2003) 259 ITR 19 (SC) it was held that assessing officer is bound to furnish reasons within a reasonable time and noticee is entitled to file their objection to such notice and assessing officer is bound to dispose of same by passing a speaking order—Though Explanation 3 inserted by amendment empowers assessing officer to assess income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in course of proceedings under Section 147 notwithstanding that reasons for such issue have not been included in reasons recorded under Sub-Section 2 of Section 148, prerequisite is there should be a valid notice—Admittedly, in case on hand, 15 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. notice was held to be not sustainable—If that be so, assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during reassessment proceedings— Foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid entire edifice sought to be raised on such foundation has to collapse—Tribunal was right in granting relief to assessee—Revenue’s appeal dismissed. (k) In the case of Satyawan vs. ITO ITA No. 3423/Del/2019 Jun 20, 2022 (2022) 65 CCH 0217 DelTribReassessment—Reopening of assessment—Assessee is challenging very validity of assessment made by Assessing Officer as assessment was reopened for escapement of income on account of cash deposits made into bank account by assessee and whereas while completing assessment Assessing Officer made various disallowances of expenses other than reason for which assessment was reopened—Held, a plain reading of reasons recorded Assessing Officer has reason to believe that income of assessee has escaped assessment in respect of cash deposits of Rs.68,68,705/- as they were remained unexplained— However, while completing assessment Assessing Officer disallowed 25% of purchases for want of bills and vouchers—Assessing Officer also disallowed opening capital shown by assessee in his capital account as no explanation was offered by assessee—There is one more addition which was made by assessee is in respect of license fee paid by assessee for want of supporting documents— Other than these three additions there is no other addition or disallowance made by Assessing Officer, which relates to cash deposits by assessee made into his bank account—In other words, Assessing Officer did not make any addition for which assessment was reopened—In case of Ranbaxy Laboratories Limited Vs. CIT (ITA. No. 148/2008) Delhi High Court held that if Assessing Officer does not make any addition on primary ground on basis of which proceedings under Section 147 were initiated he cannot make other additions—Ratio of decision of Delhi High Court squarely applies to facts of case since Assessing Officer did not make any addition for which reopening was made—Assessing Officer made various other additions other than addition for which assessment was reopened— In view of above, respectfully following above decision of jurisdictional High Court, reassessment order passed by Assessing Officer under Section 143(3) read with Section 147 is bad in law—Assessee’s grounds allowed. Also followed by this Honble Tribunal in the case of Pradeep Kuamr v/s ITO Ward 2(2) Jhunjhunu in ITA No.370/Jp/2022 11.01.2023. 2.8 Also refer latest decision in PCIT v. Lark Chemicals ( P) Ltd ( 2018) 99 taxmann.com 311/259 Taxman 366 (Bom) (HC) Editorial: SLP of revenue is dismissed , PCIT v. Lark Chemicals ( P) Ltd ( 2018)259 Taxman 265 ( SC) 16 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. S. 147 : Reassessment –Order passed consequent to reassessment had not confirmed the addition attributable to the reasonable belief of the Assessing Officer, while passing the reassessment order – Reassessment is held to be bad in law.[S.148 ] Dismissing the appeal of the revenue the Court held that , order passed consequent to reassessment had not confirmed the addition attributable to the reasonable belief of the Assessing Officer, while passing the reassessment order .Accordinglythe reassessment is held to be bad in law. ( AY.2004 -05) 4.Thus in view of the above submissions the Assessment order as well as notice U/s 148 may kindly be quashed. 5. No income escaped: Further it is submitted that the notice u/s 148 can be issued only when there is any escape of income because S. 147 provides that If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income, the AO has reopened the case on the basis of AIR information for sale consideration received of sale of property and the ld. AO himself has not made any addition or brought on record any escapement of income. Hence if there is no escarpment then the notice issued u/s 148 is invalid. 54. Reason to believe and not reason to suspect: 5.1It is submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are “reason to believe\" and not \"reason to suspect\". The word “believe” has to be understood in contradistinction of suspicion or opinion. Belief indicates something concrete or reliable. Kindly refer Gangasharan& Sons Pvt. Ltd. 130 ITR 1 (SC), and ITO v. LakhmaniMewal Das, (1976) 103 ITR 437 (SC). 5.2 The belief of the Officer should be as to escapement of income and the belief should not be a product of imagination or speculation. There must be reason to induce the belief as above it is the admitted facts that when the reason are itself incorrect, then how it can be said that there was reason to believe. Further on the perusal of the assessment order it is clear that at the time of recording reasons or issue of notice the ld. AO was not having any material or evidence except borrowed information, which itself admittedly wrong. Then How it can be said reason to believe. No notice u/s without any material evidence and on borrowed information can be issued. It is also that there is no own satisfaction of the ld. AO and higher authority. 17 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. 5.3 Further, the belief must be of an honest and reasonable person based upon reasonable grounds. The officer may act on direct or circumstantial evidence; but his belief must not be based on mere suspicion, gossip or rumor. The AO would be acting without jurisdictionif the reason for hisbelief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the provision of law. The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court (SheoNath Singh v. AAC, (1971) 82 ITR 147 (SC). In the case of Mukesh Modi &Ors. vs. DCIT 366 ITR 418 (Raj) held that Evasion of tax was menace to society but Assesseecontributing to the exchequer in form of tax could not be allowed to suffer on mere pretence that it had evaded payment of tax. Rowing and fishing enquiry in hands of AO on mere suspicion or change of opinion could not satisfy expression \"reason to believe\" exposing Assessee for reopening of assessment. Notice for reopening of assessment was not in consonance and in conformity with under Section 147 and made specified notice vulnerable. High Court pointed that, reasons given by AO for issuance of notice for Re-assessment were not plausible and convincing. In fact order, where objections were rejected by AO, was not self-contained speaking order. Upon perusal of the order, it was amply clear that the same contains conclusions and is bereft of reasons.(para 12) Notices issued to Assessee by AO under Section 147/148 were not satisfying the pre-requisites for same. There was no whisper in the notice, or iota of proof that while issuing same. AO had reason to believe that any income chargeable to tax had escaped assessment for the assessment year. Notice issued by AO simply for his own verification and to clear his doubts and suspicions to re-examine the material which were already available on record at time of passing of t earlier assessment orders. The legislature under Section 147 has not clothed AO with such jurisdiction therefore the action could not be upheld in the background of facts of instant case. One more redeeming fact which had direct nexus with the subsequent re-assessment proceedings and ramification of the same had culminated into re-assessment orders was the impugned order where AO rejected the objections submitted by Assessees pursuant to notice under Section 147/148. Order passed by AO in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO while rejecting objections Assessee the consequential assessment Orders were liable to be annulled.(para16) 9.Thus notice u/s 148 cannot be given on wrong facts. Hence the same may kindly be quashed. WS ON GOA:2 Wrong setaside 1.1 Further it is submitted that the ld. CIT(A) has wrongly setaside the assessment order without deciding the legal; grounds of appeal when there was no 18 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. further verification and examination is required on the legal issue’s, when admittedly the ld. CIT(A) has not disputed our contentions. And it is the settled position of law that firstly legal issue is to be decided and if on the legal issue the assessee succeed or having good case then there was no need to setaside or restore the matter to the AO. The matter is to be restored to the AO by the ld. CIT(A) on merit only after deciding the case against the assessee on legal issues. As per new amended act wef 01.10.2024. In our view the matter to be restored to the AO by the ld. CIT(A) those appeals which have been filed after the 01.10.2024 not before it because it is not retrospective amendment. 1.2. Further on the merit the case when it is the admitted facts that all the details and replies have been filed before the ld. CIT(A) a and also before the ld. AO except some documents and have not been considered by ld. CIT(A) and now the assessee is not required to file other details/evidences. Then the matter was to be decided by the ld. CIT(A) itself, for which he has failed to do so. Hence it is prayed that the matter on legal issue and on merit may kindly be consider and decided by your honor. As recently this Honble ITAT in the case of Suresh Kumar Saini v/s ITO Ward 7(4), Jaipur in ITA No. 1256/Jp/2024 dt. 29.01.2025 has decided the legal grounds of appeal even not decided by the ld. CIT(A). Copy is enclosed. Also refer the case of Praveen Daga v/s ITO in ITA No.1309/Jp/2024 dt.26.03.2025 2. Now on the legal issue and merit we rely upon on our WS, paper book, additional evidence, etc, which may kindly consider. GOA-3: Addition of Rs.4,28,000/- on account of cash deposit in the bank account: FACTS: Kindly refer facts of GOA-1. Hence this appeal. SUBMISSIONS: 1. Addition u/s 69C wrongly made: At the very outset it is submitted that the ld. AO has made the addition of Rs.4,28,000/- on account of cash deposit in bank account as alleged unexplained investment u/s 69C, which is absolute wrong because the addition for unexplained investment come u/s 69 and unexplained money or cash deposit come u/s 69A not u/s 69C. The sec. 69C applicable for unexplained expenditure. Hence the addition made prima faci is illegal invalid and bad in law and liable to be deleted in full on this ground alone. 19 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. 2. Further we have to submit that in the bank account the total cash deposit was only of Rs.3,29,000/- not of Rs.4,28,000/- as wrongly taken by the ld. AO. Thus the addition to the extent of Rs.99,000/- has been wrongly. Hence the addition was to be made at Rs.3,29,000/-. For that we would like to submit that, the first time the cash of Rs.48,000/- has been deposited on dated 22.09.2009 before it there was total cash withdrawals was of Rs.1,93,000/- from the same bank time to time. Thus there remains only of Rs.1,36,000/-. Further there are withdrawal of Rs.74,800/- from post office A/c (as on 29.09.2009), Rs.20,000/- from the Mother A/c(as on 11.09.2009) and Rs.1,10,000/- from wife account (as on 29.09.2009). Thusthese total amount of Rs.2,04,800/- were also available with the assessee and his family member from depositing in the bank account. In support copy of bank statement of the assessee, his wife, post office account and mother account are enclosed. Thus the source of the cash deposit is clearly verifiable and no addition was to be made. The ld. AO has wrongly made the addition without verifying the record and other evidences and material. Further we have also bring the vital facts on record as the assessee is Govt. Ayurvedic Doctor since 1991 and getting the salary and having past saving in the service period of 18-19 years and it is possible to keep at least savings of Rs. 2.00 lakhs. In consolidation the availability of cash amount with the assessee is in very excess in comparison to deposited in the bank account during the year. Vide the below chart for reference Cash flow statements and position of cash deposit, source of cash and cash withdrawals Date Cash Withdrawals/source Cash deposit Balance 18.04.20109 15000 15000 25.04.2009 10000 25000 01.05.2009 47000 72000 06.05.2009 8000 80000 27.05.2009 20000 100000 02.06.2009 10000 110000 20.06.2009 10000 120000 27.06.2009 10000 130000 08.08.09 15000 145000 22.08.2009 48000 193000 11.09.2009 20000 (From Mother A/c) 213000 22.09.09 48000 165000 22.09.09 4000 161000 29.09.2009 74800 (From Post office) 215800 29.09.2009 110000 (from wife A/c) 325800 21.10.09 35000 290800 20 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. 28.10.2009 49000 241800 29.10.09 49000 192800 30.10.2009 49000 143800 31.10.09 49000 94800 03.11.2009 46000 48800 Total 377800 329000 On perusal of the assessment order it is clear that the ld. AO has made the addition in hast without looking and verifying the sources available with the assessee. The ld. AO has also made on assumption, presumption, suspicion and gauss work and it is the settled preposition of law that no addition can be made on this basis. The money received from mother and wife is a gift to the assessee to help for purchase of property. And we have filed all the above WS to the ld. CIT(A) and the ld. CIT(A) without seeing and without considering the same has sent the matter back to the ld. AO. Therefore in view of the above facts, submissions and legal position the assessment proceedings may kindly be quashed as well as the addition may also kindly be deleted in full. GOA-4:Charging of interest u/s 234A,B,C: FACTS AND SUBMISSIONS: The ld. AO has also grossly erred in charging the interest u/s 234A,B and C and the assessee is totally denied its liabilities. Because the ld. AO has wrongly charged the same and charged against the provisions of law and against the settled legal position of charging the interest u/s 234A,B and C in the assessment u/s 234A,B and C. Hence the same may kindly be deleted in full and oblige. Prayer: Hence in view of the above facts, circumstances and legal position entire addition may kindly be deleted in full.” 5. On the other hand, the ld. DR supported the orders of the revenue authorities. Ground Nos. 1 & 2: 6. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We 21 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. have also deliberated upon the orders of the lower authorities. On perusal of record (PB 1-2), we find that the assessee had filed his return of income on 27.07.2020 declaring total income of Rs. 3,46,497/- vide acknowledgement no. 2444011887. Thereafter, the AO on the basis of information received from the ITO (Hq) vide his letter no. 657 dated 02.07.2015 proposed to reopen the case of the assessee after recording reasons on 27.03.2017 that “ As per information, the assessee has sold the plot no.72, Gayatri Nagar at Rs. 20,00,000/- on 04.11.2009 through the sale deed which was executed by the Sub-Registrar VIII, Jaipur. The assessee has filed his ITR and not disclosed capital gain on this transaction. The property was a capital assets. I have reasons to believe that the income of the assessee of Rs. 20,00,000/- for the assessment year 2010-11 has escaped assessment within the meaning of the provisions of section 147 of the Income Tax Act, 1961. The approval may be given for initiation assessment proceeding u/s 147 of the Income Tax Act, 1961.”The AO, therefore, on the basis above reason believed that there is an escapement of income to the extent of Rs. 20,00,000/- on the part of the assessee for the AY 2010-11. The AO accordingly reopened the case of the assessee by issuing notice under section 148 of the IT Act, 1961 dated 30.03.2017. From the copy of the reasons recorded by the AO as submitted by the appellant, we find that though the AO in the last para of reasons recorded has sought approval of the competent 22 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. authority, but we do not find any approval by the competent authority therein, further we have also noted that in the assessment order also the ld. AO has not mentioned anything about approval taken from higher authorities which normally remains in reassessment cases. Thus it is presumed that while issuing notice under section 148 no approval from the competent authority was taken by the AO. 6.1 The AO has also not recorded anything with regard to the material on the basis of which the reasons and conclusion was formed except the information received from ITO (Hq.) and on the basis of vague reasons initiated proceedings under section 147 by issuing notice under section 148 of the Act. The case of the assessee was reopened on the reason that the assessee has sold property for Rs. 20,00,000/- and has not disclosed the capital gain on this transaction and income escaped assessment. Whereas, the assessment order was passed taking into account that the assessee has purchased plot no. 72 at Gayatri Nagar-B, Maharani Farm, Durgapura, Jaipur and cash deposit of Rs. 4,28,000/- in the bank account of the assessee. Thus it is observed that the reasons recorded are vague and suffer from infirmities mentioned. We also note that even after verifying that the information available him based on which notice u/s 148 had been issued was wrong, the AO lose his jurisdiction to assess the case which has not been done by him. Therefore we are of the opinion that once the reasons on the basis of which notice of reassessment had been given do not subsist the AO loses his jurisdiction to 23 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. assessee the case and hence we quash the assessment order passed by ld. AO on this score. 6.2 It is noteworthy that it is a settled position that reasons cannot be substituted and the reasons are required to be read as they were recorded by the AO. In the instant case, the information was available with the AO at the time of recording reasons was that the appellant had sold plot no. 72, Gayatri Nagar at Rs. 20,00,000/- however, when the assessment order was passed it was mentioned that the assessee has purchased the property and the assessee could not explain the source of purchase of the property. The assessment order also mentioned that the assessee has deposited cash amount of Rs. 4,28,000/- on different dates in his bank account and the assessee has failed to furnish any explanation of the cash deposit made in the bank account and accordingly added the same to the total income of the assessee treating it as unexplained cash deposit. Therefore, what has been recorded by the AO as ‘reasons to believe’ is nothing more than a vague information, further, the said reasons cannot be substituted subsequently by way of assessment order. 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. 24 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. vs. R.B. Wadkar (2004) 268 ITR 332 (Bom.) has, inter alia, observed in para 21 of its order as under :- “ 21. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. 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. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and while. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer, The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced”. Further, reasons are deduced from the material available on record and such material should have a direct link with the formation of the belief that income chargeable to tax has escaped assessment. In the instant case the AO has neither 25 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. provided any material nor referred any material on the basis of which the AO formed his reasons and came to the conclusion that there is escapement of income. In fact, there was no tangible material in possession of the AO leading to the belief that income has escaped assessment. The AO has failed to establish any live nexus between the information and formation of belief that the assessee received capital gains on sale of the plot which represents income of the appellant and such income has escaped assessment. 6.3 In the present case, the assessment was completed the by the AO holding that the assessee has failed to explain the source of purchase of the plot no. 72, Gayatri Nagar and cash deposit of Rs. 4,28,000/- in the bank account of the assessee, which are not the reasons while recording the reasons by the AO for initiating proceedings under section 148 and for obtaining the approval of the competent authority. The reasons recorded for initiating proceedings under section 148 are “ assessee sold the plot no. 72, Gayatri Nagar at Rs. 20,00,000/- on 04.11.2009 through a sale deed.” Thus, we find that the AO himself, while passing the assessment order has substituted the reasons recorded for initiating proceedings under section 148 of the I.T. Act, 1961 which is beyond his jurisdiction and without authority of law. We also observed that no addition was made by the AO on the ground of reasons recorded and AO believed that income is escaped assessment. Hence, when the reason for reopening itself is wrong, incorrect and 26 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. without material and altogether reverse then all the proceedings are void ab-initio and liable to be quashed. The AO have merely acted upon the AIR information without even verifying by way of an independent enquiry, the source, nature and component of such cash deposit. The ld. CIT (A) has also not verified the said fact before setting aside the assessment to the file of the AO for conducting fresh assessment. The ld. CIT (A) while setting aside the assessment for making fresh assessment, has observed at para 7 of his order as under :- “ 7. In view of the aforesaid facts of the case like the AO having passed the assessment order as per best judgement case and in view of the newly inserted proviso to section 251(1)(a), I am of the considered view that it would be proper to set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment. Accordingly, I set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment. The AO is further directed to provide sufficient and reasonable opportunity of being heard to the assessee.” This approach shows that the ld. AO did not apply his mind on the information coming to him to know the truthfulness of the information and he proceeded merely on the basis of such information and framed opinion about concealment of income which is not permitted under Income tax Law. Further the ld. CIT (A) also did not try to apply his mind that on the available facts wherein wrong reasons were recorded and no addition had been made on the reasons so recorded there was hardly any reason to sustain the order and hence he was ought to have quashed the assessment order passed by ld. AO which we are doing now. 27 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. In this regard, vide following judgments of the Hon’ble High Courts and the Tribunals have observed as under :- “Hon’ble Gujarat High Court in the case of Mumtaz Hazi Mohamad Memon vs. ITO 408 ITR 268 (Guj.) Held – “11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1,18,95,000/- and two; that the assessee had not filed the return and that therefore his 1/3rd share out of the sale proceeds was not offered to tax. Both these factual grounds are totally incorrect as is now virtually admitted by the Revenue. It is undisputed that the assessee had actually filed the return of income for the said assessment year and income also offered his share of the declared sale consideration to tax as capital gain. The Assessing Officer may have dispute with respect to computation of such capital gain, he cannot simply dispute the fact that the assessee did file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of Rs. 1,18,95,000/- as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was Rs. 50 lakhs. 12. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is Rs. 50 lakhs but the registering authority has valued the property on the date of sale at Rs. 1,18,95,000/- for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited are that the assessee filed no return and that 1/3rd share of the assessee from the actual sale consideration of Rs. 1,18,95,000/- therefore, was not brought to tax. These reasons are inter-connected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage lthe impugned notice. Through the affidavit-in-reply a faint attempt has been made to entirely shift the centre of the reasons to a completely new theory viz. the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was Rs. 50 lakhs and that the assessee had by filling the return offered his share of such proceeds by way of capital gain.” Hon’ble Gujarat High Court in the case of Vijay Harish Chandra Patel vs. ITO 400 ITR 167 (Guj.) (2018) 28 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. Held that – “ When very basis for reopening no longer survives, assumption of jurisdiction u/s 147 by AO by issuing notice u/s 148 was without authority of law and could not be sustained.” ITAT Jaipur Bench in the case of Smt. Sushila Chahch vs. ITO In ITA No. 683/JP/2019 dated 30.03.2021. Held in para 9 as under : “ 9. In light of aforesaid discussion and following the decision referred supra, where the very foundation for reopening the case is vitiated given that the assessee has filed her return of income disclosing the transaction of sale of immovable property for the specified consideration and offering the same to tax, there cannot be any reasons to believe that income has escaped assessment for the very same transaction the assumption of jurisdiction u/s 147 cannot be sustained and the subsequent proceedings are hereby directed to be set-aside.” Nadeem Hasan vs. ITO, Ward-46(4), New Delhi in ITA No.445/Del/2020 dated 18.05.2022 ITAT, Delhi: 14. On going through the reasons recorded by the AO, I find that there is no nexus between the prima facie inferences arrived in the reasons recorded and the information. The information was restricted to cash deposit in bank account but there was no material much less tangible, cogent, credible and relevant material to form a reason to believe that cash deposits represented income of the assessee. The reasons recorded in the present case at best can be treated to be reasons to suspect which is not sufficient for reopening the assessment u/s 148 of the Act. The requirement of application of mind is missing in the present ease on the face of it in the reasons recorded. ITAT Delhi in the case of Bir Bahadur Singh Sijwali Vs ITO, ITA No. 3814/Del/2011, held that “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 29 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. about income escaping assessment, in our humble understanding, cannot be drawn” ITAT Delhi Bench in the case of Praveen Kumar Jain vs. ITO, ITA No. 1331/Del/2015, held that “9. As it is manifest from the reasons recorded by the AO that the AO proposed to reopen the assessment by issuing notice u/s 148 on the basis of information received that the assessee deposit cash amount of Rs.6 lac in the bank account. The AO has recorded in the reasons that the assessee has not filed return of income for the Assessment Year 2006-07. This fact recorded by the AO that the assessee has not filed the return of income for the Assessment Year under consideration has turned out to be incorrect as the assessment order begins with the narration of fact that manual return declared Rs. 112030/- filed on 31.03.2007. Thus at the time of passing the assessment order the AO was aware that return for the year under consideration filed on 31st March,2007. Therefore, it is clear that the AO proceed to reopen assessment on the basis of incorrect assumption of the fact that the assessee has not filed any return income for the year under consideration. This wrong assumption of fact also lead to the consequential reopening by the AO without verifying the record available with the AO as filed by the assessee being return of income and the other details and record along with return of income. Thus, it is clear that the AO reopen the assessment under wrong presumption of fact and without verifying the material information already available with the AO in the shape of return of income filed by the assessee. This fact of filing of return was also recorded by the learned Commissioner of Income-tax (Appeals) at Page 3 of the impugned order. Further, the recourse of reopening u/s 148/147 is not to first issue the notice and then to proceed to investigate and find out if there was income assessable to tax which has escaped assessment rather it is pre requisite for issuing the notice u/s 148 that the AO on the basis of tangible material and information has legitimate reason to believe that income assessable to tax has escaped assessment. The belief must be based on a material which has direct nexus to the income assessable has escaped assessment and should not be guess work and to ascertain the same through the process of investigation. The provision of section 148/147 cannot be used such investigation to ascertain where income assessable to tax has escaped assessment. It is apparent that the reason for reopening was only on information of deposit of cash of Rs.6 lac in the bank account. Therefore the reason for reopening was for further investigation to find out the source of the cash deposit by the assessee as the AO has not recorded anything that this deposit of cash is from particular source which is not disclosed by the assessee in the books of account or in the return of income. The deposit of cash in the bank account of the assessee does not establish any live nexus between the information and formation of the believe that there was escapement of the income by the assessee. There may be end number of reasons and sources of deposit of cash in the bank which may not constitute the same as income of the assessee and therefore merely deposit of cash 30 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. in bank itself would not lead to the conclusion or believe that the said amount is assessable income of the assessee and escapement of assessment. …… …… 12. Thus, it is clear that the basic requirement for reopening of assessment that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment was found to be missing when the AO proceed to reopen the assessment which is in nature of a post mortem exercise after the event of reopening of the assessment. Therefore the reopening of the assessment was found to be invalid as it does not satisfy the requirement of law that prior to the reopening of the assessment the AO has to apply his mind to the material and conclude that he has reason to believe that income of the assessee has escaped assessment. Applying the above proposition of law it leaves no doubt in the mind that in the case on hand the AO has reopened the assessment mechanically without application of mind to conclude that the said amount of Rs. 6 Lac deposit in the bank account of the assessee constitutes the income of the assessee and the same has escaped assessment. The decision relied upon by the ld DR is not applicable in the facts of the present case because in the said case not only the accommodation entry were found by the investigation wing but the modus operandi was also detected and therefore it was found that the AO was having the sufficient material and information to form the believe that the income assessable to tax has escaped assessment. In view of the facts and circumstances as well as the decisions relied upon by the AR, the reopening is in the case of the assessee is not valid and the same is quashed. Since the reopening of the assessment held to be invalid therefore other grounds of the appeal become infractuous.” ITAT Delhi, in the case of Harmeet Singh vs. ITO, ITA No. 1939/ Del/2016 held that: “8. After going through the reasons recorded by the ITO, Ward-36(1), New Delhi Rewari, I am of the view that there is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, the same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and there are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the Asstt. Year in dispute is bad in law and deserves to be quashed.” 31 ITA No. 253/JPR/2025 Rama Shanker Pareek, Jaipur. Thus taking note of the facts and the case laws narrated hereinabove, we are inclined to quash the assessment order passed by ld. AO making addition of Rs. 4,28,000/- on account of cash deposit in bank account and we quash the order of the ld. CIT (A) wherein he has set aside the case to ld. AO for fresh adjudication which was not warranted in this case. 7. Since we have quashed the order of the ld. CIT (A) as well as that of ld. AO, ground nos. 3 and 4 of the appellant become infructuous and hence we are not deciding the same. 8. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 24/06/2025. Sd/- Sd/- ¼ jkBkSM+ deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 24/06/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Rama Shanker Pareek, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward-7(2), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 253/JPRR/2025} vkns'kkuqlkj@By order, lgk;d iathdkj@Asst. Registrar "
Other Referred Cases
Mumtaz Hazi Mohamad Memon v/s ITO, Vijay Harish Chandra Patel vs. ITO, Smt. Sushila Chahch v/s ITO, Shri Shambhu Dayal Saraf v/s IT, Praveen Kumar Jain vs. ITO, Harmeet Singh vs. ITO, Bir Bahadur Singh Sijwali Vs ITO, Dr. Devendra Gupta vs. ITO, Rames Bhojprasad Gupta vs. ITO, ABDUL MAJEED vs. INCOME TAX OFFICER, Catchy Prop-Build(P.)Ltd v/s ACIT, Nadeem Hasan vs. ITO, Saraf GramodyogSansthan vs. ITO, Vikram Singh vs. Income Tax Officer, CIT vs. Shri Ram Singh, CIT vs. Jet Airways (I) LTD, Ranbaxy Laboratories Ltd. vs. CIT, CIT(EXEMPTION) vs. B.P. Poddar Foundation For Education
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Salary Structuring
₹1
1:1 Consultation on FEMA Compliance
₹1
Master The Pitch-Deck Game
₹0
Declaration of Gift
Mehul₹500
Assignment of Registered Trademark
Mehul₹500
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