IMPORTANT POINT
Reopening of assessment under section 148 requires valid reasons and cannot be based on mere suspicion or for verification purposes.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Heard learned advocate Mr. Manish Shah for the petitioner and learned Senior Standing Counsel Mr. Karan Sanghani for learned advocate Mrs. Kalpana Raval for the respondents.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Sanghani waives service of notice of rule on behalf of the respondents.

3. Having regard to the controversy in a narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.

4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 31.03.2021 for the Assessment Year 2015-16 issued under section 148 of the Income Tax Act,1961 [for short ‘the Act’] for reopening of the assessment.

5. In response to the request of the Assessee, reasons recorded by the Assessing Officer were supplied along with notice under section 143(2) dated 30.06.2021. Detailed reasons recorded by the Assessing Officer read as under:

“1. Brief details of the Assessee:

The assessee is an Association of Persons, engaged in the activity of banking and deriving income from profit & gains of business or profession during the year. The assessee has filed his return of income for A.Y. 2016-17 on 28.09.2016 declaring his total income at Rs. 5,17,74,340/-. The return of income of the assessee was processed u/s. 143(3) of the Act on 21/12/2018 assessing the total income at Rs. 5,26,00,170/-;

(a) Nature of business activity:

On going through the retum of income filed for AY 2016-17, it is seen that the assessee has derived income from business & profession during the FY relevant to AY 2016-17.

(b) Details of previous filing of ROI/processing and scrutiny:

2. Brief details of information collected/ received by the AO:

In this case, information has been received from the DDIT(Inv), Valsad through the Insight Portal that during the FY relevant to AY 2016-17, the assessee has deposited huge amounts of cash amounting to Rs 5,05,00,000/in his current bank account in Indusind Bank Limited, Valsad Branch

3 Analysis of information collected/ received:

In this case, on verification of ITD/ITBA, it is noticed that return of income for A.Y. 2016-17 was filed by the assessee if 28.09.2016. Scrutiny assessment u/s 143(3) has been completed in this case for A.Y. 2016-17.During the scrutiny assessment for AY 2016-17, additions on account of disallowance of thé claim u/s. 37 paid towards unapproved Gratuity fund and on account of Income Tax Expenses were made. As per the information received, “Mr Dashrathsingh Rajput, Mr Maganlal Patel, Mr Jayantilal Parmar, Mr Prafulchandra B Naik and Gunvantrai K Vashi maintains current a/c No. 200006404127 in the name of M/s Valsad Dist Central Co-op Bank Ltd, Halar Road Branch since 30/06/2003.Customer has submitted PAN at the time of account opening. Scrutiny of the current a/c No. 200006404127 during the period from Féb 2015 to July 2015 revealed that, high value cash credits aggregating to Rs 5.05crs are séen in the current a/c no.200006404127 and the proceeds, were immediately debited from the account through cheque issuance, funds transfers and RTGS M/s Valsad Dist Central Co-op Bank. Huge cash deposits amounting to just below the threshold limit of Rs 10 lacs is seen in the above account. High value cash deposits aggregating to large amount in current account followed by immediate utilization of proceeds coupled with high volume of cash deposit is not matching with declared profile of the customer”.

4. Enquiries made by the AO as sequel to information collected/ Received:

It is seen that the assessee has not submitted any proper explanation regarding the huge cash deposits.

5. Findings of the AO:

On verification on of ITD/ITBA, it is noticed that return of income for A.Y. 2016-17 was filed by the assessee on 28 09 2016. Scrutiny assessment u/s 143(3) has been completed in this case for A.Y. 2016-17. During the scrutiny assessment for AY 2016-17, additions on account of disallow