IMPORTANT POINT
The court ruled that an Assessing Officer must demonstrate a tangible basis for believing income has escaped assessment; mere suspicion or lack of evidence does not justify reopening.

JUDGMENT :

Bhargav D. Karia, J.

1. Heard learned advocate Mr. Darshan Gandhi for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondent.

2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for respondent.

3. Having regard to the controversy arising in this petition in 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 assumption of the jurisdiction by the respondent-Assessing Officer to issue notice dated 30.03.2021 for reopening assessment for the Assessment Year 2017-18 under section 148 of the Income Tax Act,1961 [for short ‘the Act’].

5. The petitioner filed the return of income for the Assessment Year 2017-18 on 31.08.2017 declaring total income of Rs. 1,73,370/-. It is the case of the petitioner that on 20.02.2021, summons under section 131(1) of the Act was issued by the Deputy Director of Investigation/Assistant Director of Investigation, 2 (2), Ahmedabad, requiring the petitioner to provide various details asked in the said summons pertaining to the cash deposited in banks during demonetization period from 09,11,2016 to 31.12.2016.

5.1 The petitioner by reply dated 01.03.2021 submitted the details as called for. Thereafter, the petitioner received the impugned notice for reopening. The petitioner was also provided with the reasons recorded as under:

“REASONS FOR REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME-TAX ACT, 1964,

In this case, the assessee has filed return of income for A. Y. 2017-18 declaring total income of Rs, 173370/on 31/08/2017.

2. The case of the assessee has been identified as potential case flagged by the Directorate of Income tax (Systems) after risk profiling based on enquiry reports and findings of the Directorate of Income tax (investigation) and Directorate of intelligence & Criminal Investigation. The information has been disseminated to this office through the Insight Portal wherein enquiry reports and findings have been uploaded by the field officers of the respective directorate. In this case, information has been received that during the year under consideration, as per details available on records, it is noticed that the assessee has made cash deposit during the demonetization period in its Bank Account of Rs. 56,07,000/-. As a outcome of enquiry/perusal and analysis of details available on records, it is noticed that the known source of cash deposit is not conclusively proved.

3. From the above details and Insight information available on the system for the year under consideration, it is found that the assessee has made transaction of cash deposit and source of the cash deposit is not proved.

4. The report is perused and having satisfied with the outcome and no further enquiry is necessary. I have gone through the information received and I have also gone through the material available on records. The ITBA/ITD data available in this office is also verified. The information and facts are found to be correct. On personal analysis of the data, prima facie, I have reason to believe that an amount of Rs. 56,07,000/- has escaped assessment within the meaning of section 147 of the I. T. Act. In view of this, the case is fit to be proceeded u/s, 147 and u/s.148 of the I. T. Act.

5. The assessee has filed return of income for year under consideration, which does not commensurate with the transactions found in information available with this office as stated above.

6. it is pertinent to mention here that the assessee filed return of income but chosen not to disclose fully and truly all particulars of income in the ITR filed as discussed above and no assessment was made in this case.”

5.2 The petitioner filed objections on 31.07.2021 explaining that the cash deposited during demonetization period is not Rs. 56,07,000/- as stated in the reasons reco