Tribunal quashes invalid reassessment, emphasizes need for rationale.

Harmeet Singh C/o Kapil Goel, Adv. Versus ITO, Ward-36 (1), New Delhi

Harmeet Singh C/o Kapil Goel, Adv. Versus ITO, Ward-36 (1), New Delhi - TMI Issues Involved
1. Jurisdictional Ground: Coram Non Judice
2. Validity of Reopening Action under Section 148
3. Basis of Cash Deposits with Centurion Bank of Punjab
4. Affidavit and Remand Report Consideration
5. Sufficiency and Specificity of Reasons Recorded
6. Service of Notice under Section 148
7. Sustaining the Addition of Rs. 14,69,823 out of Rs. 40,49,500

Detailed Analysis

Jurisdictional Ground: Coram Non Judice
The Assessee argued that the reopening action of the Assessing Officer (AO) under Section 148 was made in violation of mandatory jurisdictional conditions stipulated under the Act. The Tribunal found that there was no nexus between the prima facie inference arrived in the reasons recorded and the information available. The proceedings were based on surmises, conjectures, and suspicion, and thus, without jurisdiction.

Validity of Reopening Action under Section 148
The Tribunal examined whether the AO had valid reasons to believe that income had escaped assessment. The reasons recorded by the AO were based on vague and unsubstantiated AIR information regarding cash deposits. The Tribunal concluded that the AO's action was mechanical and lacked independent application of mind. The reopening was deemed invalid and quashed.

Basis of Cash Deposits with Centurion Bank of Punjab
The Assessee contended that the reopening was based on non-existing cash deposits with Centurion Bank of Punjab. The Tribunal noted that the information was restricted to cash deposits without any credible, cogent, or relevant material to form a reason to believe that these deposits represented the Assessee's income. The Tribunal supported its view with various case laws, including 'Amrik Singh vs. ITO' and 'Praveen Kumar Jain vs. ITO.'

Affidavit and Remand Report Consideration
The Assessee's affidavit stated that he had no bank account with Centurion Bank of Punjab. The remand report obtained during appellate proceedings could not rescue an inherently invalid reopening. The Tribunal emphasized that the reasons recorded were silent on the details of any bank account and treated mere cash deposits as equivalent to income escaping assessment.

Sufficiency and Specificity of Reasons Recorded
The Tribunal found that the reasons recorded by the AO were highly vague and far-fetched. They did not lead to a conclusion of income escapement. The Tribunal cited the case of 'Bir Bahadur Singh Sijwali,' which held that the reasons for reopening must indicate income escaping assessment rather than merely the need for further inquiry.

Service of Notice under Section 148
The Assessee argued that the AO reopened the case without legal and valid mandatory service of notice under Section 148. The Tribunal found that the AO's action was based on insufficient and inadequate material, leading to an invalid reopening.

Sustaining the Addition of Rs. 14,69,823 out of Rs. 40,49,500
The Tribunal did not find it necessary to decide on the merits of the case regarding the addition of Rs. 14,69,823 out of Rs. 40,49,500, as the reassessment itself was held to be bad in law.

Conclusion
The Tribunal quashed the reassessment proceedings as bad in law and illegal, following precedents and legal principles that emphasize the necessity of a rational connection between the reasons recorded and the belief of income escapement. The Assessee's appeal was allowed, and the reassessment proceedings were deemed invalid.