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Issues: (i) Whether the reassessment proceedings were valid where, for an assessment year beyond three years, approval of the higher specified authority under section 151(ii) was not obtained; (ii) Whether the addition under section 68 on account of the alleged unsecured loan was sustainable where the assessee showed that the money had already been taxed in the hands of the intermediary group concern and the assessee had otherwise furnished supporting material; (iii) Whether the addition on account of cash deposit was sustainable where the assessee explained the deposit as out of earlier cash withdrawals and available cash-in-hand.
Issue (i): Whether the reassessment proceedings were valid where, for an assessment year beyond three years, approval of the higher specified authority under section 151(ii) was not obtained.
Analysis: The reassessment notice was issued in a case covered by the new regime, and the elapsed time from the end of the relevant assessment year brought the matter within the higher-approval category. The requisite sanction was obtained only from the authority corresponding to section 151(i), not the higher authority mandated by section 151(ii). Since prior approval of the correct specified authority is a jurisdictional condition for reopening, non-compliance vitiated the reassessment.
Conclusion: The reopening was held unsustainable and was quashed in favour of the assessee.
Issue (ii): Whether the addition under section 68 on account of the alleged unsecured loan was sustainable where the assessee showed that the money had already been taxed in the hands of the intermediary group concern and the assessee had otherwise furnished supporting material.
Analysis: The assessee placed material showing the source trail of the credit through group entities and demonstrated that the amounts had already been assessed in the hands of the intermediary and related person. The appellate findings accepted the genuineness of the underlying fund movement and held that the same money could not be taxed again in the assessee's hands. The assessee's explanation also met the settled requirements relating to identity, genuineness, and creditworthiness, and no contrary material justified treating the receipt as unexplained.
Conclusion: The addition under section 68 was deleted in favour of the assessee.
Issue (iii): Whether the addition on account of cash deposit was sustainable where the assessee explained the deposit as out of earlier cash withdrawals and available cash-in-hand.
Analysis: The assessee produced bank statements and cash book entries showing earlier withdrawals and sufficient cash balance before the deposit. The explanation was consistent with the cash flow and remained unrebutted by any material showing diversion or exhaustion of the withdrawn cash for other purposes. On these facts, the deposit was treated as explained and not as unexplained income.
Conclusion: The cash-deposit addition was deleted in favour of the assessee.
Final Conclusion: The reassessment failed at the jurisdictional stage, and the substantive additions were also found unsustainable on merits, leaving no surviving basis for the Revenue's challenge.
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