Reassessment scope is limited to recorded reasons; explained cash deposits from agricultural land cannot support unrelated additions.

Reassessment under sections 147 and 148 may be sustained where prior approval is shown to have been obtained and the objection to sanction is unsupported by material. However, if the reassessment was initiated only to verify cash deposits and the assessee substantiates that the deposits came from sale of agricultural land, the revenue cannot travel beyond the recorded reasons and make additions on a different footing. The operative principle is that reassessment inquiry remains confined to the basis on which reopening was recorded, and additions unrelated to that basis are not sustainable once the source is explained on record.

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Issues: (i) Whether the reopening of assessment under sections 147 and 148 of the Income-tax Act, 1961 was invalid for want of proper approval or application of mind; (ii) whether, once the source of cash deposits was shown to arise from sale of agricultural land, the authorities could sustain additions beyond the reasons recorded for reopening.

Issue (i): Whether the reopening of assessment under sections 147 and 148 of the Income-tax Act, 1961 was invalid for want of proper approval or application of mind.

Analysis: The reassessment was initiated on the basis of cash deposits in the bank account and non-filing of return. The record showed that approval was obtained from the competent authority before issuance of notice, and the challenge to the sanction process was treated as resting on presumptions rather than material demonstrating absence of application of mind. The reopening was therefore examined as having been validly undertaken for verification of the deposits and related transactions.

Conclusion: The reopening was upheld and the assessee did not succeed on this issue.

Issue (ii): Whether, once the source of cash deposits was shown to arise from sale of agricultural land, the authorities could sustain additions beyond the reasons recorded for reopening.

Analysis: The assessee placed material to show that the cash deposits originated from sale of agricultural land. The reassessment had been triggered only to verify the source of those deposits. In that setting, once the source stood explained on record, the authorities were held not entitled to travel beyond the scope of the recorded reasons and sustain further additions by changing the character of the addition or by proceeding on a different basis. The additions made beyond the mandate of reopening were therefore found unsustainable on merits.

Conclusion: The assessee succeeded on the merits issue and the additions beyond the scope of reopening were not sustained.

Final Conclusion: The reassessment itself was not disturbed, but the additions made beyond the recorded basis for reopening were deleted, resulting in partial relief to the assessee.

Ratio Decidendi: In reassessment proceedings, once the source of the transaction that formed the basis for reopening is satisfactorily explained, the revenue cannot enlarge the inquiry and sustain additions unrelated to the recorded reasons for reopening.

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