Reassessment based only on AIR cash deposit data fails where the Assessing Officer does not independently verify the material.

Reassessment based only on AIR/ITD information showing cash deposits was invalid where the Assessing Officer did not independently examine the entries or apply fresh mind before recording reasons. A reopening founded merely on system-generated information, without tangible material supporting a belief that income had escaped assessment, was treated as mechanical and based on suspicion rather than jurisdictional facts. The reassessment proceedings were therefore void and bad in law, while the merits of the assessment remained undecided as academic.

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Issues: Whether the reassessment initiated on the basis of AIR information and cash deposit entries, without independent examination of the material by the Assessing Officer, was valid.

Analysis: The reasons recorded showed reliance only on information from the AIR/ITD system regarding cash deposits. No independent scrutiny of the entries or fresh application of mind was demonstrated before forming the belief that income had escaped assessment. The reopening was therefore treated as resting on suspicion and a mechanical exercise rather than on tangible material establishing the requisite belief for assumption of jurisdiction.

Conclusion: The reassessment proceedings were held to be void and bad in law. The assessee succeeded on the validity of reopening, and the merits were left undecided as academic.

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