Reassessment based on cash deposits failed where the final addition related to unsecured loans, making reopening unsustainable.

Reassessment under the Income-tax Act was found unsustainable where the recorded reasons for reopening were based on cash deposits in the bank account, but the completed assessment made an addition only for unsecured loans. The jurisdictional link between the material relied on for reopening and the addition ultimately made was not established, so the reopening could not be sustained. The reassessment was therefore quashed in favour of the assessee.

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Issues: Whether the reassessment initiated under sections 147 and 148 of the Income-tax Act, 1961 was sustainable when the addition ultimately made did not correspond to the cash deposits forming the basis of reopening.

Analysis: The reassessment was triggered on the premise of large cash deposits in the assessee's bank account, but the assessment ultimately resulted only in an addition toward unsecured loans. In such circumstances, the reopening failed on the jurisdictional requirement linking the recorded reasons and the resultant assessment, making the reassessment unsustainable.

Conclusion: The reopening was held invalid and was quashed, in favour of the assessee.

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