The Assessing Officer issued a reassessment notice based on information received from the investigation wing, indicating that cash had been deposited in the assessee’s bank account and immediately thereafter transferred via cheque into a company’s account where the assessee was a director. The primary reason given by the Assessing Officer was the need to examine the details of these deposits.

The court held that the notice did not state that any income chargeable to tax had escaped assessment, nor did it show that the Assessing Officer had applied his mind to the information received. The notice appeared to be issued merely for verification or examination purposes. The court ruled that reopening notices cannot be issued solely for verification purposes and must be based on a belief that income chargeable to tax has escaped assessment. Therefore, the impugned reassessment notice was unjustified and set aside. (AY. 2007-08)