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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश / O R D E R
Per Mahavir Singh, Vice President :
This appeal filed by the assessee is arising out of assessment framed by Income Tax Officer, International Taxation Ward, Coimbatore u/s. 147 r/w s. 144C(13) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 10.01.2023, with the directions of Dispute Resolution Panel-2, Bengaluru, dated 16.12.2022 passed u/s. 144C(5) of the Act, for the Assessment Year 2015-16.
The first issue raised before us is as regards to the reopening of assessment raised by Ground No.3, which reads as under:
“3. The Learned DRP-2 erred in not considering the fact of illegal assumption of jurisdiction under Section 148 by the Assessing Officer, in respect of issue of issues for which no reason was recorded, more particularly when the reason recorded ceased to exist.”
The Ld. counsel for the assessee before us stated that as per draft assessment order, the reasons recorded were given in Para 2 that there is sale of property which is not disclosed. He referred to Para 2 of the draft assessment order passed by A.O u/s. 144C of the Act dated 25.03.2022. The relevant Para 2 reads as under:
“2. The case was re-opened for the issue that assessee had purchased property valued at Rs. 2.05 Crores. In this regard, assessee submitted copy of purchase deed in document no. 2813/2014 dated 28.04.2014 and also submitted the loan sanction letter from Repco Bank for Rs. 1,80,00,000/-. For the balance amount of Rs.25,00,000/-, the assessee submitted that the amount was paid in FY 2013-14 itself as per purchase deed. The Submissions were Verified and found to be correct.”
The Ld. counsel for the assessee stated that no addition on account of purchase of property was made by the A.O, whereas the addition was made only on account of cash deposit made in the bank accounts i.e., ICICI Bank Account Nos.034201075976 & 034201075307 amounting to Rs. 9.50 Lakhs u/s. 69A of the Act being unexplained money, apart from income from house property at Rs. 67,200/-. The Ld. counsel for the assessee now before us raised the issue that once there is no addition on the issue of reopening and reasons recorded, no addition can be made on other issues unless and until addition is made on the reasons recorded. For this, the ld. counsel for the assessee relied on the decision of Hon’ble Bombay High Court in the case of CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom.). The Ld. counsel for the assessee has also relied the decision of Hon’ble Madras High Court in the case of Tractors and Farm Equipment Ltd. v. ACIT [2018] 409 ITR 369 (Mad.), wherein it is held as under:
“16. The decision in the case of Jet Airways (cited supra) was referred to by the High Court of Delhi in the case of Ranbaxy Laboratories Limited v. CIT (2011] 336 ITR 136 (Delhi), wherein it was held that the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. Further, it was held that for every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148 of the Act. Thus, it was held that the Assessing Officer had jurisdiction to reassess the income other than the income in respect of which the proceedings under section 147 were initiated, but, he was not justified in doing so when the reasons for the initiation of those proceedings ceased to survive. Therefore, the argument advanced by the Revenue placing reliance on Explanation 3 to section 147 is of little avail. Having thus come to a conclusion that reopening of the assessment itself was bad in law, we may not be required to decide other issue as to whether the finding of the Assessing Officer with regard to computation of eligible profits for the purpose of section 80HHC of the Act was correct or not. However, in this regard, learned counsel appearing for the Revenue placed reliance on the decision of the Punjab and Haryana High Court in the case of CIT v. Malwa Cotton Spinning Mills Ltd. (2008] 302 ITR 53 (P&H) ; (2008] 166 Taxman 457 (P&H).”
In view of the above, the Ld. counsel for the assessee stated that the issue is squarely covered by the Hon’ble Jurisdictional High Court in the case of Tractors Farm Equipment Ltd., supra, and also in the case of Jet Airways (I) Ltd., supra.
When these were confronted to Ld. CIT-DR, he could not controvert the above averments.
We have heard the rival contentions and gone through the facts and circumstances of the case. Admittedly, the issue raised in the reasons recorded were that the assessee has purchased property which is not disclosed, but during the draft assessment proceedings, the A.O admitted that these are explained sources. However, the A.O chose to make additions on unexplained cash deposit u/s. 69A of the Act at Rs. 9.50 Lakhs and income from house property at Rs. 67,200/-.
Now, the question arises whether the A.O can made addition on any other item other than the reasons recorded when he has not made additions, for which the reasons were recorded. Hence, in the present case, the addition is not based on the reasons recorded, other additions made by A.O cannot be sustained in view of the decision of Hon’ble Madras High Court in the case of Tractors Farm Equipment Ltd., supra. In view of the above, we quash the assessment and allow the appeal of the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced on 02nd August, 2023.