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Facts
The assessee trust had cash deposits of Rs. 21,55,350/- which were subject to reassessment proceedings under Section 147. Subsequently, the AO made an addition of Rs. 10,69,100/- on account of anonymous donations under Section 115BBC, which was not part of the initial reasons for reopening.
Held
The Tribunal held that the AO exceeded his jurisdiction by making an addition on a ground (anonymous donations) that was different from the original reason recorded for reopening (cash deposits). The addition was based on a new ground for which no separate notice under Section 148 was issued.
Key Issues
Whether the Assessing Officer can make additions on grounds different from the reasons recorded for initiating reassessment proceedings under Section 147/148 without issuing a fresh notice.
Sections Cited
147, 148, 143(3), 115BBC, 12AA, 12A(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: MS. MADHUMITA ROY
O R D E R PER Ms. MADHUMITA ROY, JM:
The instant appeal filed by the assessee is directed against the order dated 03.08.2023 passed by the Ld. NFAC, Delhi arising out of the order dated 27.12.2016 passed by the ITO, Exemption Ward, Ghaziabad under Section 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2009-10 whereby and whereunder the addition made by the Ld. AO to the tune of Rs.18,69,100/- under Section 115BBC in the hands of the assessee has been confirmed.
Brief fact leading to the case is this that upon recording reasons under Section 147 of the Act that cash deposit to the tune of Rs.21,55,350/- made by the assessee trust having its office at 204/4 Patel Nagar, Muzaffarnagar Uttar Pradesh in the saving bank account has escaped assessment within the meaning of Section 147 of the Act and chargeable to tax for Assessment Year 2009-10, notice under Section 148 dated 18.03.2016 was issued and served upon the assessee to examine the source of cash deposit of Rs.21,55,350/- in the bank account during the year whereupon the assessee filed its reply on 28.11.2016 contending that the return filed on 21.09.2009 be treated as return of income in compliance with the said notice issued under Section 148 of the Act.
Relevant to mention that the assessee is a trust and was granted Registration under Section 12AA of the Act by CIT(E) Muzaffarnagar dated 14.02.2008. The audit report under Section 12A(b) of the Act as prescribed in the case of charitable or religious trust or institution along with balance sheet, income and expenditure account disclosing total receipt of Rs.48,63,313/- against which expenditure claimed at Rs.21,61,170/- and surplus shown at Rs.27,02,809/- were duly placed before the Ld. AO. The appellant further has shown to have taken corpus donation of Rs.11,69,100/- in cash, the details whereof were duly furnished including the date of donation, name of the donors, address of the donors and the donation amount by and under the email dated 21.12.2016. In the absence of complete postal address of the donors the Ld. AO made addition of Rs.10,69,100/- invoking the provision of Section 115BBC of the Act on account of donations being anonymous which was in turn confirmed by the First Appellate Authority. Hence, the instant appeal before us.
At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the Ld. AO made addition on account of anonymous donation receipt which is different to the reason recorded by the Ld. AO in reopening the assessment under Section 147/148 of the Act and thus, liable to be deleted. In this regard, he has relied upon the judgment passed by the Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. of 2008, the judgment passed by the Coordinate Bench in the case of ACIT Vs. Index Securities and Research Pvt. Ltd. in for Assessment Year 2011-12 and further the judgment passed by the Coordinate Bench in the case of M/s Tanmay International Vs. ITO in ITA No. 1256/Del/2024.
On the other hand, the Ld. DR vehemently argued in support of the order passed by the authorities below in initiating the proceeding under Section 148 of the Act culminating in making addition of the impugned amount.
We have heard the rival submissions made by the respective parties, perused the records and we have further considered the judgments relied upon by the Ld. AR.
The reason recorded by the Ld. AO is reproduced as follows:
The heading of Section 147 is “Income escaping assessment” and the heading of Section 148 is “issue of notice where income escaped assessment”. Thus, Section 148 is supplementary and complimentary to Section 147 of the Act. Sub-section 2 of Section 148 of the Act mandates reasons for issuance of notice by the Ld. AO and sub-Section 1 of Section 148 the mandates to service of notice to the assessee before the Ld. AO proceeds to assess/reassess and re-compute escaped income. Further that Section 147 mandates recording of reasons to believe by the Ld. AO that the income chargeable to tax has escaped assessment. Explanation 3 further provides that during the course of these proceedings the Ld. AO comes to a conclusion that same items have escaped assessment which is notwithstanding that those items were not included in the reason to believe as recorded in initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Ld. AO that on assumption jurisdiction of escaped income he would keep on making roving inquiry and thereby include different items of income not connected or related with the reasons to believe on the basis of which he assumed jurisdiction. In fact for every new issue coming before the Ld. AO during the course of proceeding of assessment or reassessment of escaped income which he intends to take into account he would be required to issue fresh notice under Section 148 of the Act. The Ld. AO is having power under Section 147 of the Act to assess or reassess the income which escaped assessment and which is the basis of formation of belief. After issuing a notice under Section 148 of the Act if the Ld. AO accepted the contention of the assessee and hold that the income which he has initially formed a reason to believe had escaped assessment as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under Section 148 would be necessary. In fact, this is the crux of the judgment cited by the Ld. AO laying down the law.
It is an admitted position that the Ld. AO though recorded reasons of escaping assessment of Rs.21,55,350/- being cash deposit made by the appellant in the savings bank account and consequently notice issued under Section 148 of the Act, the order of addition made by the Ld. AO is on account of anonymous donations under Section 115BBC to the tune of Rs.10,69,100/- which is completely different from that of the reason recorded by the Ld. AO. It is noted that notice under Section 148 was subsequently issued to the appellant alleging escaping assessment of Rs.10,69,100/- on anonymous donation before making addition invoking Section 115BBC of the Act. Relevant to mention that no reason was recorded by the Ld. AO to that effect alleging escapement of assessment by the assessee. Thus, in my considered opinion that the Ld. AO has acceded his jurisdiction in making addition of the impugned amount of Rs.10,69,100/- treating the same as anonymous donation under Section 115BBC which was never part of the reason to believe of having been escaped by the assessee as recorded by him on 04.03.2016.
In that view of the matter the order of addition is found to be perverse and hence, quashed.
The appeal preferred by the assessee is allowed.
Order pronounced in the open court on 16.07.2025