JYOTI RANI,HISSAR vs. INCOME TAX OFFICER, WARD -1, HISSAR

Sh. Lalit Mohan, CA, appearing on behalf of the assessee submits that the assessment proceedings in the instant case are liable to be quashed as the final addition in the assessment order has been made on the issue other than for which the assessment was reopened. The learned counsel referring to notice under section 148A(b), dated 12.03.2022 at page 3 of the paper-book submits that the assessment was reopened on the ground that the assessee has received commission amounting to Rs.15,13,500/- from M/s. Future Maker Life Care Pvt. Ltd. under Ponzi Scheme run by the said company. The assessee gave reply to the said notice on 19.03.2022. The Assessing Officer vide order passed under section 148A(d), dated 26.03.2022 accepted that no commission was received by the assessee but went on a different tangent to say that the expenses amounting to Rs. 6,07,830/- was wrongly claimed by the assessee. The Assessing Officer vide assessment order dated 15.02.2023 made addition of the aforesaid amount. The learned counsel for the assessee further submits that the Assessing Officer in assessment made under section 148 of the Act cannot make addition solely on the ground which was not part of the reasons.

Sh. Manoj Kumar, Sr. DR, representing the department vehemently defended the impugned order and the legality of the assessment made under section 148 of the Act by the Assessing Officer. The learned DR reiterating findings of the CIT(A) prayed for dismissing appeal of the assessee.

Both sides heard, orders of the lower authorities examined. The limited issue for consideration in the present appeal is the validity of reopening of assessment. The assessee has assailed that the addition has been made by the Assessing Officer in assessment order passed under section 147 r.w.s. section 144B of the Act on the issue other than for which the assessment was reopened.

Here it would be imperative to refer to the reasons recorded for reopening, annexed to the notice issued under section 148A(b) of the Act. The same reads as under,

The Assessing Officer while completing the assessment under section 147 r.w.s. 144B has finally made addition of Rs.6,07,830/- disallowing the expenditure claimed by the assessee. Thus, it is evident from the records that the addition has been made on a ground other than for which the assessment was reopened. The case of the assessee is squarely covered by the decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratory Vs. CIT, (2011) 336 ITR 136 (Del) and Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.). The Hon’ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra) held that if after issuing notice u/s 148, the AO accepts contention of the assessee and holds that income for which he had initially formed a reason to believe that it had escaped assessment; has, as a matter of fact, not escaped assessment, it is not open to AO to independently assess some other income. Accordingly, the impugned assessment order is quashed and appeal of the assessee is allowed.

In the result, appeal of the assessee is allowed.