ROHAN RAJESH RATHI,NAGPUR vs. ITO WARD 1(1), NAGPUR

On hearing both the sides, we find that among other grounds on merits, assessee by way of additional ground No.1(a) to 1(b), has challenged the impugned assessment order alleging that the same is not sustainable under law for the reason that reopening the case of the assessee was done for a particular issue and for which Ld. AO was satisfied yet Ld. AO ended by making addition on distinct issue.

At the outset, we admit this additional ground for the reason that the same is pure question of fact and can be decided on the basis of facts.

In this context, as we go through the copy of notice under clause (b) of section 148A of the Act dated 21.03.2024, the annexures to this notice mention that the case of the assessee was reopened for the following reasons:-

Now, in regard to this issue, during the assessment proceedings what Ld. AO observes is relevant, and para 4.5.1 are reproduced here:-

However, thereafter, Ld. AO has examined the issue of credit entries in the bank account of the assessee and considering that the same lack sufficient explanation for the purpose of section 69A of the Act, made the addition of Rs. 3,10,40,954/-. 7. Ld.DR defended the impugned orders and submitted that Ld. AO while examining the issue for which case was reopened, has duly taken note of other issues which proviso to section 147 permits. 8. We are of the considered view that what Ld.DR submits would have made any sense if in the assessment order, the Ld. AO at first instance had made addition on account of issue for which the case was reopened and notice under clause (b) of section 148A of the Act was issued. 9. Here is a case, where Ld. AO completely exonerated the assessee in regard to the issue for which the case was reopened. In this regard, reliance can be made on the decision of Hon'ble Delhi High Court in the case of M/s. Ranbaxy Laboratories Ltd. vs. CIT [2011] 336 ITR 136 (Delhi) wherein it has been held as under:- “19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc.,proceeded to make deductions under Section 80HH and 80-I and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80 HH and 80-I which as per our discussion was not permissible. Had the Assessing Officer proceeded not to make dis-allowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per explanation 3 to reduce the claim of deduction under Section 80 HH and 8-ID as well. 5

The Hon'ble Jurisdictional High Court in the case of CIT vs. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom.) has also expressed the same view. Thus, by respectfully following the aforesaid judgments of Hon'ble Delhi High Court and of the Hon'ble Jurisdictional High Court wherein it is held that the reassessment order passed by making additions beyond the reasons recorded is without jurisdiction when the AO has not made any addition on the reasons recorded for initiating the reassessment proceedings. We are inclined to sustain the ground. Appeal of the assessee is allowed and the impugned assessment is quashed.

In the result, appeal filed by the assessee stands allowed.