SKY SCRAPER PROPERTIES PRIVATE LIMITED,MUMBAI vs. ITO 13(2)(2), MUMBAI

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ITA 1110/MUM/2025Status: DisposedITAT Mumbai03 June 2025AY 2014-15Bench: SHRI NARENDER KUMAR CHOUDHRY (Judicial Member)3 pages

AI SummaryAllowed

Facts

The assessee's case was reopened under Section 147 for AY 2014-15 due to alleged accommodation entries of Rs.8,10,000 from Shri Hasmukhlal Mehta. While the Assessing Officer made additions for interest income and interest paid amounting to Rs.4,97,917 and Rs.10,23,658 respectively, no addition was made based on the initial reason for reopening under Section 147/148.

Held

Relying on the Bombay High Court judgment in Jetair (P.) Ltd. vs. Dy. Commissioner of Income Tax, the Tribunal held that if the income forming the initial reason for reopening under Section 147 is found not to have escaped assessment, it is not open to the AO to independently assess other income. Since the additions were not based on the original reason for reopening, the assessment order passed under Section 148 was quashed.

Key Issues

Whether an assessment order passed consequent to a Section 147 notice can sustain additions unrelated to the original reason for reopening if the original reason itself is not pursued, and the applicability of the Jetair (P.) Ltd. judgment.

Sections Cited

147, 148, 131, 133A, 250

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Cases cited in this judgment

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Jetair (P) Ltd. v. DCIT
148 Taxmann.com 185 · 2023 · HC
12 citing

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY

For Appellant: Mr. Bhupendra Shah, Ld. A.R

For Respondent: Mr. P D Chougule, Ld. Sr. D.R

Hearing: 03.06.2025Pronounced: 03.06.2025

Per : Narender Kumar Choudhry, Judicial Member:

This appeal has been preferred by the Assessee against the order dated 10.02.2025, impugned herein, passed by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15.

In the instant case, the case of the Assessee was reopened by recording reasons for reopening u/s 147 of the Act with the allegations that the Assessee Company is one of the beneficiary companies to whom accommodation entries of Rs.8,10,000/- were provided by Shri Hasmukhlal Mehta, who has admitted in his statement recorded on oath u/s 131 of the Act dated 25.03.2014 during the course of survey action u/s 133A of the Act.

Though the Assessing Officer (AO) has made the additions of Rs.4,97,917/- and Rs.10,23,658/- on account of interest income received and interest paid respectively to Simandhar Developer and Mukta Builder and other entity, however, admittedly has not made any addition on the basis reason/issue, on which the case was reopened u/s 147/148 of the Act. Therefore, the addition made in the absence of substantive addition on the basis of reason for reopening of the case, is hit by the judgment of the Hon'ble Jurisdictional High Court in the case of Jetair (P.) Ltd. vs. Dy. Commissioner of Income Tax (2023) 148 taxmann.com 185 (Bombay) wherein it was held as under:

“16…………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… …………………………Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has 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, the legality of which would be tested in the event of a challenge by the assessee”.