SUBHASH CHANDRA,UTTAR PRADESH vs. INCOME TAX DEPARTMENT, AGRA

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ITA 6449/MUM/2024Status: DisposedITAT Mumbai27 May 2025AY 2016-17Bench: SHRI SANDEEP GOSAIN (Judicial Member)14 pages
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What did the Tribunal hold?

The Tribunal held that the reassessment was initiated to investigate the source of funds for the property purchased, but the addition was made on the taxability of salary income, which is an entirely different ground. Following the decision of the jurisdictional High Court in Jet Airways (supra), the Tribunal was of the view that the AO cannot make additions on issues not forming part of the recorded reasons for reopening, as it violates the jurisdictional requirement under Section 147 of the Act. Therefore, grounds 1 and 2 raised by the assessee were allowed, and the order of reopening and the consequential order of reassessment were quashed. The Tribunal also noted that since the order of reopening and reassessment was quashed, other grounds raised by the assessee needed no specific adjudication. The disallowance of deduction under Section 80P was also held to be not sustainable.

What were the facts?

The assessee, Subhash Chandra, an individual non-resident, is in appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2016-17. The Income Tax Department initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, based on information that the assessee purchased immovable property worth Rs. 53,82,256 during FY 2015-16 but did not file a return. The initial reason for reopening was the property purchase. The Assessing Officer (AO) initially concluded that the assessee had explained the sources for the property purchase and no addition was warranted under Section 56(2)(vii)(b). However, the AO later issued a second show cause notice focusing on the taxability of the assessee's salary of Rs. 25,20,000 from an overseas employer, M/s Securewest International Ltd., leading to an addition of this amount.

What were the issues?

1. Whether the Assessing Officer could make an addition on the taxability of overseas salary income when the reassessment proceedings were initiated based on the purchase of immovable property, and the AO initially concluded no addition was required on that ground? Assessee's Contention: The assessee argued that the reassessment was initiated to investigate the sources of funds for the property purchase. However, the final addition was made on an entirely different ground – the taxability of overseas salary income. The assessee relied on the Bombay High Court's decision in CIT Vs. Jet Airways Ltd. (331 ITR 236) to contend that an assessment reopened on one ground cannot be concluded by making additions on a different ground unless the new ground was part of the reasons recorded for reopening. The AO cannot make additions on issues not forming part of the recorded reasons for reopening, as it violates the jurisdictional requirement under Section 147. Revenue's Contention: The Revenue relied upon the orders passed by the revenue authorities.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 148,Section 142(1),Section 144,Section 144B,Section 56(2)(vii)(b),Section 90,Section 91,Section 271(1)(c),Section 80P

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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI

Before: HON’BLE SHRI SANDEEP GOSAIN

For Appellant: Mr. Suchek Anchaliya
For Respondent: Ms. Madhura M. Nayak Sr. DR
Hearing: 07.05.2025Pronounced: 27.05.2025

Date of Hearing 07.05.2025 Date of Pronouncement 27.05.2025 आदेश / ORDER

PER SANDEEP GOSAIN, JM:

1.

1. The present appeal has been filed by the assessee challenging the impugned order 27.08.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2016-17.

2. Ground No. 1 & 2 of the revised grounds raised

by the assessee are interrelated and interconnected and relates to challenging the order of Ld.CIT(A) in upholding the order of reopening of assessment. Therefore, I have 2. Subhash Chandra., Mumbai decided to adjudicate these grounds through the present consolidated order.

3.

At the very outset, Ld. AR submitted that the reasons for reopening the case were other than the issue on which the actual addition was made by the AO and while relying upon the decision of Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways Ltd 331 ITR 236 Bombay, requested to set aside the order of reassessment, Ld. AR also relied upon his written submissions and the same are reproduced here in below:

1.

The case pertains to Mr. Subhash Chandra (PAN: AFEPC7113H) (herein after 'assessee/ appellant'), an individual non resident of India, for the Assessment Year ('AY') 2016-17. The Income Tax Department initiated reassessment proceedings under section 147 of the Income Tax Act, 1961, based on information that the assessee purchased immovable property worth Rs. 53,82,256 during the Financial Year 2015- 16, but did not file a return of income for AY 2016-17.

2.

The Reason reproduced under section 148A(b) of the Act dated 18.02.2023 is as under:

Information, in accordance with the Risk Management Strategy formulated by the Central Board of Direct Taxes (CBDT) has been received in your case for the Financial Year 2015-16 relevant to A.Y 2016-17 through Insight Portal. The details of the aforesaid information is as given below.

Transaction Information Information Source Amount date /F.Y Code description 2015-16 Air – 006 Purchased Sub 53,82,256 immovable

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