ASHWIN KEDIA,HISSAR vs. ITO, WARD-1, HISSAR

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ITA 7880/DEL/2018Status: DisposedITAT Delhi22 October 2019AY 2009-103 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if the AO does not make any addition on the issue for which reassessment was invoked, they cannot make additions on other issues. This was based on the principle that the reasons for reassessment must survive.

What were the facts?

The assessee's assessment was reopened under Section 147 based on information about investment in mutual funds. However, the Assessing Officer (AO) made no additions related to this reason. Instead, other additions were made, which the assessee challenged.

What were the issues?

The primary issue was the validity of the reassessment proceedings when no additions were made on the original grounds for reopening. The secondary issue concerned the AO's authority to make additions on unrelated matters during reassessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F+ SMC”: NEW DELHI

Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI

For Appellant: Shri V. P. Bansal, CA
For Respondent: Shri S. L. Anuragi, Sr. DR
Hearing: 25/07/2019Pronounced: 22/10/2019

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT(A), Gurgaon dated 28.09.2018. 2. The assessee has raised the following grounds of appeal:- “1. That the impugned order is against facts and bad in law.

2. That on the facts and circumstances of the case and legal position, the notice u/s 147/148 is invalid and void-ab-initio since the conditions precedent for assuming jurisdiction has not been satisfied.

3. That the learned CIT(A) has erred in confirming the addition of Rs. 4,58,072/-made by the AO on account of Long Term Capital Gain on sale of plot at Hissar.

4. That the learned CIT(A) has erred in confirming the addition of Rs. 95,573/- made by the AO on account of disallowance of house rent allowance and conveyance allowance u/s 10 of the IT Act, 1961.

5. That the learned CIT(A) has erred in confirming the addition of Rs. 11,644/- made by the AO on account of deduction u/s 80C of the IT Act, 1961.”

3. The first ground is against the reopening of the assessment.

4. The brief of the case shows that the assessee filed his return of income on 25.07.2016 declaring total income of Rs. 254880/- in response to the notice u/s 148 of the Act. The revenue got an information that the assessee has Page | 1 Ashwin Kedia Vs ITO, (Assessment Year: 2009-10) purchased units of Reliance Mutual Fund of Rs. 6 lacs on 26.05.2008. Therefore, notice u/s 148 was issued on 26.03.2016. During the course of scrutiny no addition was made with respect to the reasons on which assessment is reopened. However, the ld AO made several other additions and determined the total income of the assessee at Rs. 8,55,860/- in assessment order passed u/s 143(3) read with section 147 of the Act on 03.10.2016. The assessee aggrieved with the order of the ld AO preferred an appeal before the ld CIT(A), who confirmed the action of the ld AO. Therefore, the assessee is in appeal before us.

5. The ld AR first submitted that the there was no tangible material for reopening of assessment u/s 147 of the Act. He further submitted that the ld AO did not seek any information before recording the reasons and not put them on record. He further stated that the approval obtained u/s 151 was based on vague finding. He submitted that approval was obtained with respect to the investment in mutual fund assessment has been completed on altogether different counts and no addition has been made on the reason for which the case is reopened. Even on the merits of the case he submitted that the additions are not sustainable. He referred to the details furnished before the ld AO. On the issue of reopening he relied upon the several decisions.

6.

The ld DR vehemently supported the orders of the lower authorities.

7.

We have carefully considered the rival contentions and perused orders of lower authorities. Apparently in this case, assessment was reopened on the issue of escapement of investment in mutual fund. However, the assessment order u/s 147 of the Act, o addition was made on account of investment in mutual fund. Certain other additions were made. Thus, no addition was made on the issue on which notice u/s 147 of the Act was issued, but other additions were made on which there was no notice of reassessment u/s 147 of the Act. Explanation (3) of section 147 provides that:- “Explanation 3.—For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue Page | 2

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