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

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F+ SMC”: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 7880/Del/2018 (Assessment Year: 2009-10) Ashwin Kedia, Vs. ITO, House No. 12-S, Model Town, Ward-1, Hissar, Haryana Hissar PAN: ABSPK0721B (Appellant) (Respondent)

Assessee by : Shri V. P. Bansal, CA Revenue by: Shri S. L. Anuragi, Sr. DR Date of Hearing 25/07/2019 Date of pronouncement 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, ITA No. 7880/Del/2018 (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

Ashwin Kedia Vs ITO, ITA No. 7880/Del/2018 (Assessment Year: 2009-10) comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148.” 8. Thus, if AO does not make any addition on the issue on which reassessment is invoked, he does not have authority to make addition on any other issue. As in the present case, there is no addition in assessment order u/s 143(3) read with section 147 of the Act on issue, for which notice u/s 148 is issued, no other addition can be made. This issue is squarely covered in favours of assessee by decision of Hon’ble Delhi High Court in 339 ITR 136 Ranbaxy Laboratories Ltd Vs. CIT (Del), wherein, it is held that:- “21. In view of our above discussions, the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive.” 9. Therefore, we direct the ld AO to delete the disallowance/ additions made in the assessment order following the decision of the Hon’ble Jurisdictional High Court. Accordingly, ground No. 1 of appeal is allowed. 10. In the result appeal of the assessee is allowed. Order pronounced in the open court on 22/10/2019. -Sd/- -Sd/- (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22/10/2019 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi