MOHINI V. KALANTRI,MUMBAI vs. ASST CIT 13(2), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the AO cannot make an addition on grounds unrelated to the original reasons for reopening the assessment. The addition made under Section 2(22)(e) was therefore deleted.
What were the facts?
The Assessing Officer (AO) reopened the assessment based on specific reasons, including escaped income from technical fees and bank interest. However, the AO made an addition based on deemed dividend under Section 2(22)(e) without addressing the original reasons for reopening.
What were the issues?
Whether the AO can make additions on grounds unrelated to the reasons for which the assessment was reopened. The validity of an addition made under Section 2(22)(e) when the reopening was based on other grounds.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- PCIT v. Lark Chemicals (P) Ltd.162 citing195 Taxmann 117 · 2010 · HC
Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य बी सद�य बी बी. . . . आर बी आर आर. . . . बा�करन आर बा�करन बा�करन केकेकेके अनुसार बा�करन अनुसार अनुसार/ Per B.R. Baskaran, AM- अनुसार The appeal filed by the assessee is directed against the order dated 28/10/2016 passed by the ld. Commissioner of Income tax(Appeals) and it relates to assessment year 2006-07.
At the time of hearing the ld. Authorised Representative (AR) urged a legal ground that the addition made in the re-opened assessment is bad in law. He submitted that the Assessing Officer has re-opened the assessment on certain reasons but did not make any addition thereon. The Assessing Officer has completed the assessment by making an altogether new addition. Accordingly, by placing reliance on the decision rendered by the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2010) 195 Taxman 117 (Bom), the ld. AR submitted that the addition made by the Assessing Officer is liable to be deleted.
416/M/16 Mohini V. Kalantari
We have also heard the ld. Departmental Representative (DR) and perused the record. We noticed that the Assessing Officer has re-opened the assessment on the following reasons:- “2. The reasons for initiating proceedings u/s. 148 of the I.T.Act, 1961 in your case for the above assessment year are given as under- Income has escaped assessment for A.Y. 2006-07 due to the following reasons:- (1) An amount of Rs. 5,25,000/- received from M/s. Poonam Soni Signature Cine (P) Ltd. as technical fees has escaped assessment, as it is neither shown in the computation statement nor in the P & L A/c. nor brought to tax. (2) It is seen from the capital account that the following income has not been assessed to tax:- (a) Bank interest : Rs. 31,381/- (b) BOB brokerage : Rs. 4,220/- (c) Progressive share Brokerage : Rs. 1,12,271/- Rs. 1,47,872/- (3) Based on the statement filed by the assessee on computation of Capital Gain, the assessment was made of only Rs, l,13,11,626/- as unaccounted investments. The remaining investments amounting to about Rs. 1 crore, which were not shown and which were held by the assessee till 31.03.2006, has apparently escaped assessment. (4) Certain unexplained deposits amounting to Rs. 55.58 lakhs made in the bank accounts after November, 2005 till March, 2006 were omitted to be taxed.”
3.1. We notice from the assessment order that the Assessing Officer has completed assessment by assessing deemed dividend of Rs.38.00 lakhs u/s.2(22)(e) of the Act. Thus, we notice that the AO has made an altogether new addition without making any addition on the reasons for which the assessment was re-opened. The Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (supra), has held that it is not open for the AO to independently assess some other income, when he did not make any addition in respect of items for which he had initially formed a reason to believe that it had escaped assessment. Since the contentions of the assessee get support from the decision rendered by the Hon'ble Jurisdictional Bombay High Court (supra), we agree with the contentions of the assessee that the Assessing Officer could not have made addition of Rs.38.00 lakhs u/s.2(22)(e) of the Act, in the facts and circumstances of the case. Accordingly, we set aside the order of the CIT(A) and direct the AO to delete the addition made u/s. 2(22)(e) of the Act. Since we have deleted the 416/M/16 Mohini V. Kalantari addition on legal grounds, we do not find it necessary to adjudicate the Grounds urged on merits.
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