No addition made on account of reasons recorded for reopening vitiated reassessment order – ITAT

No addition made on account of reasons recorded for reopening, the reassessment, order passed was vitiated in law – ITAT

ABCAUS Case Law Citation:
ABCAUS 2939 (2019) (05) ITAT

Important Case Laws Cited/relied upon by the parties:
CIT v. Jet Airways (I) Ltd. (2011) 52 DTR 71
Shri Anil C. Mhaske Vs. Addl.CIT

In the instant case, the assessee had raised an additional ground of appeal challenging the reassessment completed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (the Act) by the Assessing Officer (AO) and confirmed by the CIT(A).

The contention of the assessee was that the order was bad in law and without jurisdiction following the jurisdictional High Court order.

The assessee pointed out that the additional ground of appeal was legal issue, which may be admitted and once the same was decided, then no other grounds of appeal need to be adjudicated.

The assessment was reopened in the hands of assessee on account of insurance premium paid towards life Insurance, howeverthe Assessing Officer had made various additions in the hands of assessee, but no addition was made on account of reasons recorded for reopening the assessment.

The Tribunal observed that the question which arose was whether in the re-assessment proceedings, wherein no addition was made on account of reasons recorded for reopening the assessment, was the assessment order passed thereafter was vitiated in law?

The Tribunal observed that the language of section 147 of the Act itself is clear, wherein it is categorically mentioned that where the Assessing Officer has reason to believe that any income had escaped assessment for any assessment year, then he may assess or re-assess such income and also any other income chargeable to tax. In other words, it is incumbent upon the Assessing Officer first, to record reasons for reopening the assessment on account of escapement of income of particular source of income during particular assessment year, which comes to his notice and then the Assessing Officer is to pass an order of assessment by assessing or re-assessing such income and also any other income in the hands of assessee.

However, the Tribunal pointed out that where the Assessing Officer makes no addition on account of reasons recorded for reopening the assessment, then he is precluded from making any other addition on account of any other sources for which no reasons were recorded for reopening the assessment.

The Tribunal observed that the Hon’ble jurisdictional High Court had laid down the aforesaid proposition, wherein they have elaborately discussed the significance of expression ‘also’ and held in favour of the assessee.

Therefore, the Tribunal opined that in the instant case, wherein no addition had been made in the hands of assessee on account of reasons recorded for reopening the assessment, the assessment order assessing any other income in the hands of assessee was not sustainable.

Accordingly the Tribunal held that re-assessment proceedings completed in the case of assessee, wherein no addition had been made on account of reasons recorded for reopening the assessment could not stand and was bad in law.

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