When AO do not make any addition on the basis of the reasons on which the reopening was done, the reopening is bad in law – ITAT
In a recent judgment, ITAT Cuttack has held that when the AO do not make any addition on the basis of the reasons on which the reopening was done, the reopening is bad in law.
ABCAUS Case Law Citation:
5036 (2026) (02) abcaus.in ITAT
Important Case Laws relied upon by Parties
The appellant assessee had purchased a property but had not filed its return for the impugned assessment year as the assessee did not have taxable income.
The AO issued a show cause notice u/s 148A(b) of the Income Tax Act, 1961 (the Act) on the ground that the assessee had sold the immovable property as return had not been filed.
The assessee replied that for the relevant Assessment Year she was not having income exceeding the exemption limit. The assessee further stated that notice issued u/s 148A(b) did not indicate that the AO had conducted any enquiry and the notice only specified the information available with the Department.
The assessee also contended that the scn did not allege any escapement of income. It was also stated that the assessee had purchased another property and therefore there was no taxable capital gain in the hands of the assessee.
However, the AO did not accept the response of the assessee and reopened and completed the assessment.
Before the Tribunal the assessee contended that in the assessment no addition had been made on account of the reasons recorded for the purpose of the reopening. It was submission that the addition had been made in respect of the source for the purchase of property. It was submission that the in view of the decision of the Hon’ble Supreme Court and the decision of the Hon’ble Madras High Court section 147 of the Act enables the Assessing Officer to travel beyond the reasons for initiating reassessment proceedings provided such reassessment is also carried out on the grounds or reasons on which reassessment was initiated. On the other hand, if the ground on which reassessment was initiated was no longer available to the Assessing Officer, reassessment cannot be continued on the basis of the original notice u/s.148 of the Act and that a fresh notice is necessary.
The Tribunal opined that AO having not made any addition on the basis of the reasons on which the reopening was done, the reopening was bad in law and quashed the consequential assessment order.
Download Full Judgment Click Here >>
- Merely because sales were declared for only one month, same cannot be treated as bogus
- ITAT deleted addition as method of accounting had been accepted in earlier years
- Orders passed under Benami Act cannot be challenged under IBC 2016 – SC
- RBI notified format of Currency Declaration Form to declare foreign exchange brought
- Companies Compliance Facilitation Scheme 2026 to condone delay in filing forms with ROCs
