IN THE INCOME TAX APPELLATE TRIBUNAL

LUCKNOW BENCH “A”, LUCKNOW

BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER

AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER

ITA No.872, 873, 874/LKW/2014

Assessment Year:2008-09/2009-10

Income Tax Officer Gonda (Appellant) vs M/s Suraj Udyog (Respndent)
Date of Order: 16-09-2015

ORDER

PER SUNIL KUMAR YADAV:        

                  These appeals are preferred by the Revenue against the respective orders of the ld. CIT(A) almost on common grounds subject to difference in quantum.  We, therefore, heard these appeals together and are being disposed of through this consolidated order.

2.             In I.T.A. Nos. 873 & 874/LKW/2014, the ld. counsel for the assessee has invited our attention to the order of the ld. CIT(A) with the submission that in these appeals, the ld. CIT(A) has held the reopening to be invalid on the ground that no addition was made on the issue on which assessment was reopened following the judgments of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways, 331 ITR 236 and the Hon'ble Delhi High Court in the case of Ranbaxy Lab. Vs. CIT, 200 Taxman 242 in which it has been held that if no addition is made on an issue on which assessment was reopened, the reopening itself is bad and the assessment framed consequent thereto deserves to be annulled.  The ld. counsel for the assessee has further contended that in all these years, the assessment was reopened having noted there was unexplained unsecured loans which escaped assessment, but while completing the assessment, no addition under this head was made.  Therefore, in the light of the aforesaid judgments, the ld. CIT(A) has rightly annulled the assessment having held the reopening under section 147 of the Act to be bad.

3.             The ld. D.R., on the other hand, has placed reliance upon the assessment order.

4.             Having carefully examined the orders of the lower authorities in the light of the rival submissions in I.T.A. No. 873 & 874/LKW/2014, we find that undisputedly the assessment was reopened on the basis of unexplained unsecured loan noticed by the Assessing Officer for forming a belief that the income has escaped assessment, but while completing the assessment, no addition under this head was made.  It is settled position of law that if the addition is made on an issue on which assessment is reopened, the Assessing Officer is free to examine other issues and to make addition thereon.  But in a case where no addition is made on an issue, on which assessment is reopened, the reopening itself is not valid and the assessment framed consequent thereto deserves to be quashed in the light of the aforesaid judgments of the Hon'ble Delhi and Bombay High Courts.  We accordingly do not find any infirmity in the orders of the ld. CIT(A) who has rightly annulled the assessment for these two assessment years.

I.T.A. No. 872/LKW/2014:

5.             In this appeal, the Revenue has raised various grounds including a ground on merit for an addition of Rs.36,49,000/- on account of unexplained creditors.

6.             In this case, the Assessing Officer has made addition of Rs.36.49 lakhs on account of unsecured loans for which assessment was reopened by forming a belief that this unsecured loan has escaped assessment.  During the course of hearing, the ld. counsel for the assessee has also agreed that in this case the assessment is valid, as the addition was made on an issue on which it was reopened, but the ld. counsel for the assessee has contended that the ld. CIT(A) has annulled the assessment relying upon his order for other years and he has not given any finding on merit.  Since the assessment is held to be valid in this case, the issue on merit requires proper adjudication.  He accordingly submitted that in the interest of justice, the issue of addition of Rs.36.49 lakhs on account of unexplained creditors be restored to the ld. CIT(A) for adjudicating it on merit after affording an opportunity of being heard to the assessee.

7.             The ld. D.R. did not dispute this proposition.

8.             In the light of these facts, we are of the view that since the reopening is valid in this case, as the addition was made by the Assessing Officer on an issue on which assessment was reopened under section 147 of the Act, the issue requires to be adjudicated on merit, as the ld. CIT(A) has not given any finding on merit on this issue.  We accordingly set aside the order of the ld. CIT(A) and restore the issue of addition of Rs.36.49 lakhs on account of unexplained creditors to the ld. CIT(A) to re-adjudicate the same on merit after affording an opportunity of being heard to the assessee.

9.             In the result, appeals of the Revenue in I.T.A. No. 873& 874/LKW/2014 stand dismissed and appeal in I.T.A. No. 872/LKW/2014 is allowed for statistical purposes.

            Order was pronounced in the open court on the date mentioned on the captioned page.

Sd/-		Sd/-
[A. K. GARODIA]		[SUNIL KUMAR YADAV]
ACCOUNTANT MEMBER DATED:16 th   September, 2015		JUDICIAL MEMBER