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2018 (6) TMI 1574 - AT - Income TaxReopening of assessment u/s 148 - AO resorted to the re-assessment on account of one reason - addition so consequently made stood deleted in the first appeal - HELD THAT - The use of words and between the income escaping assessment forming reasons to believe for issuing notice u/s 148 and other income chargeable to tax which escaped assessment and comes to the notice of the AO in the course of the proceeding, amply shows that the existence of the former is a pre-condition for taxing the latter. To put it simply, if the grounds set out in the re-assessment notice are nonexistent, i.e., either no addition is made on such grounds or the addition so made does not pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to the notice of the AO during the course of proceedings u/s 147. Without there being such a deterrent, the AO would acquire an unhindered power to initiate reassessment at the drop of a hat without any legally sustainable reasons and then make other additions resulting in multiplicity of proceedings, which the legislature has sought to curb. Any lawful jurisdiction to make addition on account of other incomes coming to the notice of the AO during the course of proceedings u/s 147 can be acquired only on the foundation of a validly acquired jurisdiction on legally sustainable items of income escaping assessment forming reasons for issuing notice u/s 148. If the AO fails to acquire a valid jurisdiction to make reassessment on the basis of his reasons, then, he is also debarred from making additions for other incomes chargeable to tax which escaped assessment and come to his notice subsequently in the course of proceedings u/s 147 - Decided in favour of assessee.
Issues:
1. Addition of ?25,06,400/- confirmed by Ld. CIT(A). Analysis: The appeal by the assessee was against the confirmation of the addition of ?25,06,400/- made by the Assessing Officer. The Assessing Officer had received information that the assessee had deposited cash in a bank, and despite the assessee's explanation, the addition was made. The Ld. CIT(A) deleted an earlier addition of ?5,25,000/- but sustained the addition of ?25,06,400/-. The Tribunal noted that the AO's grounds for reassessment were non-existent, leading to the deletion of the addition. Citing legal provisions and precedents, the Tribunal emphasized that for any addition based on income noticed during proceedings u/s 147, a valid jurisdiction must first exist for the reassessment. As the AO lacked valid grounds for reassessment, the addition of ?25,06,400/- was deleted. 2. Validity of reassessment and jurisdiction of AO. The Tribunal highlighted the importance of a valid jurisdiction for reassessment under Section 147. It noted that the AO must have legally sustainable reasons for issuing a notice u/s 148 to assess or reassess income. The Tribunal emphasized that the existence of valid grounds for reassessment is a pre-condition for taxing any other income noticed during proceedings u/s 147. Citing judicial decisions, the Tribunal clarified that without a valid jurisdiction for reassessment, the AO cannot make additional additions based on other income noticed during the proceedings. In this case, as the AO's grounds for reassessment were found to be non-existent, the Tribunal set aside the assessment order and deleted the additional ?25,06,400/- added by the AO. The Tribunal's decision in this case focused on the necessity of a valid jurisdiction for reassessment under Section 147 of the Income Tax Act. By emphasizing the legal requirement for the AO to have legally sustainable reasons for reassessment, the Tribunal clarified that without valid grounds for reassessment, the AO cannot make additional additions based on other income noticed during the proceedings. The Tribunal's decision to delete the addition of ?25,06,400/- was based on the lack of valid grounds for reassessment, highlighting the importance of adhering to legal procedures and jurisdictional requirements in tax assessments.
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