2021 (2) TMI 669 - AT - Income Tax

Reopening of assessment u/s 147 - Addition of unexplained cash deposits in the bank account - HELD THAT - On a conjoint reading of the 'reasons' along with the order u/s. 147 it is palpable no addition arising from the reasons for the reassessment was made. An altogether separate addition was made, which admittedly did not have any connection with the initiation of re-assessment. Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY has held that the AO cannot proceed with re-assessment if the grounds mentioned in re-assessment are non-existent i.e if no addition is made on that score. When I examine the factual scenario obtaining in the instant case on the touchstone of the ratio laid down by the Hon'ble jurisdictional High Court in the above decision, the inescapable conclusion which can be drawn is that the only addition made in the reassessment on a ground different from the one for which notice u/s. 148 of the Act was issued, lacks legality. The same is, therefore, deleted.

Summary

Issues:
1. Addition of ?2,18,000 made by the Assessing Officer under section 143(3) read with section 147.

Analysis:

Issue 1: Addition of ?2,18,000
The appeal pertains to an addition of ?2,18,000 made by the Assessing Officer in the order under section 143(3) read with section 147 of the Income Tax Act, 1961. The appellant contested this addition, arguing that it was not supported by the reasons recorded by the AO for initiating reassessment. Upon review, it was found that the reasons for reassessment did not correlate with the addition made. The AO had only added ?2,18,000 as unexplained cash deposits, which was unrelated to the grounds for reassessment. The Tribunal referred to a precedent set by the Hon'ble Bombay High Court in CIT vs. Jet Airways (I) Ltd., emphasizing that if no addition is made based on the grounds mentioned in the reassessment, the reassessment itself becomes invalid. Therefore, the Tribunal concluded that the addition of ?2,18,000 lacked legality and was deleted. The appeal was allowed in favor of the appellant.

This detailed analysis covers the key legal issue raised in the judgment, providing a comprehensive understanding of the Tribunal's decision regarding the addition of ?2,18,000 in the assessment.