Arpita Jena Vs ITO (ITAT Cuttack)
Reassessment u/s 148 Quashed Where No Addition Made on Recorded Reasons; Entire Proceedings Held Invalid – ITAT Cuttack
The ITAT Cuttack allowed the assessee’s appeal for AY 2016-17 & quashed the reassessment proceedings u/s 147/148, holding that the reassessment cannot survive when no addition is ultimately made on the very reasons recorded for reopening.
In this case, the AO issued notice u/s 148 solely on the ground that the assessee had sold an immovable property for ₹75 lakh & had not filed return of income. However, during reassessment proceedings, no addition was made on account of the alleged sale consideration or escapement forming the basis of reopening. Instead, the AO travelled beyond the recorded reasons & made addition relating to source of purchase of property, which was not the basis for reopening.
The Tribunal relied on settled law laid down by the Supreme Court in Jet Airways (I) Ltd. & followed by High Courts, holding that if the ground on which reassessment is initiated fails or is not acted upon, the AO cannot proceed to make additions on other issues. Section 147 permits expansion of reassessment only when reassessment is first carried out on the original reasons.
It was further noted that the assessee had earned only short-term capital loss & had no taxable income exceeding exemption limit, explaining non-filing of return. The reopening, therefore, lacked legal foundation.
Accordingly, holding that the very assumption of jurisdiction u/s 148 was invalid, the ITAT quashed the reassessment & consequential assessment order, and allowed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
