Annakodiraj Vs ITO (ITAT Chennai)
In this case, the ITAT Chennai held that a reassessment cannot survive when no addition is ultimately made on the very reasons recorded for reopening.
The AO had reopened the assessment based on alleged cash deposits (₹1.15 lakh) and withdrawals (₹1.70 crore). However, in the final reassessment order, no addition was made on these issues. Instead, the AO made completely unrelated additions—estimating net profit and treating milk sales as unexplained purchases.
The Tribunal noted that these additions had no nexus with the reasons recorded for reopening. Relying on binding Madras High Court rulings (including PVP Ventures Ltd. and others), it reiterated that once the original “reason to believe” fails, the AO cannot make fishing or roving additions on other issues.
Accordingly, the reassessment order was held to be bad in law and quashed, without examining the merits of additions. The assessee’s legal ground was allowed, and other grounds were left open.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 09.10.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
