Ichchaben Kantilal Desai Vs ITO (ITAT Surat)
The ITAT Surat held that a reassessment under Section 147 cannot survive when the Assessing Officer (AO) ultimately makes additions on issues completely unrelated to the reasons recorded for reopening. In this case, the reassessment was initiated solely on the basis of alleged unexplained time deposits of ₹10 lakh and interest income of ₹24,329. However, during reassessment proceedings, the AO instead made a substantial addition of ₹24,62,107 towards long-term capital gains (LTCG) arising from the sale of ancestral land, along with an addition of ₹5 lakh for unexplained investment. The Tribunal found that the recorded reasons never referred to the sale of land or capital gains. Further, no sustainable addition survived on the very issue forming the basis of reopening. Relying on judicial precedents, the Tribunal held that once the foundation of reopening fails, the AO cannot assess entirely new issues without recording fresh reasons and obtaining proper approval. Accordingly, the reassessment was quashed as void ab initio.
Core Issue: Whether a reassessment under section 147 can survive when the reasons recorded for reopening referred only to unexplained time deposits of ₹10 lakh and interest income of ₹24,329, but the Assessing Officer ultimately made no sustainable addition on that issue and instead assessed long-term capital gains of ₹24,62,107 arising from sale of land, which did not form part of the recorded reasons.
