Sonia Kapoor Vs ITO (ITAT Delhi)
ITAT Delhi Quashes Reassessment – No Addition Made on Recorded Reasons, Entire 147 Action Held Void
Delhi ITAT allowed the appeal of Sonia Kapoor & struck down reassessment framed u/s 147 r.w.s. 144B, holding that when no addition is ultimately made on the very reason recorded for reopening, the reassessment becomes invalid in law.
Reassessment was initiated alleging that Assessee had made cash payment of ₹9,60,000/- for purchase of property, which constituted income escaping assessment. Notice u/s 148 was issued & assessment was framed u/s 147 r.w.s. 144B on 09.03.2022. However, in the reassessment order, no addition was made on account of the alleged ₹9.60 lakh property purchase. Instead, AO made other additions of ₹65,100/- & ₹75,000/-.
NFAC confirmed reassessment, leading Assessee to file appeal before Tribunal.
Tribunal’s noted that Reasons recorded for reopening formed the very basis of AO’s belief that income had escaped assessment. If ultimately no addition is made on the issue for which reasons were recorded, the foundation of belief “vanishes in thin air”. AO is entitled to examine other issues only if at least part of addition relating to recorded reasons is made. Reliance placed on binding precedents: Ranbaxy Laboratories Ltd. vs. CIT (336 ITR 136, Del HC), CIT vs. Jet Airways Pvt. Ltd. (331 ITR 236, Bom HC), Martech Peripherals Pvt. Ltd. vs. DCIT (394 ITR 733, Mad HC). Following these rulings, Tribunal held reassessment void ab initio.
