Ram Khilari Meena Vs ITO (ITAT Jaipur)
Reassessment Invalid If No Addition on Original Reason – ITAT Jaipur Follows Jurisdictional HC
The case was reopened based on information of cash deposits of ₹11.10 lakh in Assessee’s bank account. During reassessment, AO accepted the explanation for cash deposits but made an addition of ₹21 lakh as Long-Term Capital Gain (LTCG) on sale of land & building, even though LTCG was not the reason for reopening.
CIT(A) held that AO was empowered u/s 147 to assess “any other income” coming to his notice during reassessment, relying on Mehak Finvest (P&H HC) & N. Govindaraju (Karnataka HC). He partly allowed the appeal directing AO to verify purchase/sale deeds.
Before ITAT, Assessee argued that once AO made no addition on the issue for which case was reopened, he lost jurisdiction to assess any other income, citing CIT v. Shri Ram Singh (306 ITR 343 – Raj HC), Jet Airways (Bom HC) & Ranbaxy Laboratories (Del HC).
Tribunal agreed with Assessee, holding that as per binding jurisdictional precedent (Ram Singh), AO’s power u/s 147 ceases once the income which formed the basis of “reason to believe” is found to be explained. Only thereafter can a fresh notice be issued, not an addition on unrelated issues. Accordingly, ITAT quashed the reassessment order, allowing the appeal in full.
