Amey Pravinbhai Brahmbhatt Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that addition on grounds other than grounds forming part of reasons recorded for reopening of assessment not justified. Accordingly, addition towards unexplained investment which didn’t form part of reasons liable to be deleted.
Facts- The return of income was filed declaring income of Rs.3,87,630/-. Subsequently, an information was received by the AO that the assessee had made share transactions of Rs.49,10,402/- in penny stock scrip, namely M/s. Swarna Sarita Gems Ltd., and that the assessee had obtained accommodation entry by trading in this share. It was further noticed that the assessee had made certain share transactions and income/loss arising on such transactions was not reflected in the return of income. Therefore, the AO recorded his reason for escapement of income and initiated proceeding u/s.147 of the Act. The reassessment was completed u/s.144 r.w.s. 147 of the Act on 14.12.2018 at total income of Rs.11,05,630/-.
First appellate authority partly allowed the appeal. Being aggrieved, assessee has preferred the present appeal.
Conclusion- Held that when on ground on which the reopening of assessment was based, no addition was made by the AO; he could not make addition on some other grounds which did not form part of the reasons recorded by him. Respectfully following the ratio of the said decision, we are of the considered opinion that the AO was not correct in making addition in respect of unexplained investment in shares, which did not form part of the reason as recorded by the AO, particularly when no addition was made in respect of accommodation entry of Rs.49,10,402 for which the case was reopened and also for income/loss arising in share transactions. Accordingly, the addition of Rs.6,37,000/- in respect of unexplained investment is deleted.
