Re-assessment proceedings quashed as there was no nexus between reasons recorded and addition made

Hon’ble Delhi ITAT has in the case of Krishan Kumar v/s ITO in ITA No. 3985/Del/2017 has quashed the reassessment proceedings as there was no nexus between reasons recorded and addition made. In the instant case reopening was made on the basis of AIR information received that the assessee has made cash deposit of Rs. 19 lakhs whereas the AO  made addition of Rs. 36,26,500/- to the total income of the assessee on account of capital gain.

Further, the AO also made addition of Rs. 38,362/- on account of interest which was not disclosed by the assessee.

Hon’ble Delhi ITAT has held as under:-

“I have considered the rival arguments made by both the sides, perused the orders of the AO and Ld. CIT(A) and the paperbook filed on behalf of the assessee. I have also considered the various decisions cited before me. A perusal of the reasons recorded by the AO as reproduced by him in the assessment order shows that the reopening was made on account of cash deposit of Rs. 19 lakh in the bank account of the assessee. However, the AO in the assessment order has made addition of Rs. 36,26,500/- on account of capital gain and interest income. Thus, there is no addition on account of which the assessment was reopened by issue of notice u/s 148 of the I.T. Act. Hon’ble Delhi High Court in the case of Ranbaxy Laboratory Ltd., vs CIT(supra) has held that the assessing officer has the jurisdiction to reassess the issues other than issues in respect of which proceedings were initiated. But he was not justified when the reasons for the initiation of those proceedings seized to survive. Since, in the instant case, there was no addition made in the assessment order on account of which the assessment was reopened but some other additions have been made by the AO, therefore, the AO does not have jurisdiction to make such other additions in absence of any addition made for which the assessment was re-opened in the light of the decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratory Ltd. (supra). Therefore, the re-assessment proceedings have to be quashed.”

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