DCIT Vs SRMB Srijan Private Limited (ITAT Kolkata)
Kolkata Tribunal dismissed Revenue’s appeal & upheld the CIT(A)’s order quashing reassessment initiated u/s 147, holding that reopening cannot be sustained when the recorded reason for escapement was not pursued in assessment.
Assessee filed return on 24.09.2011 declaring income of ₹5.00 crore. Assessment was completed u/s 143(3) on 24.03.2014. AO later reopened u/s 147 on 28.03.2018 on the ground that commodity profit of ₹1.61 crore had escaped assessment. However, in reassessment order u/s 147 dated 22.01.2018, AO made no addition for commodity profit (since already disclosed in P&L and accepted) but made unrelated addition of ₹50 lakh as unexplained investment paid to Pushkar Trading & Holding Pvt. Ltd. CIT(A) quashed reassessment holding it as bad in law since the very reason recorded was non-existent, and addition on other issues could not survive.
Tribunal observed that Once AO recorded reason that commodity profit had escaped assessment, reassessment had to be confined to that issue. Since AO himself accepted commodity profit as already disclosed & made no addition on that count, the foundation of reopening collapsed. Making addition on a different issue, not forming part of recorded reasons, is impermissible. Tribunal relied on CIT vs. Jet Airways (I) Ltd. (331 ITR 236 Bom- HC), Ranbaxy Laboratories Ltd. (336 ITR 136 Delhi HC) & ACIT vs. Major Deepak Mehta (344 ITR 641 Chhattisgarh HC), which categorically hold that if no addition is made on the issue for which case was reopened, then no other addition can survive. Tribunal upheld CIT(A)’s finding that reopening was invalid.
