Bindu Dharmesh Bhatt Vs ACIT (ITAT Ahmedabad)
Reopening Invalid Where No Addition Made on Recorded Reasons: ITAT Quashes Bogus Loss Disallowance
The Ahmedabad Bench of the Income Tax Appellate Tribunal quashed the reassessment proceedings for AY 2011-12, holding that the reopening under section 147 was without jurisdiction since no addition was ultimately made on the issues forming the basis of the recorded reasons.
The Assessing Officer reopened the assessment on the alleged non-disclosure of (i) commodity purchases of ₹5.99 lakh and (ii) interest income of ₹2.16 lakh. However, during reassessment, no addition was made on these issues. Instead, the AO disallowed a trading loss of ₹82.67 lakh on the ground that the assessee lacked financial capacity and treated the loss as bogus—an issue completely absent from the recorded reasons.
The Tribunal held that once the reasons recorded for reopening do not survive and no addition is made on those grounds, the AO lacks jurisdiction to make additions on unrelated issues. Relying on binding precedents including CIT v. Mohmed Juned Dadani (Gujarat HC), Jet Airways (Bom HC) and Ranbaxy Laboratories (Delhi HC), the ITAT ruled that reassessment based merely on suspicion is impermissible. Since the very foundation of reopening failed, the entire reassessment was held to be invalid and quashed, without examining the merits of the disallowance. The assessee’s appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is an appeal filed against the order dated 14-06-2023 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2011-12.
