Shueb Urf Mohd. Kunwer Shueb Vs ITO (ITAT Delhi)
147 Is Not a Fishing Net – If You Don’t Catch the Fish, You Can’t Keep the Boat- No Addition on Issue of Reopening? Whole Assessment Goes in Trash
In this case, the reassessment was initiated u/s 148/147 solely on the ground that Assessee had allegedly made cash deposits of ₹26,06,500, & therefore income had escaped assessment. However, during the reassessment, AO did NOT make any addition whatsoever on this “reason recorded” issue. Instead, he went on to make other additions relating to Section 54F deduction, cost of acquisition & improvement, etc.
This triggered a fundamental legal defect.
The ITAT noted a settled legal principle laid down by the Delhi High Court in Ranbaxy Laboratories Ltd. v. CIT (335 ITR 136) & reaffirmed in ATS Infrastructure Ltd. v. ACIT (2024) 166 taxmann.com 61 (Del.):
If the AO does not make any addition on the issue for which reassessment was initiated, then he cannot make additions on other issues. Such a reassessment is invalid & must be quashed.
Applying this binding precedent, the Tribunal observed:
- The only reason for reopening was cash deposit of ₹26.06 lakh.
- AO made no addition at all on this issue.
- Instead, he made entirely different disallowances.
- Therefore, the reassessment fails the jurisdictional test.
Accordingly, Tribunal held that the reassessment itself is invalid in law, & quashed the entire reassessment order. As a result, all other grounds became academic & were not adjudicated.
