Other Income Tax Additions In Reassessment Proceedings Cannot Be Sustained If Addition on Primary Grounds Is Not Made: ITAT

The assessee/appellant has challenged the validity of the assessment made by the Assessing Officer as the assessment was reopened for escapement of income on account of cash deposits made into the bank account by the assessee. While completing the assessment, the assessing officer made various disallowances of expenses other than the reason for which the assessment was reopened.

The assessment was reopened for verification of financial transactions that the assessee had made cash deposits into bank accounts, and while completing the assessment, no addition was made.

The reasons recorded by the Assessing Officer have reason to believe that the income of the assessee has escaped assessment in respect of cash deposits as they remained unexplained. However, while completing the assessment, the Assessing Officer disallowed 25% of the purchases for want of bills and vouchers. The Assessing Officer also disallowed the opening capital shown by the assessee in his capital account as no explanation was offered by the assessee. There was one more addition that was made in respect of the licence fee paid by the assessee for wanting supporting documents. There was no other addition or disallowance made by the Assessing Officer, which relates to cash deposits by the assessee made into his bank account. In other words, the assessing officer did not make any additions for which the assessment was reopened.

The ITAT held that the reassessment order passed by the Assessing Officer under Section 143 (3) read with Section 147 of the Income Tax Act was bad in law and liable to be quashed.

Case Title: Shri Satyawan Versus ITO

Citation: I.T.A No. 3423/Del/2019

Dated: 20/06/2022

Counsel For Appellant: Advocate Subhash Chander Jindal

Counsel For Respondent: Sr. D. R. Om Parkash

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