No Addition can be made on ground which did not found part of reasons recorded for Sec 147 Assessment: ITAT

The issue in the present ground is with respect to the reopening of assessment and the framing of the order u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (The Act).

In this matter, the reasons that was recorded by the AO for reopening of the assessment was that assessee had sold an immovable property at Village Jonawas which is situated within 5 K.M. from the municipality’s limit of Rewari/Dharuhera Municipality and thus was covered in the definition of Capital Assets.

Since, the assessee had not disclosed the Long Term Capital Gain, AO was of the view that income had escaped assessment within the meaning of Section 147 of the Act.

The assesee pointed to the assessment order framed u/s 143(3) r.w.s 147 of the Act dated 11.03.2013 and submitted that no addition has been made by the AO on the issue of Long Term Capital Gain but AO has proceeded to make the addition of Rs.63,00,000/- u/s 68 of the Act.

He therefore submitted that the addition has been made by the AO on the different ground then that was recorded in the reasons for reopening the assessment. He thereafter submitted that on the issues on which the additions have been made in the order passed u/s 143(3) r.w.s. 147 of the Act, no fresh notice u/s 148 of the Act was issued by the AO.

He therefore relying on the decision of Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) (331 ITR 236) (Bom) and the decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs. CIT (2011) 12 taxmann.com 74 (Delhi) submitted that it is not open to AO to assess or reassess independently any other income which does not form the subject matter of the notice.

He therefore submitted that in the present case, since no addition has been made on the issue with respect to which the reasons which were recorded and for which reopening was made, the order for re-assessment was void and therefore the order be set aside.

ITAT placed reliance on the decision of Hon’ble Gujarat High Court in the case of CIT vs. Mohmed Juned Dadani reported in (2013) 355 ITR 172 (Guj.) wherein it was held that if the assessing officer does not make any addition with respect to the ground on the basis of which the notice u/s 148 of the Act was issued, then he cannot make addition on other issues which did not found part on the reasons recorded. Therefore, ITAT stated that the assessment order is not sustainable in the eye of law and set aside the assessment.