AO Cannot Make Addition on Unrelated Issue When No Addition Is Made on Grounds Recorded for Reopening Assessment: ITAT:

The Income Tax Appellate Tribunal (ITAT), Kolkata ‘A’ Bench, has dismissed the Revenue’s appeal in the case of Aakriti Overseas Pvt. Ltd. for Assessment Year 2012-13, holding that the Assessing Officer (AO) could not make an addition on an issue that was not part of the reasons recorded for reopening the assessment when no addition was made on the original issue.

The Revenue had challenged the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (CIT(A)), dated May 25, 2026.

The case was reopened under Section 147 of the Income-tax Act, 1961, through a notice issued under Section 148 on March 29, 2019. The reasons for reopening were based on information that Aakriti Overseas had received Rs. 35 lakh from Quest Infrastructure Pvt. Ltd. and Rs. 10 lakh from Starlight Vintrade Pvt. Ltd. The assessee filed its return declaring nil income and subsequently responded to the notices issued by the AO.

During the reassessment proceedings, however, the AO did not make any addition relating to the two transactions that had formed the basis for reopening the assessment. Instead, the AO treated Rs. 2,04,79,500 received as share premium as unexplained cash credit under Section 68 of the Act and added the amount to the assessee’s income.

On appeal, the CIT(A) deleted the addition, observing that since the AO had not made any addition on the issue for which the assessment was originally reopened, he could not proceed to make an addition on an entirely different issue.

Aggrieved by this decision, the Revenue approached the ITAT, arguing that the AO had the power to assess any other income that came to his notice during reassessment proceedings, even if it was unrelated to the original reasons for reopening.

After considering the submissions of both sides, the Tribunal agreed with the CIT(A). It noted that the reassessment was initiated specifically to examine the alleged receipts of Rs. 35 lakh from Quest Infrastructure Pvt. Ltd. and Rs. 10 lakh from Starlight Vintrade Pvt. Ltd. However, the AO made no addition in respect of these transactions and instead added Rs. 2.04 crore towards share premium.

The Tribunal relied on the judgments of the Bombay High Court in CIT vs. Jet Airways (India) Ltd. (2011) 331 ITR 236 and the Delhi High Court in Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 136. It also referred to the judgment of the Calcutta High Court in CIT vs. Infinity Infotech Parks Ltd., ITAT No. 60 of 2014, dated September 10, 2014.

Following these judicial precedents, the Tribunal held that the CIT(A) had rightly deleted the addition and found no reason to interfere with the appellate order.

Accordingly, the ITAT dismissed the Revenue’s appeal and upheld the order of the CIT(A).