ITAT Ahmedabad Quashes Reassessment for No Addition on Recorded Reasons

The assessee filed a return for AY 2011–12 declaring income of Rs. 4,02,420. The AO reopened the assessment by issuing notice under Section 148 on 30.03.2018, alleging escapement of income relating to immovable property transactions of Rs. 2.08 crore and scrip transactions of Rs. 72.73 lakh.

Relying on ITBA portal data, the AO treated long-term capital gains of Rs. 1.04 crore from shares of Splash Media Ltd. as bogus under Section 68 and added Rs. 5.21 lakh as unexplained commission under Section 69C. The reassessment was completed at Rs. 1.13 crore. The CIT(A) confirmed the additions.

Main Issue: Whether reassessment is valid when no addition is made on the issues recorded in the reasons under Section 148, and additions are made to unrelated issues.

ITAT’s Ruling: The ITAT quashed the reassessment. It held that the recorded reasons were confined to alleged immovable property and scrip transactions, on which no additions were ultimately made. No belief of escapement was recorded regarding Splash Media Ltd. shares.

Relying on CIT v. Mohmed Juned Dadani, the Tribunal held that where the very basis of reopening fails, the AO cannot make additions on issues dehors the recorded reasons. Since the reopening rested on an erroneous factual foundation, the reassessment was held to be without jurisdiction and was quashed in its entirety.

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