ITAT Quashes Reassessment as Final Addition Was Made on Different Grounds:

ITAT Quashes Reassessment as Final Addition Was Made on Different Grounds The Income Tax Appellate Tribunal (ITAT), Delhi, quashed the reassessment, holding that additions cannot be made on grounds different from those on which the assessment was reopened. The assessee company, LDM Agro Foods Pvt. Ltd., filed an appeal raising several grounds. The main contention of the assessee was that the basis on which the assessment was reopened was entirely different from the basis on which the final addition was made.

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Based on the information that the assessee had taken bogus accommodation entries of Rs 1,20,25,868 related to purchases from M/s Madan Lal Madho Prasad and Kalki Trading Company. As a result, the AO issued a notice under section 148A(b), which remained unanswered by the assessee. Therefore, the AO passed an order under section 148A(d) and also issued a notice under section 148 claiming that the income had escaped assessment. However, in the final assessment order under section 147 read with section 144B, the AO made an addition of Rs 1,24,89,146 towards the bogus purchases from a different party named M/s Om Trading Co., under section 37(1) of the Act. Before the Tribunal, the assessee argued that the final assessment did not mention the party's name mentioned in the order and the notice. It was contended that such reassessment was invalid and bad in law. After examining the case, the Tribunal observed that the parties mentioned in the notice under section 148A(b) and the order under section 148A(d) were not the same as the party mentioned in the final assessment order. Therefore, the grounds for reopening the assessment and final addition during the reassessment were made on entirely different facts.

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Accordingly, the ITAT quashed the reassessment order. Since the assessment itself was held invalid, all other grounds raised by the assessee were treated as invalid.