2020 (10) TMI 556 - AT - Income Tax

Assessments Cancelled: Tribunal Rules Assessing Officer Cannot Independently Add under Section 68

The Tribunal allowed the assessee's appeals challenging the validity of assessments made by the Assessing Officer for A.Y. 2006-07 and A.Y. 2009-10 under ... Validity of reopening u/s 147 - addition u/s 2(22)(e) and unexplained cash credit u/s 68 - HELD THAT:- In the present case were reopened by the Assessing Officer for bringing to tax the income on account of deemed dividend u/s 2(22)(e) of the Act that had allegedly escaped assessment as is evident from the reasons recorded by the AO, but no addition was finally made by the AO in the assessments u/s 143(3) r.w.s. 147 for both the years under consideration u/s 2(22)(e) and the addition was made only on the issue of unexplained cash credit u/s 68 which did not form the basis of reasons recorded by the Assessing Officer for reopening of the assessments for both the years under consideration. If these facts of the case, which have remained undisputed or uncontroverted by the ld. DR, are considered in the case of CIT vs. Jet Airways (I) Ltd [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] we find merit in the contention of assessee that it was not open to the Assessing Officer independently to make addition u/s 68 in the assessments completed u/s 143(3) r.w.s. 147 for both the years under consideration and the assessments so made by him without satisfying the requisite condition are liable to be cancelled being bad in law. - Decided in favour of assessee. Issues:Validity of assessments made by Assessing Officer u/s 143(3) r.w.s. 147 for A.Y. 2006-07 and A.Y. 2009-10.Analysis:The appeals were filed by the assessee against two separate orders passed by the ld. CIT(A)-1, Kolhapur for A.Y. 2006-07 and A.Y. 2009-10. The Assessing Officer had reopened the assessments and made additions under section 68 of the Income Tax Act, 1961. The ld. CIT(A) upheld the validity of the assessments but allowed partial relief on the additions made under section 68. The assessee challenged the validity of the assessments on the grounds that no additions were made based on the reasons for reopening. An additional ground was raised during the appellate proceedings to challenge the validity of the assessments.The ld. Counsel for the assessee argued that since no additions were made based on the reasons for reopening, it was not lawful for the Assessing Officer to independently make additions under section 68. The Counsel relied on a decision by the Hon’ble Bombay High Court and stated that assessments made without satisfying the requisite condition are liable to be cancelled. The Tribunal found merit in the contention and allowed the additional ground raised by the assessee, cancelling the assessments made by the Assessing Officer for both years under consideration.The Tribunal, having decided to cancel the assessments, deemed the other grounds raised by the assessee as infructuous. Therefore, those grounds were not adjudicated upon. Consequently, both appeals of the assessee were allowed, and the order was pronounced on September 21, 2020.