Reassessment must match recorded reasons: an addition on a different footing cannot stand where the reopening lacked a live nexus to the stated income.

Rule 27 of the ITAT Rules permits an assessee to raise a jurisdictional objection even if it was not pressed earlier, where the objection goes to the root of the reassessment. In reassessment proceedings, the addition must have a live nexus with the income for which reasons to believe were recorded. Where reopening was based on alleged undisclosed foreign bank account income, but the assessment instead brought to tax the minimum balance said to be needed to open the account, the addition was treated as beyond the scope of the recorded reasons and therefore unsustainable.

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Issues: (i) Whether the assessee could raise, by way of Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, the objection that the reassessment was without jurisdiction because the impugned addition did not arise from the recorded reasons for reopening; (ii) Whether the addition made under section 69A of the Income-tax Act, 1961 was sustainable when the reassessment was initiated on the basis of alleged escaped income in foreign bank accounts but the assessment ultimately brought to tax the minimum balance required to open the accounts.

Issue (i): Whether the assessee could raise, by way of Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, the objection that the reassessment was without jurisdiction because the impugned addition did not arise from the recorded reasons for reopening.

Analysis: The jurisdictional objection went to the root of the Assessing Officer's power to make the addition in reassessment proceedings. The Tribunal applied the principle that a respondent who has succeeded before the first appellate authority may support the order on a ground decided against him or even not raised earlier, where the issue concerns jurisdiction. On that basis, the Rule 27 petitions were held admissible.

Conclusion: The assessee was entitled to raise the jurisdictional objection under Rule 27, and the petitions were allowed.

Issue (ii): Whether the addition made under section 69A of the Income-tax Act, 1961 was sustainable when the reassessment was initiated on the basis of alleged escaped income in foreign bank accounts but the assessment ultimately brought to tax the minimum balance required to open the accounts.

Analysis: The recorded reasons for reopening were confined to alleged escaped income represented by funds lying in undisclosed foreign bank accounts. The assessment, however, did not assess that very income and instead made an addition of the minimum balance allegedly needed to open the bank account. Applying the binding rule that reassessment must remain linked to the income for which reasons were recorded, the Tribunal held that the impugned addition could not be sustained under section 147.

Conclusion: The addition was held to be beyond jurisdiction and unsustainable.

Final Conclusion: The Revenue's appeals failed and the assessee's Rule 27 challenge succeeded, with the merits of the additions becoming academic.

Ratio Decidendi: In reassessment proceedings, an addition must bear a live nexus to the income for which reasons to believe were recorded; if the reassessment does not proceed on that income, no independent addition on a different footing can be sustained.

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