AO cannot make additions under section 69 for items other than those specified in section 148 notice

ITAT Pune held that AO lacked jurisdiction to make addition under section 69 regarding commodity transaction profits when no addition was made for the specific item that formed the basis for reopening assessment under section 147. Following precedents from Bombay HC in Jet Airways, Delhi HC in Ranbaxy Laboratories, and Rajasthan HC in Shri Ram Singh, the tribunal ruled that AO cannot make additions for items other than those for which reasons were recorded in section 148 notice. Since AO chose not to add the commodity transaction profit of Rs. 15,884 that triggered the reopening, subsequent addition under section 69 was impermissible. Appeal allowed, addition deleted.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) to make an addition not forming the basis for the belief that income escaped assessment.
2. Legality of the addition of Rs. 72,47,912/- under Section 69 of the Income Tax Act, 1961.

Summary:

Issue 1: Jurisdiction of the AO to Make Additional Assessments
The core issue in the appeal was whether the AO had the jurisdiction to make an addition of Rs. 72,47,912/- in the reassessment proceedings when the basis for reopening the assessment was the non-disclosure of a profit of Rs. 15,884/-. The appellant argued that the AO had no jurisdiction to make such an addition since the AO did not make an addition of Rs. 15,884/-, which was the basis for the belief that income had escaped assessment. The appellant relied on several judgments, including CIT Vs. Jet Airways(I) Ltd. (2011) 331 ITR 236 (Bombay), which held that if no addition is made in respect of the item for which reasons were recorded for issuance of notice under Section 148, then the AO cannot make any other addition.

Issue 2: Legality of the Addition of Rs. 72,47,912/- under Section 69
The AO made an addition of Rs. 72,47,912/- under Section 69 of the Act, holding that the commodity transactions through Star Commodities and J.K. Enterprises were dubious and fictitious, aimed at bringing unaccounted income into the books of account. The CIT(A) upheld the AO's findings. However, the appellant contended that since the AO did not add the profit of Rs. 15,884/- (the basis for reopening the assessment), the AO lacked jurisdiction to make the addition of Rs. 72,47,912/-.

Tribunal's Findings:
The Tribunal referenced the judgment in CIT Vs. Jet Airways(I) Ltd. and other similar cases, reiterating that it is not permissible for the AO to make any other addition if no addition is made concerning the item for which reasons were recorded for issuing notice under Section 148. The Tribunal noted that the AO sought to reopen the assessment to add the profit of Rs. 15,884/- and had no doubts about the genuineness of the transaction. Therefore, the addition of Rs. 72,47,912/- was not justified, and the AO had no jurisdiction to make such an addition.

Conclusion:
The Tribunal directed the AO to delete the addition of Rs. 72,47,912/-, allowing the appeal filed by the assessee. The order was pronounced on February 21, 2024.

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