Scope of reassessment under section 147 limited to recorded reasons; unrelated additions invalid and deleted on appeal.

Reassessment under section 147 is confined to the specific escapement for which reasons were recorded; where reopening was justified by unexplained sales, making additions on unrelated unexplained sundry creditors exceeds the authorised scope and is impermissible. The correct legal position requires fresh recorded reasons before reopening or assessing items not encompassed by the original reasons to believe. Consequently, additions made on sundry creditors that do not relate to the recorded grounds must be deleted and the taxpayer's appeals allowed.

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Issues: (i) Whether additions made in reassessment proceedings on items other than the specific item for which reasons to reopen under section 147 were recorded are permissible.

Analysis: The recorded reasons for reopening in the assessment years identify unexplained sales (sale of flats) as the basis for initiating reassessment under section 147. The reassessment orders, however, do not make additions on the sales item for which reopening was claimed; instead, additions were made on unexplained sundry creditors. The legal position reflected in binding decisions relied upon in the record construes the scope of reassessment as limited to matters for which reasons to believe were recorded; where no addition is made on the specific item forming the basis for reopening, making additions on unrelated items exceeds the scope of reassessment and requires fresh reasons to be recorded before reopening for those items. The authority to issue notice and the applicability of explanation(s) to section 147 were considered in relation to whether the reassessment remained confined to the originally recorded escapement.

Conclusion: The additions made on unexplained sundry creditors, being beyond the scope of the reassessment proceedings initiated for unexplained sales, are not permissible; the reassessment additions are to be deleted and the appeals are allowed in favour of the assessee.

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