TaxTMI 
TaxTMI 
2026 (8) TMI 874
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....al Tax effect 1. The order of the Ld. CIT (A) u/s. 250 of the Act dt. 07/08/2025 for the AY 2020-21 is erroneous both on facts and in law to the extent the order is prejudicial to the interests of the appellant. General ground 2. The Ld. CIT (A) erred in dismissing the appeal without considering the facts and circumstances of the case. Technical ground 3. The Ld. CIT(A) erred in upholding the action of the Ld. AO in disallowing the claim of Rs. 25,000/- of deduction claimed u/s. 80D which is bad-in-law. Technical ground 4. The Ld. CIT(A) ought to have appreciated that the Ld. AO has erred in properly considering the fact that the yearly contribution for insurance company is Rs. 25,000/-, that through it commence in second half of FY 2019-20, it covers for 1st half of previous year 2020-21 and that for second half of FY 2020-21 fresh premium is paid as that, therefore entire Rs. 25000/- is to be allowed for each year. Technical ground 5. The Ld. CIT(A) ought to have held that, when an un-reported income is taken into account by the AO, then the un-reported loss also ought to have been taken into consideration basing on the information ava....
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....e in view of judgment rendered by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). The Learned Departmental Representative ("Ld. DR") also did not raise any objection for admission of the additional grounds. The prayer for admission of additional grounds noted above which are not in memorandum of appeal are being admitted for adjudication in terms of Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objections raised in additional grounds are legal in nature for which relevant facts are stated to be emanating from the existing records. 5. The brief facts of the case are that the assessee is an individual who filed her return of income for the assessment year 2020-21 on 29.12.2020 declaring total income of Rs. 4,72,570/-. Subsequently, a search and seizure operation under section 132 of the Income Tax Act, 1961 ("the Act") was conducted on 18.01.2023 in the case of M/s. Oorjita Builders & Developers Pvt. Ltd. and its group entities. The case of the assessee was also covered under section 132 of the Act. Pursuant thereto, proceedings under section 147 of the Act were initiated in the case of t....
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....s notice during the course of reassessment proceedings. The Ld. DR further invited our attention to the additions made by the Ld. AO and submitted that each of the additions was made on account of discrepancies noticed by the Ld. AO during assessment proceedings. Accordingly, it was contended that the legal ground raised by the assessee deserves to be rejected. 9. We have heard the rival submissions and perused the material available on record including the case law relied upon. The assessee has raised Ground No. 11 of the additional grounds of appeal challenging the validity of the additions made by the AO in the reassessment proceedings. The contention of the assessee is that none of the additions made by the Ld. AO are based upon the material available with the Revenue at the time of initiation of reassessment proceedings and all the additions have been made only on the basis of materials collected and enquiries conducted during the course of reassessment proceedings. Therefore, according to the assessee, such additions cannot survive in law. In this regard, we have gone through the Explanation to section 147 of the Act as applicable at the relevant point of time, which is to....
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....d that being if, in the course of reassessment, the AO ultimately comes to conclude that no additions or modifications are warranted under those heads, it would not be entitled to make any additions in respect of other items forming part of the original return. 26. This position in law also finds resonance in the judgment of the Punjab and Haryana High Court in Majinder Singh Kang v. CIT 2010 SCC OnLine P&H 13401/[2012] 25 taxmann.com 124/344 ITR 358 (Punjab & Haryana) and where it was observed :- "8. Learned counsel for the assessee submitted that the Assessing Officer had reopened the assessment by issuing notice under section 148 of the Act on the ground that the income from salary, perquisites and unexplained cash deposits in various accounts along with interest thereon had escaped assessment. The counsel urged that the Assessing Officer, however, while passing the reassessment order had sought to make addition of another amount without any addition having been made on the ground on the basis of which reassessment had been initiated. According to the learned counsel, no reassessment order could be passed by the Assessing Officer. Learned counsel for the assess....
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....n of a larger Bench. This becomes evident from a reading of paragraphs 13, 14 and 15 of the report and which are extracted herein below :- "13. This Court specifically is of the opinion that the Karnataka High Court's view in the case of N. Govindaraju (supra) is a more accurate one. In this Court's view the emphasis placed in Jet Airways's case (supra) on "and also" undermines the essential objective of Section 147 of the Act and unduly restricts and narrows it. The circumstance clarifies existence of an additional power to bring to tax other sums. This per se would not mean that the sums or amounts sought to be brought to tax in a reassessment notice (which are ultimately not the subject of the final reassessment orders), act as a limitation. 14. Having regard to the facts, this Court is of the opinion that since there is some doubt as to the accuracy of the interpretation in the case of Ranbaxy Laboratories Limited (supra) and which was subsequently followed in the case of Monarch Educational Society (supra), the appropriate course would be to refer the issue to a larger Bench. 15. The following issue is accordingly framed for reference to ....
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.... 32. Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action under Section 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions. 11. On perusal of the above, we find that the Hon'ble Delhi High Court has categorically held that once reassessment proceedings are initiated, the Assessing Officer is not confined only to the issue which formed the basis for reopening and may assess or reassess income in respect of other issues which come to his notice during the course of reassessment proceedings. However, the Hon'ble High Court has further held that such power is subject to an important rider. If ultimately no addition or modification is made in respect of the issue which formed the basis of initiation of reassessment proceedings, the Assessing Officer would not be entitled to make additions in respect of other issues which came to his notice subsequently during the reassessment proceedings. In other words, the Hon'ble High Court....
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....f initiation of reassessment proceedings. The additions made by the Ld. AO relate to disallowance under section 80C of the Act amounting to Rs. 69,226/-, disallowance under section 24(b) of the Act amounting to Rs. 13,889/-, disallowance under section 80D of the Act amounting to Rs. 25,000/- and addition of Rs. 2,04,914/- on account of speculative profit. The Revenue has not been able to point out any material available prior to issuance of notice under section 148 on the basis of which the aforesaid additions have been made. On the contrary, it is evident from the assessment order that the additions have been made only on the basis of verification and enquiries carried out during the course of reassessment proceedings. The Ld. DR has also not been able to demonstrate before us that any addition has been made on the basis of the material which was in the possession of the Ld. A.O, before initiation of reassessment proceedings. Therefore, respectfully following the ratio laid down by the Hon'ble Delhi High Court in the case of ATS Infrastructure Ltd. Vs. ACIT (supra), we hold that the additions made by the Ld. AO solely on the basis of material gathered during the course of reassess....