GORAV FOOTWEAR,AGRA V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE1(1)(1), AGRA/CIT(A), NFAC, DELHI, AGRA

ITA 503/AGR/2024

AI Insights

The case involves Gorav Footwear, the appellant, contesting an assessment order for the Assessment Year 2012-13, which was reopened by the Assessing Officer (AO) under sections 143(3) read with section 147 of the Income Tax Act, citing undisclosed cash credits in the bank account of the assessee. However, the AO ultimately made a disallowance under section 40A(3) amounting to Rs.90.55 Lacs, without making any addition regarding the reopened issues. The Commissioner of Income Tax (Appeals) upheld the AO's decision, leading to the current appeal before the Income Tax Appellate Tribunal. The Tribunal, referencing decisions from the Bombay and Delhi High Courts, concluded that the AO lacked jurisdiction to make any additions if the original grounds for reopening were not substantiated, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25477 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs. Jet Airways (I) Ltd. (331 ITR 236), Ranbaxy Laboratories Ltd. Vs. CIT (12 Taxmann.com 74)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SHRIVASTAVA LD.
• Assessee Lawyers: DEEPENDRA MOHAN LD
• Keywords: Reassessment proceedings; Unexplained cash credit

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.503/Agr/2024 (िनधा \u0010रणवष\u0010 / Assessment Year: 2012-13) Gorav Footwear 6, Nath Complex, Dhakran Crossing, Agra – 282 003 बनाम/ Vs. DCIT Circle 1(1)(1) Agra \u0002थायीलेखासं./जीआइआरसं./PAN/GIR No. AAHFG-7549-R (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001cकीओरसे/ Appellant by : Shri Deependra Mohan (CA)- Ld.AR \u001f थ\u001cकीओरसे/Respondent by : Shri Shailendra Shrivastava – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 18-02-2025 घोषणाकीतारीख /Date of Pronouncement : 18-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arises out of the order of learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 25-09-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 147 of the Act on 24-12-2019. Upon perusal of assessment order, it could be seen that Ld. AO reopened the case of the assessee upon formation of an opinion of escapement of income on account of undisclosed / unexplained cash credits in the bank account of the assessee. However, ultimately, Ld. AO has landed up in making disallowance u/s 40A (3) for Rs.90.55 Lacs. In other words, no addition 2 has been made for the issue which form the very basis of reopening the case of the assessee. Though the assessee preferred first appeal, Ld. CIT(A) confirmed the action of Ld. AO and rejected the legal grounds as well as grounds on merits. Aggrieved, the assessee is in further appeal before us. 2. In the above factual background, Ld. AR has cited the decision of Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. (331 ITR 236) as well as the decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. Vs. CIT (12 Taxmann.com 74) to plead that the law does not empower Ld. AO to make any addition if original ground of reopening fails. In this decision, it was held that though the Explanation 3 to Sec. 147 inserted by the Finance Act, 2009 w.e.f. 01.04.1989 permits the AO to assess or reassess income which has escaped assessment even if the recorded reasons have not been recorded with regard to such items, it is essential that the items in respect of which the reasons had been recorded are assessed. If the AO accepts that the items for which reasons are recorded have not escaped assessment, it means he had no “reasons to believe that income has escaped assessment” and the issue of the notice becomes invalid. If so, he has no jurisdiction to assess any other income. This fact could not be rebutted by revenue. No contrary decision has been shown to us. The final undisputed position that emerges is that no addition has been on issues which form the basis of reopening and therefore, reopening fails. This being the case, the reassessment proceedings are liable to be quashed. We order so. Consequently, the other issues would not survive in the appeal. 3 3. The appeal stand allowed in terms of our above order. Order pronounced on 18th February, 2025. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) 4ा ियक सद5 /JUDICIAL MEMBER लेखा सद5 / ACCOUNTANT MEMBER Dated: 18-02-2025 Mks आदेश की 7ितिलिप अ9ेिषत / Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु2/CIT 4. िवभागीय\u001fितिनिध/DR 5. गाड8फाईल/GF ASSISTANT REGISTRAR ITAT AGRA "