The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that reassessment is invalid if no addition is made on the issue for which the case was reopened and no fresh notice under Section 148 of Income Tax Act,1961 is issued.
Navjyoti Farming Private Limited,appellant-assessee,engaged in agricultural and related activities, filed its income tax return on September 27, 2012, declaring ‘Nil’ income after adjusting a loss of ₹99,419 against short-term capital gains. The return was processed under section 143(1), and the case was later selected for scrutiny. After issuing statutory notices, the Assessing Officer ( AO ) completed the assessment under section 143(3) on March 11, 2015, accepting the declared income.
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The case was later reopened, and a notice was issued on March 29, 2019. The assessee objected, but the objections were dismissed. In the reassessment order dated December 30, 2019, the AO determined the total income at ₹82.74 crore, adding ₹16.54 crore for share capital and share application money and ₹66.20 crore for unsecured loans.
Before the Commissioner of Income Tax (Appelas) [CIT(A)], the assessee challenged both the reassessment proceedings and the additions. However, the CIT(A) upheld the reopening of the case and confirmed the additions under section 68 of the Act.
The assessee appealed before the tribunal.
The assessee’s counsel argued that the reassessment notice under Section 148, issued on March 29, 2019, was beyond the four-year limit from the 2012-13 assessment year. The recorded reasons did not indicate any failure by the assessee to disclose material facts, making the reopening invalid under Section 147. Judicial precedents supported this claim.
The reassessment was based on a ₹36 crore investment in Concise Exim Private Limited, but no addition was made on this ground. Citing CIT vs. Jet Airways (I) Ltd., the counsel argued that if no addition was made for the stated reason, other additions were not justified.
It was further contended that all relevant details, including share capital, confirmations, and bank statements, were provided during the original assessment. The reassessment, based on Investigation Wing information, was a change of opinion and invalid, as held in Godrej Projects Development (P.) Ltd. vs. ITO.
On merits, the counsel stated that the assessee had submitted all required documents, proving identity, creditworthiness, and genuineness of transactions. Despite this, the AO made an addition under Section 68, which the CIT(A) upheld. The counsel maintained that the reassessment and additions were legally unsustainable.
The two member bench comprising R.K.Panda ( Vice President ) and Astha Chandra ( Judicial Member ) reviewed arguments, examined orders, and considered case laws. The assessment for AY 2012-13 was initially completed under section 143(3), accepting the declared income as nil. The AO later reopened the case based on information from the Investigation Wing, citing unexplained investment of ₹36 crore in shares of M/s Concise Exim (P) Ltd.
However, the reassessment order did not include any addition related to this investment but made other additions. The tribunal referred to multiple High Court rulings, including CIT vs. Jet Airways, Ranbaxy Laboratories Ltd. vs. CIT, and CIT vs. Mohmed Juned Dadani, which held that if the ground for reopening does not lead to an addition, the Assessing Officer cannot make new additions without issuing a fresh notice under section 148 of the Act.
Following these precedents, the appellate tribunal ruled in favor of the assessee, holding that the reassessment was invalid since no addition was made on the issue for which the case was reopened.
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