The Delhi High Court quashed the addition of supplementary grounds beyond the ones raised during the initiation of reassessment proceedings while adjudging a matter regarding massive discrepancy of Rs.86 Crore in the assessed turnover of an Assessee.
The present Income Tax Appeal, instituted by the Revenue under Section 260A of the Income Tax Act, 1961 sought to impugn an order dated 22.01.2024 passed by the learned Income Tax Appellate Tribunal (ITAT).
Factual matrix follows Notice issued by the Assessing Officer (AO) under Section 148 and initiation of reassessment proceedings under Section 147 of the Income Tax Act, 1961, against the financials of Naveen Infra for the Assessment Year 2012-13.
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The reassessment proceedings were based on the alleged grave variance between the turnover of Rs.52,50,00,000/- declared by the Assessee in their returns and bank credit entries estimated to be over Rs.1,39,00,00,000/-, resulting in a turnover discrepancy of over Rs.86,00,00,000/-.
Such variance was clarified by the Assessee adducing loan receipts availed during the said period, but remained insufficient before the eyes of the AO, who maintained that a credit of ₹24,00,00,000/- still remained unexplained.
The AO further assessed the taxable income of Naveen Infra at Rs.65,40,00,000/- via Assessment Order which was contested before the CIT(A). The CIT(A) in its order observed that no income had been taxed on the grounds purported in the preceding Notice under Section 148 of the Act and vitiated such addition.
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Upon Appeal by the Revenue, the ITAT echoed with the decision of the CIT(A).
The Division Bench of the Delhi High Court comprising Justice Vibhu Bakhru and Justice Swarana Kanta Sharma while dismissing the Appeal, referred to the decision of the same Court in Ranbaxy Laboratories Ltd. v. Commissioner of Income Tax (2011) and ATS Infrastructure v. Assistant Commissioner of Income Tax, Circle 1 (1) & Ors. (2024) to maintain that no income tax addition can be made by AO during reassessment proceedings, in the event that the proposed additions have not been made on the basis of same Grounds as purported in the preceding Notice issued to the Assessee.
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