Income Tax Law does not prohibit Assessing Officer to go beyond the Reasons based on

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that there is no prohibition under the law that the Assessing Officer is required to confine assessment on the issue for which the assessment was reopened by him under sections 147/148 of the Income Tax Act, 1961.

The Assessing Officer reopened the assessment against M/s M R Enterprises based on the information regarding the cash deposit by the assessee in its bank account amounting to Rs. 3,00,000/-. Accordingly, the Assessing Officer made an addition of Rs. 1,89,856/- in respect of the difference between gross profit and net profit, hence assessment income at Rs. 1,90,253/-.

Being aggrieved with the orders of the lower authorities, the assessee preferred an appeal before the Tribunal.

Shri Kul Bharat, Judicial Member has observed that in the present case the assessment was reopened on the basis of cash deposited in the bank account and no addition has been made by the Assessing Officer regarding the deposit of this amount. It is seen that the assessee has not raised this issue before the learned CIT(Appeals).

“However, this being a legal ground which goes to the very root of the jurisdiction, therefore, same is admitted and is being adjudicated. I have considered the objections of the assessee regarding the framing of the assessment qua the issue other than the issue for which the assessment was reopened. There is no dispute that the assessee had made cash deposits in the bank account. It is categorically recorded by the Assessing Officer that no income-tax return was filed by the assessee. Therefore, at the time of reopening there was no explanation regarding the source of cash deposits by the assessee. In my considered view, it was sufficient for the Assessing Officer to form a belief that the income chargeable to tax has escaped assessment. Hence, he was justified to reopen the assessment u/s 147 of the Act. After reopening of assessment, the Assessing Officer can in his wisdom proceed to make assessments regarding other issues as well. There is no prohibition under the law that the Assessing Officer is required to confine assessment on the issue for which the assessment was reopened by him,” the Tribunal said.