Explanation 3 To Sec 147 Can't Be Resorted To Make Addition On Any Other Issue Which Is Not Included In Reasons For Reopening: New Delhi ITAT

On finding that no addition is made based on the reasons to believe recorded by the AO for reopening the assessment, the New Delhi ITAT quashed the order passed by the AO u/s 147 of the Income tax Act, 1961 The Bench of the ITAT comprising of Anubhav Sharma and Shamim Yahya observed while referring to the decision of Jurisdictional High Court in the case of Commissioner of Income Tax vs. Monarch Educational Society 387 ITR 416 that, “If no addition is made on the basis of the reasons to believe recorded by the Assessing Officer for reopening the assessment under section 148 of the Act, resort cannot be had to Explanation 3 to section 147 of the Act to make an addition on any other issue not included in the reasons to believe for reopening the assessment.” As per the brief facts of the case, the assessee is corporate society and his case was reopened as Non-PAN AIR has been received that the assessee had purchased immovable property of Rs. To ascertain the assessment particulars of the assessee and to verify the transaction, query letter and verification letter u/133 were issued to the assessee to explain the source of this high value transaction. Hence, the AO has reason to believe that the income of Rs 1,00,00,000/-, chargeable to tax has escaped assessment within the meaning of section 147 on account of unexplained/undisclosed investment made by the assessee. The Bench reiterated the AO's observation in respect of the addition that, “Further, during the course of assessment proceedings, the assessee was required to file a valid confirmation with the details of each Members such as complete Name & address, PAN, details of their business/profession, their relations with each other, their ITR and copy of bank account of the members evidencing such transactions.