When the original reason fails, the AO cannot make any other addition in a reassessment proceeding: ITAT
Recently, ITAT has again followed the Bombay High Court in Jet Airways rule and held that when the original reason fails, the AO cannot make any other addition, making the entire reassessment invalid. As a result, the ₹5.65 crore addition was also deleted,
In this case, the AO reopened the case solely on an Investigation Wing note alleging that ₹27.44 crore moved through the Supariwala family’s accounts, but the note never showed that the assessee received this amount, and the assessee’s own bank records contained no such credit.
Without verifying the facts or applying his mind, the AO simply copied the report and treated it as a “reason to believe,” which the Tribunal held was only a guess or suspicion, not a valid basis for reopening.
After reopening, the AO did not add the ₹27.44 crore mentioned in the reasons; instead, he made a different addition of ₹5.65 crore u/s 68 towards a loan from Nadeem Supariwala.
The Tribunal held that under the Jet Airways rule, when the original reason fails, the AO cannot make any other addition, making the entire reassessment invalid. As a result, the ₹5.65 crore addition was also deleted, and the whole reassessment was quashed.
The copy of the order is as under:
