Reassessment Order Quashed as Assessing Officer Deviated from

Reassessment Order Quashed as Assessing Officer Deviated from Reasons Recorded for Reopening

Issue

Whether a reassessment order under Section 147 is legally sustainable if the Assessing Officer (AO) completely deviates from the original reasons recorded for reopening the assessment and makes additions on entirely different grounds.

Facts

Initiation of Reassessment: For the Assessment Year (AY) 2014-15, the Assessing Officer initiated reassessment proceedings against the assessee.
Original Reasons Recorded: The proposal for reopening was based on estimating an 8% profit on an alleged turnover of ₹7.86 crore, leading to a proposed addition of ₹62.93 lakh by invoking Section 44AB read with Section 69.
The Deviation: When the final assessment order was passed, the AO did not make the addition based on the alleged turnover or estimated profit. Instead, the AO made additions towards an “initial investment” and “share purchase.”
Challenge: The assessee challenged the validity of the assessment order, arguing that the reopening could not be sustained when the very ground on which the assessment was reopened was dropped or altered in the final order.

Decision

Held, in favor of the assessee: The impugned reopening and the resulting reassessment order were held to be legally unsustainable and were subsequently quashed.
Loss of Jurisdiction: Once the AO deviates from the original reasons recorded for reopening and drops those specific grounds, the AO loses the jurisdiction to make additions on any other fresh grounds.
Condition Precedent: The primary reason for which the assessment is reopened must survive in the final assessment order to validate any further inquiry or additions.

Key Takeaways

Jurisdictional Mandate: The reasons recorded for reopening an assessment form the foundation of the AO’s jurisdiction under Section 147. If the main ground fails or is abandoned, the entire reassessment structure collapses.

No Fresh Additions in Isolation: An AO cannot use reassessment proceedings as a general fishing expedition. If no addition is made on the issue for which the case was reopened, the AO cannot mechanically make additions on entirely new, unrelated issues found during the process.

Strict Statutory Compliance: Administrative adherence to the recorded reasons is a mandatory safeguard for taxpayers against arbitrary or unchecked reassessments.

IN THE ITAT DELHI BENCH ‘SMC’

Kavita Pahuja

Income-tax Officer

SATBEER SINGH GODARA, Judicial Member
and Manish Agarwal, Accountant Member

IT Appeal Nos. 147 & 148 (DDN) of 2026
[Assessment year 2014-15]

MAY 27, 2026

Pankaj Goel, Adv. for the Appellant. Akash Barnwal, Sr. DR for the Respondent.

ORDER

1. These assessee’s twin appeals ITA Nos. 147 & 148/DDN/2026 arise against the Commissioner of Income Tax(Appeals)/ National Faceless Appeal Centre (in short, “CIT(A)/NFAC”), Delhi’s as many DINs & Orders No. ITBA/NFAC/S/250/2025-26/1085079094(1) & ITBA/NFAC/S/250/2025-26/1085079789(1); both dated 22.01.2026; involving proceedings u/s 147 r.w.s. 144B of the Income Tax Act, 1961; hereinafter referred to as, ‘the Act’.

Heard both the parties. Case files perused.

2. We advert to the assessee’s quantum appeal No. i.e. ITA No. 147/DDN/2026 first of all. She canvasses her first and foremost legal ground/argument that the impugned reopening itself is not sustainable in law as the learned Assessing Officer had proposed to add to invoke section 44AB of the Act for the purpose of making section 69 unexplained investment @8% profit estimation of the entire turnover of Rs. 7,86,67,936/-; coming to Rs. 62,93,434/-whereas the assessment order herein dated 22.05.2023 ended up in treating the initial investment of Rs. 4,00,327/- and the share purchase of Rs. 11,04,800/- totalling to Rs. 15,05,172/- in issue. This clinching factual position has gone unrebutted from the Revenue side.

3. Faced with this situation, we hereby quote Ranbaxy Laboratories Ltd. v. CIT 336 ITR 136 (Delhi) and CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bombay) and ATS Infrastructure Ltd. v. Asstt. CIT [2025] 473 ITR 595 (Delhi) to conclude that the impugned reopening itself is not sustainable in law once the learned assessing authority has deviated from its foregoing proposal/reason in the assessee’s case. Quashed in very terms therefore.

4. The assessee succeeds in her quantum appeal ITA No. 147/DDN/2026.

5. The assessee’s penalty appeal ITA No. 148/DDN/2026 also follows the suit since involving section 271(1)(c) consequential proceedings.

6. Both these assessee’s appeals ITA Nos. 147 & 148/DDN/2026 are allowed. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 27.05.2026.