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2017 (6) TMI 449 - AT - Income TaxReopening of assessment - foundational addition - Held that:- the reasons which persuaded the AO to reopen the reassessment proceedings and on the basis of which additions were made were not found valid or justifiable as those additions were deleted by the Tribunal. Appeal of the Revenue was dismissed. In further appeal, the Hon’ble High Court upheld the order of the tribunal by holding that : `Since the grounds for reopening the reassessment do not exist any longer and no additions were ultimately made on that account, the additions in respect of other items which were not part of "reasons to believe" cannot be made.’ On going through the ratio decidendi of the above judgment, it is vivid that if the `foundational addition’ is finally deleted in appeal, then `other addition’ also can’t stand. The Assessing Officer initiated reassessment proceedings and made addition of ₹ 22.57 lac. When the ld. CIT(A) held that the addition of ₹ 22.57 lac was not sustainable, it meant that the jurisdiction of the Assessing Officer was lacking in initiating the reassessment proceedings. As a consequence of his deletion of the addition, not only the assessment order but all the proceedings flowing therefrom had the effect of becoming null and void. As such, he could not have gone ahead with any other issue and made enhancement of income. Making an enhancement in such circumstances would mean that though the jurisdiction of the Assessing Officer in initiating the reassessment was lacking, still, the assessment would be valid and ex consequenti, the addition would be sustainable. - Decided in favour of assessee.
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