2025 (7) TMI 1476 - AT - Income Tax

Reopening of assessment u/s 147 - deduction u/s 80P(2)(d) denied - assessee has filed return of income after issue of notice u/s 148 - HELD THAT - Reasons were recorded to tax the cash withdrawal from the account of the Junagadh Jilla Sahakari Bank Ltd during the year under consideration. AO has not made any addition on this count and he made addition on a different footing under section 80P(2)(d) of the Act. Therefore the reassessment proceedings initiated by the assessing officer is bad in law. Therefore we find that when the assessing officer had not made any addition as regards the very basis on which the proceedings under section 147 of the Act were initiated in the case of the assessee i.e. cash withdrawal and the assessing officer has expanded his jurisdiction without taking permission from the higher authorities and has made a different addition on account of disallowance of deduction under section 80P(2) (d) of the Act. We note that the assessing officer could not make addition on other grounds which did not form part of the reasons recorded by the assessing officer for that reliance is placed on the judgement of Mohmed Juned Dadani 2013 (2) TMI 292 - GUJARAT HIGH COURT where in it was held that when on ground on which reopening of assessment was based no addition was made by Assessing Officer he could not make additions on some other grounds which did not form part of reasons recorded by him. Based on these facts and circumstances we delete the addition made by the assessing officer under section 80P(2)(d) of the Act and allow the appeal of the assessee.

Summary

ISSUES:

Whether the notice issued under section 148 of the Income-tax Act, 1961, and the reasons recorded for reopening assessment are valid and legally sustainable.Whether the assessing officer can disallow a deduction under section 80P(2)(d) of the Act when such disallowance was not part of the reasons recorded for reopening the assessment.Whether the deduction claimed under section 80P(2)(d) of the Act is allowable when the return of income was filed after the due date specified under section 139(1), in light of section 80AC of the Act.

RULINGS / HOLDINGS:

The reassessment proceedings initiated under section 147 read with section 148 of the Act are bad in law because the assessing officer made additions on a different footing than the reasons recorded, which were solely related to unexplained cash withdrawals of Rs. 2,87,70,000/-.The assessing officer cannot disallow the deduction under section 80P(2)(d) of the Act without recording separate reasons in writing and obtaining prior approval from the appropriate authority, as required under the Act.Section 80AC of the Act mandates that deduction under section 80P shall not be allowed unless the return of income is furnished on or before the due date specified under section 139(1); hence, a return filed after the due date or in response to notice under section 148 does not qualify for such deduction.

RATIONALE:

The Court applied the statutory framework of sections 147, 148, 148A, 139(1), 80P, and 80AC of the Income-tax Act, 1961.The Court relied on the principle that the assessing officer must confine the reassessment to the grounds recorded in the reasons for reopening; additions on unrelated grounds without fresh reasons and approval are impermissible, as affirmed by precedent from the Gujarat High Court.The Court recognized the legislative intent expressed in section 80AC that deduction under section 80P is conditional upon timely filing of the return, and this condition is mandatory and not subject to waiver.The Court noted that the assessing officer's failure to add income on the basis of the original reasons recorded (unexplained cash withdrawals) and instead making disallowance on unrelated grounds constituted an expansion of jurisdiction without compliance with procedural safeguards.