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Sonal Jain Vs CIT (Appeals) (ITAT Delhi)
Reopening Fails When Original Issue Not Added — ITAT Delhi Deletes Section 68 Addition on Cash Deposits
The Delhi Bench of the ITAT allowed the appeal of Sonal Jain for AY 2016-17, holding that when no addition is made on the issue for which reassessment was initiated, the Assessing Officer cannot make additions on any other issue.
The reassessment was reopened under section 147 to examine investment in an immovable property. During assessment, the assessee satisfactorily explained the source of investment and no addition was made on that count. However, the AO proceeded to examine unrelated cash deposits of ₹1,97,800 and treated them as unexplained under section 68.
Relying on the Bombay High Court ruling in CIT v. Jet Airways (I) Ltd., the Tribunal held that once the primary reason for reopening fails, the AO lacks jurisdiction to assess any other income not forming part of the recorded reasons. Since no addition was made on the property investment—the very basis of reopening—the subsequent addition on cash deposits was without authority and unsustainable.
Accordingly, the reassessment order was set aside and the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Delhi-43 [in short ‘the CIT(A)’] dated 09.09.2025, for Assessment Year 2016-17.
2. The facts of the case in brief are: The assessee was employed in the UK, hence, was a non-resident during the relevant period. Assessment proceedings u/s 147 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’) were initiated on receipt of information that the assessee had purchased immovable property for a consideration of Rs. 37,39,427. Notice u/s.148 of the Act was issued. In response to said notice the assessee filed return of income declaring income of Rs.1,07,249/-. During assessment proceedings, the Assessing Officer (AO) noted that there were cash deposits totaling to Rs. 1,97,800 in assessee’s ICICI Bank account during AY 2016-17. The assessee explained source of cash deposits as rental income and shaguns and gifts received from family members. In absence of documentary evidence to support assessee’s claim, the AO treated the said amount as unexplained cash credit u/s 68 of the Act and made addition of the same. In appeal before the CIT(A), the assessee remained unsuccessful.
3. Shri Prasoon Agarwal, appearing on behalf of the assessee submits that the notice u/s.148 of the Act was issued to enquire about assessee’s investment in immovable property. However, no addition was made for the reason for which notice u/s.148 of the Act was issued. The addition is made by the AO on account of alleged unexplained cash deposits in the bank account aggregating to Rs.1,97,800/-. Once no addition is made for which the assessment was reopened, the addition cannot be made on any other account.
4. Shri Manoj Kumar, representing the department supporting the orders of lower authorities submitted that the assessee failed to furnish any cogent documentary evidence to substantiate source of cash deposits. He thus prayed for dismissing appeal of the assessee.
5. Both sides heard, orders of the authorities below examined. A perusal of the assessment order shows that information was received by the assessee that the assessee has purchased immovable property i.e. residential flat no. A-705, 7thfloor, Tower-A in Rishab Paradise a project developed by M/s. Rishab Buildwell P. Ltd. During the course of assessment proceedings, the assessee furnished relevant documents to substantiate source of investment. Hence, no addition was made by the AO in respect of investment in immovable property. In assessment proceedings, the AO enquired about cash deposits aggregating to Rs.1,97,800/-. The assessee explained that the source of cash deposits is rental income and shaguns/gifts received from family members. Not convinced with the explanation furnished, the AO made addition of Rs.1,97,800/-. The assessment was reopened to examine source of purchase of immovable property. No addition was made by the AO in respect of the issue for which the assessment was reopened. Once, the addition has not been made for which proceedings u/s.147/148 of the Act were initiated, it is no open to the Assessing Officer to independently assess any other income not mentioned in reasons for reopening. [Re: CIT vs. Jet Airways (I) Ltd. 193 Taxman 117 (Bom.)]
6. In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on Wednesday the 14th day of January, 2026.
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