ITAT Kolkata: Reassessment Proceedings Cannot Survive When the Very Basis of Reopening Yields No Addition
Background and Overview
The Income Tax Appellate Tribunal, Kolkata Bench, delivered a significant ruling in the matter of Ekchaka Samabaya Krishi Unnayan Samity Limited Vs DCIT (ITA Nos. 426 & 427/KOL/2026), pronounced on 18th August 2026, covering Assessment Years 2015-16 and 2016-17. The Tribunal quashed the reassessment proceedings initiated against the assessee on the ground that the additions ultimately framed by the Assessing Officer had no connection whatsoever with the reasons originally recorded for reopening the assessment.
This ruling reinforces a well-settled legal principle under the Section 147 and Section 148 jurisprudence — that an Assessing Officer's jurisdiction in reassessment proceedings is circumscribed by and co-extensive with the reasons recorded, and cannot be stretched to make additions on unrelated issues, particularly when no addition is made on the issue that triggered the reopening in the first place.
Facts of the Case
Dual Appeals Heard Together
Both appeals — ITA No. 426/KOL/2026 (AY 2015-16) and ITA No. 427/KOL/2026 (AY 2016-17) — were filed by the same assessee against the orders of the National Faceless Appeal Centre (NFAC), Delhi, passed under Section 250 of the Income Tax Act, 1961. Since the assessee was common and the issues were identical across both years, the Tribunal took up both appeals together and disposed of them through a single common order. For the purpose of discussion, the facts pertaining to AY 2015-16 in ITA No. 426/KOL/2026 were treated as the reference case.
The Trigger for Reassessment
The assessee — Ekchaka Samabaya Krishi Unnayan Samity Limited — had not filed its return of income for the relevant assessment year. The Assessing Officer received information indicating that the assessee had made cash deposits of Rs. 55,92,800/- into its Axis Bank Limited accounts during the year under consideration. Acting on this information, the Assessing Officer initiated reassessment proceedings and issued a notice under Section 148 of the Income Tax Act, 1961.
Despite receiving the notice, the assessee did not file a return of income in response.
Additions Made in the Assessment Order
Notwithstanding the fact that the reassessment was triggered solely on account of the cash deposits, the Assessing Officer proceeded to frame the assessment order dated 18.03.2024 for AY 2015-16 with the following additions:
- Rs. 57,108/- under
Section 56of the Act - Rs. 4,91,302/- under
Section 28of the Act on account of income from other sources - Rs. 7,39,079/- on account of valuation in respect of disallowance under
Section 80P6(iii)of the Act
Importantly, no addition was made on account of the cash deposits — the very issue that had led to reopening — because the assessee had placed documentary evidence on record explaining the source of those deposits, which the Assessing Officer apparently accepted.
A similar pattern was followed for AY 2016-17, where an assessment order dated 19.03.2024 was passed with identical additions on the same grounds.