The AO had during the re-assessment proceedings issued notice on the ground that since assessee had not filed return of income, there was reason to believe that income of Rs.35 lakhs had escaped assessment. However, subsequently it was brought to notice of AO that assessee had filed return of income and therefore AO had recorded wrong reasons for re-opening that assessee had not filed return of income.

Further, the re-assessment was initiated and the reasons recorded was that assessee had undertaken all market transactions of 7000 shares but the AO did not make any addition in re-assessment order for which re-opening was done. However, AO made disallowance under section 14A of the Act. 

The Tribunal after placing reliance on the decision of Bombay High Court in case of CIT v. Jet Airways Ltd. (2011) 331 ITR 236 (Bom.)(HC) and Ranbaxy Laboratories Ltd v. CIT  (2011) 336 ITR 136 (Bom.)(HC) held that re-assessment proceedings were invalid and bad in law as the AO had not made any addition in re-assessment order for which re-opening was done and thereby quashed the re-opening of the assessment and allowed the assessee’s appeal. (AY. 2009-10)