2021 (2) TMI 223 - AT - Income Tax

Reopening of assessment u/s 147 - treating the donations received as anonymous donations and made the addition thereof u/s.115BBC which however was not forming a part of reasons recorded for issuance of notice u/s.147/148 - HELD THAT - The Hon ble Jurisdictional High Court in the case of Commissioner of Income Tax-5, Mumbai Vs. Jet Airways (I) Ltd. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY has held that in such event, the Assessing Officer exceeds his jurisdiction and he has to assess or reassess in respect of that subject matter only which formed the subject matter to the reasons for which the notice u/s.147/148 was issued. It is definitely open to the Assessing Officer to assess or reassess any other income which he has reason to believe has escaped assessment but for that purpose, he has to issue separate notice to the assessee u/s.148 of the Act. In present scenario, when specific subject matter reasons recorded and notice issued u/s.147/148 of the Act was with respect to under utilization of income of the assessee for which there has been no addition made, but the Assessing Officer has made addition entirely on the different subject matter which was not comprising in that notice itself, in such scenario, the Assessing Officer has acted beyond his jurisdiction. Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(Appeals) which is thereby upheld. - Decided against revenue.

Summary

Issues:
Appeals by Revenue regarding orders of Ld.CIT(Appeals) for assessment years 2008-09 & 2009-10.

Analysis:
The appeals involved identical issues, and the cases were heard together. The assessee, a charitable trust, filed its return of income declaring Nil income but received a notice u/s.148 for applying less than 85% of its income towards objects/maintenance. The Assessing Officer made an addition under Section 115BBC of the Act, reopening the case under Section 147. The issue was whether the Assessing Officer could independently assess any other income not mentioned in the notice. The Hon'ble Bombay High Court held that the Assessing Officer must assess the income forming the basis of the notice and any other income that escaped assessment. In this case, the Assessing Officer added "anonymous donations" under Section 115BBC not covered in the notice, exceeding jurisdiction.

The Ld. CIT(Appeals) noted that the Assessing Officer did not make any addition based on underutilization of income towards trust objects, the reason for reopening. Instead, the officer assessed "anonymous donations." The jurisdictional High Court ruled that the Assessing Officer must assess only the subject matter of the notice. Assessing other income requires a separate notice. Since the Assessing Officer exceeded jurisdiction, the Ld. CIT(Appeals) upheld his decision, dismissing all grounds of appeal by the Revenue in both cases.

The judgment clarified that the Assessing Officer must assess the income forming the reason for reopening and any other income that escaped assessment. If the original reason is not found valid, assessing other income not mentioned in the notice is beyond jurisdiction. The appeals by the Revenue were dismissed, upholding the decision of the Ld. CIT(Appeals).