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TMI Blog2012 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... d required enquiries in respect of the share application money, as no addition has been made on account of the reasons for reopening i.e. investment in FDR, which were recorded before issue of notice u/s 148. As the AO did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal filed by Poonam Rani Singh. 4. Thereafter, the Assessing Officer in the case of the respondent assessee issued notice under Section 148 of the Act on 29th March, 2001. In response to this notice, the respondent assessee on 16th August, 2001filed a return showing loss of Rs.1,02,756/-. By assessment order dated 28th March, 2002 the Assessing Officer accepted that the respondent assessee had established and proved the source and their capacity to invest Rs.20 lacs and accordingly no addition was made on this account. The return filed by the assessee showing loss of Rs.1,02,756/- was accepted. No addition was made. 5. In this assessment order dated 28th March, 2002, the Assesssing Officer had also noted as under:- Scrutiny of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 263 of the Act passed by the Commissioner of Income Tax. 9. One of the contentions, which has been accepted by the tribunal is that the order of the Assessing Officer cannot be regarded as erroneous even if the Assessing Officer had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition has been made on account of the reasons for reopening, which were recorded before issue of notice under Section 148 of the Act. It has been held that the Assessing Officer could not have made an addition on account of share application money as no addition has been made on account of FDRs of Rs.20 lacs. The tribunal has noticed and recorded that in the reasons for reopening i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs under the section ; and (iv) though the notice under section 148(2) does not include a particular, issue with respect to which income has escaped assessment, he may none the less, assess or reassess the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section." 11. Thereafter, the High Court referred to the decision of the Rajasthan High Court in the case of CIT versus Shri Ram Singh, (2008) 306 ITR 343 (Raj.) in which it has been observed as under: It is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax which has escaped assessment for any assessment year, with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation 3 if during the course of these proceedings the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-I which as per our discussion was not permissible. Had the Assessing Officer proceeded to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per Explanation 3 to reduce the claim of deduction under sections 80HH and 80-I as well. 13. On the second aspect raised by the Commissioner of Income Tax with regard to the Assessing Officer acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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