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TMI Blog2015 (6) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... JJ. For the Appellant : Shri Sanjay, Addl. CIT, Sr. DR For the Respondent : Shri S M Surana, Adv. ORDER Per Shri Mahavir Singh, JM. This appeal by revenue and Cross Objection by assessee are arising out of order of CIT(A)-XII, Kolkata in Appeal No. 264/XII/12(3)/10-11 dated 31.10.2011. Assessment was framed by ITO, Ward-12(3), Kolkata u/s. 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2007-08 vide his order dated 29.12.2010. 2. At the outset, Ld. Counsel for the assessee stated that the assessee s Cross Objection is time barred by 288 days and Condonation petition is not filed. Ld. Counsel for the assessee stated that he has no objection if the C.O. of the assessee is dismissed for the reason that the issue in the CO raised by assessee is in respect to legality of reassessment proceedings, which was challenged before the CIT(A) and CIT(A) adjudicated the issue against assessee. The facts relating to this issue is already available in the orders of the lower authorities and no new facts need to be investigated/considered. According to Ld. Counsel, assessee is entitled to raise this issue under rule 27 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count statement at page 5 which is P L Account, wherein sale of flats recorded at ₹ 3,07,48,597/- is disclosed. According to Ld. Counsel, this sale consideration of flat is also included in the total sales and no separate details of each and every transaction are given in the return of income. Ld. Counsel for the assessee stated, first of all, that the reasons recorded by the AO for issuance of notice u/s. 148 of the Act has no live nexus with the income escaped assessment. For this, he stated that no addition qua the income escaped assessment as reasons recorded for issuance of notice u/s. 147 read with section 148 of the Act has been included in the assessed income while completing assessment u/s. 147 read with section 143(3) of the Act. On query from the Bench, Ld. Sr. DR Shri Sanjay perused the assessment order framed u/s. 143(3) read with section 147 of the Act dated 29.12.2010 and stated that in respect to reasons recorded for excess sale consideration of ₹ 26,84,942/-, of one Shri Manish Jhunjhunwala vide agreement dated 02.06.2006, which formed basis for issuance of notice u/s. 148 of the Act has not been included in the total income as assessed by the AO. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of section 147 with effect from April 1, 1989 clearly stipulated that the Assessing Officer has to assess to reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceeding. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter. And the Hon ble High Court adjudicated the issue as under: Parliament, when, it enacted Explanation 3 to section 147 by the Finance (No. 2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Explanation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain courts that the Assessing Officer has to restrict the assessment or reassessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his notice subsequently, in the course of proceedings under section 147. To clarify if further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the Assessing Officer were to come to the conclusion, that any income chargeable to tax, which, according to his reason to believe , had escaped assessment for any assessment year, did not escape assessment, then, the mere fact that the Assessing Officer entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax which the Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under section 147. 7. In view of the above position and the facts of the present case that the allegedly escaped income, as is the subject matter of reasons for notice u/s. 148 read with section 147 of the Act, i.e. the assessee has not included the sale consideration of ₹ 26,84,940/- to one Shri Manish Jhunjhunwala vide agreement dated 02.06.2006, is never the subject matter of addition by the AO and once th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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