9911796707
TMI Blog2015 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... business premises. Based on this search operation, block assessment proceedings under Section 158BC was initiated for the block period commencing from the assessment year 1997-98 till the date of the search, i.e., 14.12.2002. The block assessment proceedings covered the assessment year 2002-03 in which extensive query on the sale of shares and purchases of shares was inquired and discussed. The assessing authority passed an assessment order dated 28.9.2004 holding that the whole transaction was a sham transaction with regard to the claim of long term capital gains and that it was merely an entry for claiming false exemption under Section 54-F of the Act. The assessing officer, accordingly, held that the amount of Rs. 36,60,072/- was undisclosed income and added the same to the income of the assessee for the assessment year 2002-03. Aggrieved by the block assessment order dated 28.9.2004 the appellant filed an appeal, which was allowed by an order dated 28.4.2006. The appellate authority held that the amount of Rs. 36,60,072/- could not be added as an undisclosed income of the assessee as it was not based on the material seized during the course of search and seizure operation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal by its order dated 23.1.2015 allowed the appeal and set aside the order of the appellate authority and directed the appellate authority to re-decide the matter afresh in the light of the observations made therein. The Tribunal held that once assessment is reopened on a particular issue and addition is made thereon, other issues which surface during the course of assessment proceeding can also be examined and addition could be made accordingly. The Tribunal held, that the assessment was reopened on the issue of deemed dividend and during the course of re-assessment proceeding, the assessing officer had examined the issue on long term capital gains and the claim of exemption under Section 54-F, which was within the permissible jurisdiction of the assessing officer to examine and pass orders. The Tribunal held that there was no infirmity in the action of the assessing officer. The appellant, being aggrieved by the order of the Tribunal, has filed the present appeal under Section 260-A of the Income Tax Act. The question of law formulated is:- "Whether the Tribunal was justified in holding that the assessing officer was justified in making the addition on transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess such income after recording reasons for re-opening the assessment. Further, he may also assess or reassess such other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section. Some courts have held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which the reasons have been recorded for reopening the assessment. He is not empowered to touch upon any other issue for which no reasons have been recorded. The above interpretation is contrary to the legislative intent. With a view to further clarifying the legislative intent, it is proposed to insert an Explanation in section 147 to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, not withstanding that the reason for such issue has not been included in the reasons recorded under sub-section (2) of section 148. This amendment will take effect retrospectively f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 147 of the Act nor can it be said that such issue came to the knowledge or notice of the assessing authority subsequently in the case of reassessment proceedings. The assessing officer in the reassessment order under Section 147 of the Act has clearly indicated that the matter was discussed and examined in detail in the block assessment order and an addition of Rs. 36,60,072/- was made on a protective basis in order to protect the interest of revenue. It is apparently clear, that this issue relating to long term capital gains had not come to the notice of the assessing officer subsequently in the course of reassessment proceeding. We are of the opinion, that the assessing officer could not have made this addition in reassessment proceeding under the cover of "protective basis". We are of the opinion that protective assessment could only be made at the stage when there was any doubt or dispute about the assessability of a particular sum either in relation to the assessment year and/or in relation to the assessee. We are of the opinion that the reason for adding this amount on "protective basis" by the assessing officer could be on account of the fact that the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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