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TMI Blog2015 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 ₹ 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. The amount which is alleged to have escaped assessment was duly indicated by the assessee in his return under Section 139 of the Act and was also considered in the block assessment order under Section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the amount of ₹ 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 ₹ 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 Section 132 of the Act and, therefore, the said amount was liable to be deleted. The revenue, being aggrieved by the appellate order dated 28.4.2006, preferred an appeal which was dismissed by the Tribunal by an order dated 23.5.2008. The Department did not pursue the matter thereafter before the higher forum and, consequently, the order passed by the Tribunal attained finality. After the completion of the block assessment order dated 28.9.2004 the assessing officer issued a notice dated 30.3.2005 under Section 148 of the Act reopening the assessment proceedings for the assessment year 2002-03 on the sole ground that the assessee received an amount of ₹ 1,65,000/- from M/s Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains 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 long term capital gains as income from other sources, on the ground that the said information came to the knowledge of the assessing officer after initiation of proceedings under Section 147 of the Act on 30.3.2005 ? We have heard Sri Ashish Bansal, the learned counsel for the appellant and Sri Ashok Kumar, the learned counsel for the appellant. Since no disputed facts are involved and all the materials have been filed along with the memo of appeal, with the consent of the parties, the appeal is being decided at the admission stage itself. In order to proceed further, it could be relevant to produce Section 147 and Explanation (3) to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from 1st April, 1989 and will, accordingly, apply in relation to assessment year 1989-1990 and subsequent years. This clarificatory note was issued because some of the Courts held that the assessing officer had to restrict the reassessment proceedings only to the reasons recorded for reopening the reassessment proceedings and was not empowered to decide any other issues for which reason had not been recorded. The explanatory note was, therefore, issued in order to clarify the legislative intent, namely, that the assessing officer may assess or re-assess the income in respect of any issue which comes to his notice, sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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's appeal against the block assessment order was pending, on the ground, that no material was found at the time of search with regard to the sale of shares. The assessing officer must have become aware that such addition could not have been added in the block assessment proceedings under Section 158-BC of the Act. Further, we are of the opinion, that the assessing authority could only assess or reassess such income which has escaped assessment. In order to take an action under Section 147 of the Act there must be a reason to believe that such income had escaped assessment which came to his notice subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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