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TMI Blog2015 (9) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in Profit & Loss Account, and hence, following the decision of the Bombay High Court in the case of Jet Airways (2010 (4) TMI 431 - HIGH COURT OF BOMBAY ), we find that the impugned re-assessment made by the Assessing Officer cannot be upheld. As decided in case of Meheria Reid & Co. Vs. ITO, [2013 (2) TMI 348 - ITAT KOLKATA] a variation in the two figures does not necessarily lead to escapement of income – Mere need to verify the discrepancy does not bring the matter within the scope of cases in which reassessment proceedings can be validly initiated – There is subtle, though significant, distinction between reason to believe and reason to suspect – While the former is good enough to hold that income has escaped assessment and initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red appeal. 3. In the appeal before the CIT(A), the assessee has in the first place contested the legality and validity of the reopening the assessment. The case was reopened by the Assessing Officer issuing a notice under S.148 of the Act, on the ground that there was a difference of ₹ 5,79,332 in the gross receipts reflected in the TDS certificates, vis-avis the gross receipts as per in the Profit Loss Account. Therefore, the Assessing Officer was of the opinion that there was reason to believe that income chargeable to tax has escaped assessment. The learned Authorised Representative submitted before the first appellate authority that once the difference in the gross receipts mentioned above was duly reconciled by furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions, and directed the Assessing Officer to recompute the income accordingly. 4. Still aggrieved, assessee preferred the present appeal before us 5. Effective grounds of the assessee in this appeal are as follows- (1) The learned Commissioner of Income-tax(Appeals) IV erred both on facts of the case and in law involved in this case. (2) The learned Commissioner of Income-tax(Appeals) IV erred in sustaining the estimation of income @ 8% on the turnover. (3) The learned Commissioner of Income-tax(Appeals) IV should have sustained the profit reflected by the Appellant. (4) .. 6. Assessee also filed additional grounds which read as follows- 1. The re-opening of Assessment and the reasons recorded for reopening of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on the decision of the Calcutta Bench of the Tribunal in the case of Meheria Reid Co. V.s. ITO (81 DTR Cal. Trib 36) and the Gujarat High Court in the case of CIT V/s. Mohmed Juned Dadani (Tax Appeal No.984 of 2011 to 967 of 2011 dated 29.1.2013), copy filed before us. 8. The learned Departmental Representative on the other hand, strongly relied on the orders of the Revenue authorities. 9. We have heard both the parties. With respect to 1st and 3rd of additional grounds of appeal, the Explanatory Memorandum presented in the Parliament at the time of introduction of Explanation (3) to S.147 of the Act, by statutory amendment, reads as under- Clarificatory amendment in respect of re-assessment Proceedings under section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation of S.147 of the Act does not in any manner even purport to expand the power to the Assessing Officer under S.147 of the Act. In any case, an explanation cannot expand the scope and speech of the main body of the statutory provision. In the leading decision of the Bombay High Court in the case of CIT Jet Airways (I) Ltd. (331 ITR 236), while considering an identical situation, the Hon ble High Court, interpreted the provisions of S.147 of the Act has held that the situation would not be different by virtue of introduction of Explanation 3 to the said section. It has been held in that case that if upon issuance of notice under S.148 of the Act, the Assessing Officer does not assess the income, which he had reason to believe has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per TDS certificates and that it requires verification to find out whether any taxable income has escaped assessment There is nothing in the reasons to indicate that there is escapement of income A variation in these two figures does not necessarily lead to escapement of income Mere need to verify the discrepancy does not bring the matter within the scope of cases in which reassessment proceedings can be validly initiated There is subtle, though significant, distinction between reason to believe and reason to suspect While the former is good enough to hold that income has escaped assessment and initiate suitable remedial measures in respect thereof, the latter can, at best, be the ground to verify and examine the matter further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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