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TMI Blog2015 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has not made any addition on the basis of formation of believe under section 147 of the IT Act. The AO has power as per Explanation 3 to include the items of income which came to his notice subsequently in the course of proceedings under this section for which no separate reopening is required, but in final out come both the additions have to be made by the AO in assessment order which has not been the case of AO during the year under consideration as he has not made any additions on the basis of total turnover. - Decided against revenue. - ITA No. 410/JP/2010 - - - Dated:- 17-7-2015 - R. P. Tolani, JM And T. R. Meena, AM, JJ. For the Petitioner : Smt Neena Jeph (JCIT) For the Respondent : Shri Rajeev Sogani (CA) ORDER Per Shri T. R. Meena, AM This is an appeal filed by the Revenue emanating from the order of ld. CIT (A)-I, Jaipur dated 18.01.2010 for the A.Y. 2002-03. The sole ground of appeal is against quashing the assessment order passed by the AO u/s 148 of the I.T. Act. 2. The brief facts of the case are that the assessee is an exporter of textile goods, filed its return declaring income of ₹ 4,96,128/- on 31.10.2002. The assessment was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dend income and income from brokerage and commission does not qualify for the deduction under section 10B of IT Act, 1961 as these incomes are not business income in nature and they are in the nature of income from Other sources and also do not form part of turnover. The AO relied upon the following cases :- Murli Investments vs. CIT 167 ITR 368 (Rajasthan High Court) CIT vs. Raj. Land Development Corporation 211 ITR 597 (Raj. High Court) CIT vs. Sterling Food, 237 ITR 579 (SC) Pandian Chemicals Ltd. Vs. CIT 262 ITR 278 (SC) In response to show cause notice the assessee submitted before the AO that assessee also incurred interest expenditure amounting to ₹ 44,65,350/-. Thus the interest income earned should be reduced from interest expenditure. Dividend income of ₹ 32,550/- is received from shares of SBBJ who are the bankers of the company. Brokerage and commission of ₹ 12,736/- is received from M/s. Maersk India Ltd. which is a shipping company. Since the assessee company has direct dealings/booking with them, they allow commission which is normally given by them to booking agents. In view of this the said receipt is only recoupment of fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material available with the AO to justify the reopening. Accordingly he quashed the reassessment and has not decided the case on merit. 4. This issue was challenged by the revenue before the Tribunal. This Bench has decided Revenue's appeal in ITA No. 410/JP/2010 for A.Y. 2002-03 vide order dated 10.03.2011 and Revenue's appeal was dismissed. 5. The Revenue filed Miscellaneous Application against this order which has been decided by this Bench in M.A. No. 46/JP/2012 (Arising out of ITA No. 410/JP/2010)) on 31.10.2014wherein Revenue has claimed that Hon'ble Rajasthan High Court decision in case of Ram Singh, 306 ITR 343 , no longer holds after explanation 3 of section 147 has been introduced in the IT Act with retrospective effect from 1989. This Bench has considered the Miscellaneous Application and recalled the order passed by coordinate Bench dated 10.03.2011. Accordingly case was refixed and reheard. 6. The ld. D/R argued that the AO recorded the reasons under section 147 on the ground that assessee's total turnover has been considered for claiming deduction under section 10B and had not included other income in total turnover. During the course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, he requested to delete the addition made by the AO. 8. We have heard rival contentions and perused the material on record and gone through the reasons recorded by the AO under section 147 of the IT Act. It is undisputed fact that AO had not borrowed the satisfaction from the audit party as nowhere in the satisfaction he has mentioned the audit objection. The basis of reopening of the assessment order was lesser figure of total turnover. As per his working in reasons recorded excess deduction had been calculated at ₹ 27,66,386/- on the basis of total turnover of ₹ 16,82,67,037/- whereas the assessee has taken total turnover in computation made by the CA in prescribed form at ₹ 15,39,35,866/- but this issue has not been considered by the AO at the time of completing the assessment. He simply reduced the other income from total income ₹ 1,43,31,171/- which includes interest at ₹ 12,14,227/-, dividend income of ₹ 32,550/- and brokerage and commission income of ₹ 12,736/- and business profit has been calculated at ₹ 3,12,21,537/- in place of ₹ 3,24,81,050/- shown by the assessee. It is clear that ld. AO had not made any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance 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 accepts 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 notice under section 148 would be necessary in the event of challenge by the assessee. The effect of section 147 as it now stands after the amendment of 2009 can therefore, be summarised as follows: (i) the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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