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TMI Blog2016 (4) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... e. - ITA No.134/Ag/2014 - - - Dated:- 5-4-2016 - SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER Appellant By : Sh. Dipendra Mohan Ms. Prathna Jalan Respondent By : Sh. Waseem Arshad ORDER PER ANNAPURNA MEHROTRA A.M. This appeal has been filed by the assessee against the order of Ld. CIT(A) Muzaffar Nagar dt. 20/01/2014. The assessee has raised the following grounds of appeal: 1. That the Hon ble C.I.T (Appeals) has erred in law and on facts in sustaining the reassessment order passed u/s 147/143(3) of the I.T. Act, 1961 even when no addition has been made on the issue which was recorded in reasons to believe for initiating re-assessment proceedings by the Ld. A.O. 2. That the Hon ble C.I.T(Appeals) has erred in law and on facts in not appreciating that no notice u/s 148 was ever served on the appellant. 3. That the re-assessment order passed u/s 148 of the I.T. Act, 1961 is void-abinitio. 4. That the Hon ble C.I.T (Appeals) has erred in law and on facts in sustaining the addition u/s 68 on account of gift received amounting to ₹ 5,00,000/- even when the identity, creditworthiness and genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is being done in this group of cases. Similar disallowances have been made in scrutiny assessment of Shri. Anurag Varshney, A.Y. 2001-02 and 2002-03 and Shri. Anupam Varshney A.Y. 2002-03, both brothers of the assessee. The assessee has also claimed indexation of sale of UTIMEP-92, which is an asset covered U/s 80CCB. No indexation is allowable u/s 45(6) on sale of such asset. With the above facts, I have reason to believe that income of the assessee chargeable to tax has escaped assessment. Such income shall be assessed under section 147. With these reasons, notice u/s 148 is being hereby issued. Ld. AR thereafter drew our attention to the assessment order passed under section 147 and stated that the addition made was on account of unexplained gift amounting to ₹ 5,00,000/- and unexplained cash credit of ₹ 15,47,000. Thus the Ld. AR stated that no addition on account of the issue raised in the reasons recorded were made. Ld. AR thereafter drew our attention to the provisions of section 147 and pointed out that it specifically stated that addition could be made on account of the issue on which the reopening was resorted and also on other income which has been found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, has been framed making addition on account of unexplained cash credit and unexplained gifts and no addition on account of the income which were found to have escaped assessment as per the reasons recorded, has been made. We hold that in this case the AO had no jurisdiction to subject to tax unexplained gifts and cash credits and frame the impugned assessment. The Hon ble Bombay High Court in the case of Jet Airways(I)Ltd.(supra) had interpreted the provision of Section 147 on first principle and held that as per section 147, upon formulation of a reason to believe u/s 147, and following the issuance of a notice u/s 148, the AO has the power to assess or reassess the income which he has reason to believe has escaped assessment and any other income chargeable to tax. The word and used in the section is important and results in an interpretation that it is only along with income which the AO has formed reason to believe has escaped assessments that any other income can be brought to tax. Independently any other income cannot be assessed to tax. It is only when in proceedings u/s 147, the AO, assesses or reassesses any income chargeable to tax which has escaped assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceeding as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under section 148(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 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 stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. Thus the Hon ble High Court held that the word and also used in section 147 was used in a cumulative and conjunctive sense, meaning thereby that it is only if additions are made on account of incomes found to have escaped assessment as per reason recorded, that any other income which has escaped assessment and comes to the notice subsequently during assessment proceedings can be brought to tax. The Hon ble High court held at para 23 of its order as follows:- 23. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter for first principle, based on the language used in section 147 and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147 as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income and also any other income chargeable to tax which comes to his notice subsequently during ..... X X X X Extracts X X X X X X X X Extracts X X X X
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