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TMI Blog2010 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... s the proceeds were initiated, though the provisions u/s 148 of the IT Act, 1961 give liberty to the assessing officer to verify any point during the assessment proceedings. As per the Explanation 3 for the purpose of assessment or reassessment under this section, the assessing officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to this notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub section (2) of section 148 (Inserted by the Finance (No.2) Act, 2009 w.e.f. 1.4.1989. 3. The assessee raised the following grounds in its Cross Objection: 1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. It is evident that the reasons recorded for reopening assessment are confined only to this investment. However, in the assessment order passed u/s 143(3) r.w.s. 147 no addition towards any income which escaped assessment relatable to the investment in the society has been made. On the contrary, the additions in the assessment order , in appeal before us relates to short term and long term capital gains arising out of the sale of four flats by the assessee. Evidently, the issue of capital gains neither forms a part of the reasons recorded for reopening the assessment nor is connected with the investment in the society. 5. According to the CIT(A), the reassessment covers income which are beyond the purview of the reasons recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the assessing officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings u/s 147. It is a different story that for such other income, the assessing officer may have recourse to such other remedies, as may be available to him under law, but then, once it is found, that the income, regarding which he had reason to believe to have escaped assessment, is not found to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy recorded reasons is it necessary that he should record reasons for assessing or reassessing any of the items which are totally unconnected with the proceedings already initiated. Suppose under two heads, income has escaped assessment and those two heads are interlinked and connected, the proceedings initiated or notice already issued under sub section (2) of sec. 148 would be sufficient if the escaped income on the second head comes to the knowledge of the officer in the course of the proceedings. But if both the items are unconnected and totally alien then the assessing officer has to follow sub section (2) of section 148 with regard to the escaped income which comes to his knowledge during the course of the proceedings. The expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, recently, the Bombay High Court decided the similar issue in favour of the assessee in the case of CIT Vs. Jet Airways (I) Ltd. (Bom) in ITA No.1714 of 2009 dated 12.4.2010 wherein it was held that: 15. Parliament when it enacted the Explanation (3) to section 147 by the Finance (No.2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions when it effected the amendment by bringing in Explanation 3 to Sec.147, Parliament stepped in to correct with it regarded as an interpretational error in view which was taken by certain courts that the assessing officer has to restrict the assessment or re assessment proceedings only to the issue in respect of which reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment of reassessment on grounds other than those on the basis of which a notice was issued u/s 148 setting out the reasons for the belief that income has escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the assessing officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. The interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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