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TMI Blog2017 (1) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs Kelvinator of India Ltd,(2010 (1) TMI 11 - SUPREME COURT OF INDIA ) has held that the reasons must be specific, should have objective and a live connection with the escaped income and there should be a proper form of belief. - Decided in favour of assessee - ITA Nos. 2151 to 2153/Ahd/2012 - - - Dated:- 17-1-2017 - SHRI R.P. TOLANI, JUDICIAL MEMBER For The Revenue : Shri G.C. Daxini, Sr DR For The Assessee : None ORDER These three appeals by the Revenue are directed against the respective orders of ld. CIT(A)-IV, Baroda of even dated 04.07.2012 for Assessment Years 2006-07, 2007-08 and 2008-09. 2. At the time of hearing, none appeared for the assessee despite service of the notice; therefore, these appeals are decided ex-parte qua the assessee, after carefully pursing the material available on record along with the contentions and citations advanced by the ld. DR. 3. The sole common ground raised in all these appeals reads as under:- On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in setting-aside the reassessment order holding the same as bad in law, without considering the Explanation 3 to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for getting its accounts audited u/s 44AB of the Act and rejected the assessee s books of accounts. The profits of the assessee were estimated at a high figure at ₹ 7,49,480/-. 5. Aggrieved, the assessee preferred first appeal, where the validity of reassessment and addition on merit, both were challenged. The ld. CIT(A) held that:- (i) The reasons are vague and general in nature and do not point out any specific instance of escapement of income; (ii) The reasons recorded and the additions made are totally different; (iii) No proper reasons were recorded to form a belief in terms of Section 147 for escapement of income by following observations:- 9. From the above it can be seen that the case of appellant for the above assessment years including the assessment year under consideration was reopened u/s 147 of the IT Act in view of the fact that there was information with the department that at Juna Dadar Anand, the appellant possesses a shop and his another shop a/c hall is situated near Indira Statue and he also owns vehicles, godowns and other assets. However, no any addition has been made by the AO in the order u/s 143(3) rws. 147 of the Act for the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration cannot be upheld accordingly, the additional grounds of the appellant is accepted and the above addition of ₹ 7,49,480/- is deleted 6. Aggrieved, the Revenue is now in appeal before the Tribunal. 7. The ld. DR contends that the Assessing Officer recorded the reasons on the basis of information in possession of the Department. Thus, the reasons were recorded on the basis of proper information and the assessee cooperated in reassessment proceedings. Therefore, the ld. CIT(A) was not justified in holding the reassessment to be bad in law. Reliance is placed on the judgment of Hon ble Karnataka High Court in the case of CIT vs. M/s. Mookambika Developers in ITA No.374 of 2014 in which reliance has been placed on another judgment of Hon ble Karnataka High Court in the case of Shri N. Govindaraju vs. ITO in ITA No.504 of 2013. The Hon ble Karnataka High Court in the case Shri N. Govindaraju (supra) has held as under:- 24. From a plain reading of section 147 of the Act it is clear that its latter part provides that 'any other income' chargeable to tax which has escaped assessment and which has come to the notice of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of the proceedings, notwithstanding that the reasons for such issue had not been included in the reasons recorded under subsection (2) of section 148. Insertion of this Explanation cannot be but for the benefit of the Revenue, and not the assessee. 28. In this background, if we read Section 147 it would be clear that in the phrase 'and also' which joins the first and second parts of the section, 'and' is conjunctive which is to join the first part with the second part, but 'also' is for the second part and would be disjunctive. It segregates the first part from the second. Thus, when we read the full section, the phrase 'and also' cannot be said to be conjunctive. 7.1 Further reliance was placed on the judgments of Punjab Haryana High Court in the case of Majinder Singh Kang vs. CIT, (2012) CIT 344 ITR 358, Rajasthan High Court in the cases of CIT vs Atlas Cycle Industries, (1989) 180 ITR 319 and CIT vs Shri Ram Singh, (2008) 306 ITR 343 and the Circular No.5 of 2010 issued by the Central Board of Direct Taxes (CBDT) after the amendment of 2009, provided for the Explanatory Notes to the Provisions of Finance (No.2) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finvest (supra). Considering the provision of section 147 as well as its Explanation 3, and also keeping in view that section 147 is for the benefit of the Revenue and not the assessee and is aimed at garnering the escaped income of the assessee [viz. Sun Engineering (supra)] and also keeping in view that it is the constitutional obligation of every assessee to disclose his total income on which it is to pay tax, we are of the clear opinion that the two parts of section 147 (one relating to 'such income' and the other to 'any other income') are to be read independently. The phrase 'such income' used in the first part of section 147 is with regard to which reasons have been recorded under section 148(2) of the Act, and the phrase 'any other income' used in the second part of the section is with regard to where no reasons have been recorded before issuing notice and has come to the notice of the Assessing Officer subsequently during the course of the proceedings, which can be assessed independent of the first part, even when no addition can be made with regard to 'such income', but the notice on the basis of which proceedings have commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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