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TMI Blog2017 (6) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... en shown as closing stock as on 31.03.2006. The audit report did not depict the figure of closing stock. Initiating the reassessment proceedings, the Assessing Officer held that the assessee understated its closing stock to the tune of Rs. 22.57 lac for the extant year. The assessee argued before the Assessing Officer that the addition made for the assessment year 2007-08, because of difference between the opening stock and closing stock, was deleted by the ld. first appellate authority. The Assessing Officer did not accept the contention by opining that the second appeal was being filed by the Revenue. He, therefore, made an addition of Rs. 22.57 lac in the instant assessment. The ld. CIT(A) deleted the addition of Rs. 22.57 lac by noticing that the Tribunal in the assessee's own case for the assessment years 2006- 07 and 2007-08 has held that there is no discrepancy in the quantitative details in respect of the items and there was no excess stock. He, however, issued notice of enhancement on the ground that there were some discrepancies in the quantitative details filed by the assessee. Such discrepancies were translated into an addition of Rs. 2,36,875/- after adding the necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular addition etc., which he was not entitled to as per law, the CIT(A) cannot equally exercise his power to make such an addition etc. With this salutary principle in mind, let us see if the action of the ld. CIT(A) in making the addition of Rs. 2.36 lac can be sustained? 6. The Assessing Officer made a solitary addition of Rs. 22.57 lac in the assessment under section 147 which was the only basis for initiating the reassessment and the same got finally deleted in the first appeal. At this juncture, it is relevant to note the mandate of the section, which provides that : `If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section...'. A bare perusal of the above provision divulges that the AO, in the course of assessment pursuant to notice u/s 148, can make two types of additions, viz., first, the addition for which he formed reason to believe about the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to him to assess some other income. Similar view has been taken by the Hon'ble Rajasthan High Court in CIT vs. Shriram Singh (2008) 306 ITR 343 (Raj). 7. The position which follows from the above discussion is that the Assessing Officer can make `other addition' in the reassessment proceedings, provided, the `foundational addition' is made. When this proposition is taken to a next level, no different consequences will emerge, if the `foundational addition' is itself finally deleted in an appeal. In such a scenario, the `other addition' made by the Assessing Officer would automatically cease to stand in isolation. This view has been affirmed by the Hon'ble jurisdictional High Court in CIT vs. Adhunik Niryat Ispat Ltd. (2011) 63 DTR 212 (Del). In that case, the return filed by the assessee for the asst. yr. 1999-2000 declaring income @ Rs. 1,22,460 was processed under s. 143(1) of the IT Act. However, notice was issued under section 148 of the Act subsequently, on the information received from the Director of IT (Inv.), New Delhi, to the effect that the assessee had accepted the accommodation entries from M/s I.G. Properties (P) Ltd., M/s Parivartan Capital & Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Bill, in this regard, reads as under : `The existing provisions of section 147 provides, inter alia, that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess such income after recording reasons for re-opening the assessment. Further, he may also assess or reassess such other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section. Some Courts have held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which the reasons have been recorded for reopening the assessment. He is not empowered to touch upon any other issue for which no reasons have been recorded. The above interpretation is contrary to the legislative intent. With a view to further clarifying the legislative intent, it is proposed to insert an explanation in section 147 to provide that the assessing officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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