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TMI Blog2018 (12) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... diction to reassess the income other than the income in respect of which the proceedings under section 147 were initiated, but, he was not justified in doing so when the reasons for the initiation of those proceedings ceased to survive. Therefore, the argument advanced by the Revenue placing reliance on Explanation 3 to section 147 is of little avail. Reopening of the assessment itself was bad in law, we may not be required to decide other issue as to whether the finding of the Assessing Officer with regard to computation of eligible profits for the purpose of section 80HHC of the Act was correct or not. We are convinced that reopening of the assessment on the said ground itself was unsustainable for the reason that in the scrutiny assessment under section 143(3) of the Act, this very issue, namely, regarding deduction under section 80HHC was considered by the Assessing Officer and a detailed working had been done and the tax pay- able was calculated. Therefore, if the Assessing Officer is to reopen the finding rendered in the scrutiny assessment, then it would clearly amount to change of opinion, which is impermissible. - Decided in favour of assessee. - T. C. (A). No. 1548 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment under section 143(3) was completed on February 28, 2000, determining the total income of ₹ 83,10,51,940. While computing the assessment, the Assessing Officer, among other things, restricted the claim of deduction under section 80HHC of the Act. Subsequently, a notice under section 148 of the Act was issued on March 30, 2004, well beyond the period of 3 years for the reason that the Assessing Officer proposes to disallow the contribution to the welfare fund of ₹ 3,51,682 as it is not an approved fund. In response to the notice, the assessee filed a return of income on November 22, 2004, and the assessment was completed under section 143(3) read with section 147 by order dated December 28, 2004, determining the total income at ₹ 82,22,49,660. 5. Though the Assessing Officer proposed to disallow the contribution to the welfare fund of ₹ 3,51,682 on the ground that it was not an approved fund, the contention raised by the assessee was accepted and the assessment was not reopened on the said ground. However, while completing the assessment, the Assessing Officer restricted the claim of deduction under section 80HHC of the Act by excluding 90 per cent. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interpreted the materials, which were disclosed by the assessee at the time of filing of the original return. 10. The earliest of decision as regards whether the disclosure of the assessee was fully and truly made is the decision of the hon'ble Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC), wherein the hon'ble Supreme Court observed as follows (page 200) : From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts dis closed, or otherwise, the assessing authority has to draw inferences as regards certain other facts ; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. 11. Thus, if the material facts are in the possession of the Assessing Officer as disclosed by the assessee, it is for the Assessing Officer to draw a proper legal inference and ascertain the correct interpretation of the statutory pro- vision for levying the proper tax. It is not for the assessee to say as to how the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [1992] 198 ITR 297 (SC). The decision in the case of K. L. Srihari (cited supra) was referred to in the decision of the hon'ble Supreme Court in the case of V. Jaganmohan Rao v. CIT/EPT [1970] 75 ITR 373 (SC). 15. In Jet Airways (cited supra), the hon'ble Division Bench of the Bombay High Court took note of the decisions in the cases of Sun Engineering Works and V. Jaganmohan Rao (cited supra) and examined the effect of Explanation 3 in a case of somewhat similar to the case on hand. The operative portion of the judgment reads as follows (page 245 of 331 ITR) : The effect of the amended provisions came to be considered, in two distinct lines of precedent on the subject. The first line of authority, to which a reference has already been made earlier, adopted the principle that where the Assessing Officer has formed a reason to believe that income has escaped assessment and has issued a notice under section 148 on certain specific issues, it was not open to him during the course of the proceedings for assessment or reassessment to assess or reassess any other income, which may have escaped assessment but which did not form the subject matter of the notice under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee . . . 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 the proceedings as having escaped assessment. The words 'and also' are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion to Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words 'and also' by the Rajasthan High Court in CIT v. Shri Ram Singh [2008] 306 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), wherein the court held that interest received by the assessee on delayed payment from the customer has been assessed as business income and it is at the time of determination of profits of business for the purpose of clause (baa) as referred to above, that the interest component added therein is to be excluded to give effect to the provisions in its true letter and spirit. The above finding was rendered by the court by placing reliance on the decisions of the hon'ble Supreme Court in the case of CIT v. Govinda Choudhury and Sons [1993] 203 ITR 881 (SC) and CIT v. B. N. Agarwala and Co. [2003] 259 ITR 754 (SC). 19. The argument of the learned counsel for the assessee is that gross interest cannot be taken into consideration. However, we are of the considered view that this issue is academic, because of the fact that we are not going into the computing of eligible profits for the purpose of section 80HHC as done by the Assessing Officer, as we are convinced that reopening of the assessment on the said ground itself was unsustainable for the reason that in the scrutiny assessment under section 143(3) of the Act, this very issue, namely, regarding deduction under section 80HH ..... X X X X Extracts X X X X X X X X Extracts X X X X
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