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TMI Blog2019 (11) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... not under Explanation 3 to Section 147, AO dealt with the issue of closing stock, but the AO dealt with this issue u/s 154 of the Act. In any case, it is not the case of the Ld. AO that Section 154 is being invoked with respect to the original assessment, finalized under section 143(3) of the Act. If we accept the argument of the learned DR that u/s 154 AO is empowered to deal with the escapement of income in respect of which the reasons were not recorded even after the assessment reopened under section 147 of the Act is completed, it would empower the AO to go on making one addition after the other by taking shelter of Explanation 3 to Section 147 endlessly. Such a course is not permissible. Power that is available to the AO under E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of ₹ 65,33,380/- and the same was processed u/s 143(1) of the Income-tax Act, 1961 ( the Act ). Subsequently, by notice dated 8.8.2011 u/s 148 of the Act, learned AO sought to reopen the proceedings by recording reasons on two aspects, namely, in respect of the escapement of income under the head travelling expenses on account of purchase of foreign exchange to the tune of ₹ 4,78,030/- and claim of the assessee to the tune of ₹ 6,58,736/- which was disallowed in the preceding year u/s 40A(ia) of the Act. Learned AO by order dated 14.11.2012 u/s 147/143(3) of the Act made addition of ₹ 4,78,030/- under the head travelling expenses on account of purchase of foreign exchange by disallowing the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, there was no mistake in the assessment order. 5. Learned CIT(A), however, did not agree with the assessee and observed that in view of Explanation 3 to Section 147 of the Act which empowers the learned AO to assess or re-assess the income which had escaped assessment and which goes to the notice of the learned AO subsequently in the course of proceedings u/s 147 , there is nothing wrong in the learned AO rectifying the mistake that had crept in the order u/s 147/143(3)of the Act. Learned CIT(A) further observed that there is a discrepancy in the figures given in the balance sheet and the assessee cannot be permitted to argue anything to the contrary. Learned CIT(A), therefore, dismissed the appeal insofar as this issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible under law. 7. Per contra, it is the submission of the learned DR that by virtue of Explanation 3 to Section 147, learned AO need not conform to the reasons recorded by him to propose the reopening but any escapement of income that has come to his notice subsequently, is also amenable to his jurisdiction and, therefore, anything that was left out by the learned AO inadvertently at the time of the passing of the order u/s 147 could as well be rectified u/s 154 of the Act. Insofar as merits are concerned, learned DR submits that there was no proper explanation from the assessee to submit that the figure of ₹ 2,97,47,872/- is correct one and the figure of ₹ 3,32,01,843/- was a mistaken one. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to the closing stock in the proceedings u/s 147, the assessee could not have agitated anything against the same stating that it is beyond the jurisdiction of the learned AO to deal with such an issue. As we have stated earlier in the entire proceedings u/s 147, there was no whisper as to the closing stock. In such an event, we find it difficult to accept the argument of the learned DR that even after conclusion of the proceedings u/s 147 of the Act, the ld. AO can take the aid of Explanation 3 to Section 147 of the Act to make any addition. The difficulty here is that it is not under Explanation 3 to Section 147, ld. AO dealt with the issue of closing stock, but the ld. AO dealt with this issue u/s 154 of the Act. In any case, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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