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TMI Blog2021 (7) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment proceeding get effaced and the AO was required to consider the proceeding de novo and to consider the claim of the assessee. - I.T.A. NO.392 OF 2016 - - - Dated:- 6-7-2021 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE HEMANT CHANDANGOUDAR APPELLANT (BY SRI. A. SHANKAR, SR. COUNSEL FOR SRI. A. CHANDRASHEKAR, ADV.) RESPONDENT (BY SRI. K.V. ARAVIND, ADV.) JUDGMENT ALOK ARADHE J., This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee. The subject matter of the appeal pertains to the Assessment year 2007-08. The appeal was admitted by a bench of this Court on the following substantial questions of law: (1) Whether the Tribunal is right in applying the ratio of the decision of the Hon'ble Supreme Court in CIT vs. Sun Engineering Pvt. Ltd. 198 ITR 297 (SC) and holding that concluded issue in the original proceeding cannot be re-agitated in re assessment proceedings even though the case of the appellant is distinguishable in as much as there was no original assessment proceedings on the facts and circumstances of the case? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 29.02.2016 inter alia allowed the claim of the assessee with regard to disallowance of contribution under various heads and held that such contributions are allowable expenses. However, the tribunal did not grant relief with regard to the additional claim of loss made by the assessee on account of sale of securities on the ground that the aforesaid additional claim was not made in original assessment proceeding. Thus, the appeal was partly allowed. In the aforesaid factual background, the assessee is in appeal before us. 4. Learned Senior counsel for the assessee submitted that in the case of the assessee there is no original assessment for the same Assessment Year and the an intimation under Section 143(1) of the Act was issued to the assessee. The said intimation under Section 143(1) of the Act is not an order of assessment and therefore, the tribunal ought to have appreciated that the issue of loss of sale on government securities was not considered by the Assessing Officer and has not reached finality. It is also submitted that in 'CIT V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable to the assessee is to file a return and to seek condonation of delay in filing the return under Section 119 of the Act. It is further submitted that Section 148 of the Act provides a remedy to the revenue and is not a remedy to the assessee. It is also submitted that proceeding under Section 148 can be initiated only in respect of such income which escapes assessment and the same has been interpreted by the Supreme Court in Sun Engineering Works (P.) Ltd supra which has rightly been applied to the case in hand by the tribunal. It is further submitted that no fresh claims can be made by the assessee in a proceeding under Section 148 of the Act. It is also urged that decision of the Supreme Court in Sun Engineering Works (P.) Ltd still holds the field. In support of aforesaid submissions, reference has been made to a decision in 'GOETZE (INDIA) LTD. VS. COMMISSIONER OF INCOME TAX', (2006) 157 TAXMAN 1 (SC). 6. We have considered the rival submissions made at the bar and have perused the record. The Explanation to Section 143 of the Act prior to 01.06.1999 reads as under: Explanation - An intimation sent to the assessee under sub-Section (1) or sub Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NADHAN VS. CIT (1963) 60 ITR 463 and held that the view taken by aforesaid two high courts is in consonance with the law laid down by the Supreme Court in V.JAGAN MOHAN RAO supra . The aforesaid decision has been followed by benches of this court in 'NITESH BERA (HUF) VS. DCIT', ITA NO.585/2016 and 'THE COMMISSIONER OF INCOME TAX AND ANOTHER VS. M/S AVASARALA AUTOMATION LIMITED', W.A.Nos.1411-1413/2004 and connected matters dated 05.04.2005. 9. Thereafter, a two judge bench of the Supreme Court in Sun Engineering Works (P.) Ltd supra while dealing with the Assessment Years 1960-61 and 1961-62 held as follows: 38. Although, Section 147 is part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that construction should be preferred which makes the machinery workable. Since, the proceedings under Section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the 'escaped income' of an assessee, the same cannot be allowed to be converted as 'revisional' or 'review' proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under Section 147 of the Act which are for the benefit of the Revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to 'escaped income', and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings relating to the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of 'reassessment' cannot be reduced beyond the income originally assessed. 10. In Sun Engineering Works (P.) Ltd supra, it was held that in a proceeding from re-assessment, the Assessing Officer cannot adjudicate the issues, which are the issues forming part of the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order in the case of the assessee and it was only an intimation under Section 143(1)of the Act, which cannot be treated to be an order in view of decision of the Supreme Court in Rajesh Jhaveri supra. Therefore, the question of re-assessment of the income of the assessee by the Assessing Officer does not arise. In the proceeding under Section 148 of the Act, it was the first assessment and the same could have been done considering all the claims of the assessee. Therefore, the decision rendered by the Supreme Court in Sun Engineering Works (P.) Ltd had no application to the fact situation of the case. Even assuming for the sake of argument that if an intimation under Section 143(1) of the Act is considered to be an order of assessment, in the subsequent re-assessment proceeding, the original assessment proceeding get effaced and the Assessing Officer was required to consider the proceeding de novo and to consider the claim of the assessee. In view of preceding analysis, the first and second substantial question of law is answered in the negative and in favour of the assessee. In the instant case, the authorities under the Act have not considered the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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