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TMI Blog2021 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 1330/Ahd/2019 & CO No. 184/Ahd/2019, ITA No. 1331/Ahd/2019 & CO No. 185/Ahd/2019 - - - Dated:- 2-8-2021 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Revenue : Shri Virendra Ojha, CIT-DR Shri S.S. Shukla, Sr. DR For the Assessee : Shri Vartik Chokshi, AR ORDER PER RAJPAL YADAV, VICE PRESIDENT : The Revenue is in appeal before the Tribunal against separate orders of learned Commissioner of Income-Tax (Appeals) of even dated 17.06.2019 passed for Assessment Years 2010-11 and 2011-12. On receipt of notice in the appeals of the Revenue, the assessee has filed Cross Objections bearing Nos. 184/Ahd/2019 and 185/Ahd/2019 in Assessment Years 2010-11 and 2011-12 respectively. 2. Since common issues are involved in all these appeals; therefore, we have heard them together and deem it appropriate to dispose of by this common order. 3. First we take up ITA No.1330/Ahd/2019 and CO No.184/Ahd/2019. In the Cross Objection, the assessee has challenged reopening of assessment. This ground of appeal of the assessee has been rejected by the learned First Appellate Authority. However, on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons recorded by the Assessing Officer has a direct bearing on the controversy in hand; therefore, we take note of the reasons available on page no.43 of the paperbook which reads as under:- REASONS FOR REOPENING SHRI JASMINE JAYENDRABHAI THAKKAR A.Y. 2010-11 On perusal of the bank statement of Jasmine Jayendrabhai Thakkar, obtained from bank, for account No.463009114082071 maintained with Bhuj Mecantile Co-operative Bank it has been found that cash deposits aggregating to ₹ 11.94 Crores have been made in this bank account on various dates during the F.Y. 2009-10. Further, the Return of income filed by Shri Jasmine J. Thakkar was examined on ITD. On perusal of the return of income filed by him it has been found that he does not have any substantial income. The details of the gross total income filed by him for various years are tabulated hereunder: Name of Person Head Gross Total Income (In Rs.) AY 2012-13 AY 2011-12 AY 2010-11 AY 2009-10 AY 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.05.2016 against the Assessment Proceedings Reg. Please refer to the above. 2. The point-wise reply to the objection raised for AY 2010-11 in your case is as follows: Objection No.1 : Non satisfaction of pre-condition for invoking the provisions of Section 147: Please note that the Reasons recorded u/s 147 was already forwarded to you through the letter dated 12.05.2016, it is clearly mentioned the reasons which leads to believe that income or profit or gains chargeable to Income-tax has escaped assessment. Objection No.2 : Jurisdiction for reassessment proceedings cannot be assumed on basis of reasons to suspect: The case is re-opened on the basis of the facts which have leads to believe that the income has escaped assessment for the concerned AY, which can be seen from the reasons recorded, already provided to you. Hence, there is no assumption made in the case. Objection No.3: Notice issued without recording of proper satisfaction of the Pr. Chief Commissioner / Chief Commissioner / Pr. Commissioner / Commissioner that it is a fit case for the issue of such notice. Please note that the notice u/s 148 was issued after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot issue such notice unless an approval from the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is obtained. In other words unless the above authorities are satisfied that it is a fit case for reopening and approved the action of the Assessing Officer, no notice under Section 148 of the Act could be issued. 11. Let us now explore whether such approval was taken or not. Under objection No.3 against the reopening of the assessment, the assessee took a plea that notice has been issued without recording of proper satisfaction of the Principal Commissioner of Income-tax. At the cost of repetition, we reproduce the relevant findings from the order dated 25th May 2016 which reads as under:- Objection No.3: Notice issued without recording of proper satisfaction of the Pr. Chief Commissioner / Chief Commissioner / Pr. Commissioner / Commissioner that it is a fit case for the issue of such notice. Please note that the notice u/s 148 was issued after obtaining the approval from the concerned Jt. Commissioner. Copy of the same is enclosed herewith for your reference. 12. A perusal of the above would indicate that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see carried the matter in appeal before the learned CIT(A). The learned CIT(A) has partly deleted the addition and confirmed the addition made under Section 68 of the Act to the extent of ₹ 5,26,30,000/-. In ground no.2 of the Cross Objection, the assessee has challenged the confirmation of this addition; whereas, the Revenue has challenged the deletion of the addition. The learned Counsel for the assessee, while impugning the orders of the Revenue Authorities, submitted that the assessment was reopened on the ground that the assessee has made cash deposits of ₹ 1.63 crores in the bank account maintained with the Bhuj Mercantile Cooperative Bank Limited. The learned Counsel for the assessee took us through the copy of the reasons recorded by the Assessing Officer which is available on page no.45 of the paper-book. The learned Counsel for the assessee thereafter took us through the assessment order and submitted that no addition was made on account of cash deposits and, therefore, it is to be construed that the addition on an issue for which the assessment was reopened was not made. If that be the case, then any other income coming to the notice of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account on various dates during the F.Y. 2010-11. Further, the Return of income filed by Shri Jasmine J. Thakkar was examined on ITD. On perusal of the return of income filed by him it has been found that he does not have any substantial income. The details of the gross total income filed by him for various years are tabulated hereunder: Name of Person Head Gross Total Income (In Rs.) AY 2012-13 AY 2011-12 AY 2010-11 AY 2009-10 AY 2008-09 Jasmine Jayendrabhai Thakkar Income from salary / Pension 287095 760248 512889 308398 262320 On perusal of the gross in come filed by him it has been found that he is showing income under the head Salary and he does not have any substantial source of income so as to deposit such huge cash in his bank account. In view of the discussion held above, the source of deposits in the hands of Shri Jasmine J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), the Hon ble High Court of Gujarat has considered identical question. The question formulated by the Hon ble High Court of Gujarat reads as under:- Whether the Income-tax Appellate Tribunal was right in law in coming to the conclusion that when on the ground on which the reopening of assessment is based, no additions are made by the Assessing Officer in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him. And, thereafter, Hon ble High Court made a reference to the decision of the Hon ble Bombay High Court in the case of Jet Airways (I) Ltd (supra) as well as the decision of the Hon ble Delhi High Court in the case of Ranbaxy Laboratories (supra). The discussions made by the Hon ble High Court of Gujarat read as under:- 19. In light of the above decisions, we need to answer the question framed. In order to do so, we may notice the statutory provisions applicable. Section 147 of the Act underwent significant changes w.e.f. 01.04.1989. In the present form as it stands the section reads as under: [Income escaping assessment.] 147. Income escaping assessment.- If the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. Explanation 3. For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. 20. We may notice that Explanation 3 to Section 147 of the Act was inserted by Finance Act 2 of 2009 w.e.f. 01.04.1989. To this aspect of the matter and the effect of the explanation itself we would advert to at a later stage. 21. Section 148 of the Act pertains to issuance of notice whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is knocked out, any further proceeding in respect to such assessment naturally would not survive. 25. A question may therefore, arise whether introduction of Explanation (3) would change this position and for that purpose we need to ascertain what is true purport of Explanation 3 and the purpose for which the same was introduced. Let us have a closer look to such Explanation which provides that for the purpose of assessment or reassessment under the said section, the Assessing Officer may assess or reassess the income in respect of any issue which escaped assessment and which comes to his notice subsequently in the course of reassessment proceedings. The explanation further provides that this would be so notwithstanding that the reasons for such issue have not been included in the reasons recorded under Section 148(2). 26. If the contention of the assessee that even after introduction of Explanation 3 to Section 147 of the Act, the situation has not undergone any material change is accepted, the question that immediately would come to one s mind is, what then was the purpose of introducing such an explanation. An argument may arise that if before and after introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... face of the provisions contained in Section 147 of the Act post 01.04.1989 some of the courts had taken a view that the Assessing Officer is restricted to the reassessment proceedings only on issues in respect of which the reasons were recorded for reopening the assessment, such explanation was introduced in the statute. Thus, the explanation was meant to be merely clarificatory in nature and was introduced with the purpose of putting at rest the legal controversy regarding the true interpretation of Section 147 of the Act which had arisen on account of certain judicial pronouncements. We have noticed that prior to enactment of Explanation 3 to Section 147, Punjab and Haryana High Court in case of Commissioner of Income Tax Vs. Atlas Cycle Industries reported in 180 ITR 319 (supra) had taken a restricted view of the power of the Assessing Officer to make any addition on the grounds not mentioned in the reasons recorded for reopening the assessment. We may also notice that Kerela High Court in case of Travencore Cements Ltd. Vs. Assistant Commissioner of Income-Tax and anr reported in 305 ITR 170 had taken somewhat similar stand. 28. Explanation 3 to Section 147 of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a period of four years from the end of relevant assessment year, the condition that income chargeable to tax has escaped assessment for the reason of the failure on the part of the assessee to disclose truly and fully all material facts for the purpose of assessment must also be established unless ofcourse some other ground viz. non-filing of the return at all etc. is available to the Assessing Officer. If such non-disclosure of material facts is established with respect to the reason recorded for issuing notice for reopening the assessment, it would be open for the Assessing Officer to thereafter even assess other income which might have escaped assessment but which may not necessarily satisfy the requirement of non-disclosure of true and full material facts. If in such a situation, the stand of the revenue is accepted, a very incongruent situation would come about if ultimately the Assessing Officer were to drop the ground on which notice for reopening had been issued but to chase some other grounds not so mentioned for issuance of the notice. In such a situation, even if a case where notice for reopening has been issued beyond a period of four years, the assessment would conti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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