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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 ..... assessment. This ground of appeal of the assessee has been rejected by the learned First Appellate Authority. However, on merits, the additions have been deleted. Therefore, firstly, we take up the jurisdictional issue agitated in the Cross Objection. In Ground No.1 the assessee has pleaded that the learned CIT(A) has erred in upholding the validity of the reassessment proceedings initiated under Section 147/148 of the Income-tax Act. 4. The brief facts of the case are that the learned Assessing Officer has issued a notice under Section 148 of the Income-tax Act on 08.01.2016 after recording the reasons. The learned Counsel for the assessee, while impugning the reopening of the assessment, contended that the assessment can be reopened if the Assessing Officer is satisfied that the income has escaped assessment; however, a notice under Section 148 could be issued only after taking approval from the competent authority as contemplated under Section 151 of the Income-tax Act. He took us through the reasons recorded and the objections filed by the assessee against the reopening. He also took us through the order of the Assessing Officer dated 25.05.2016 vide which the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 320 On perusal of the gross income 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. Thakkar remains unexplained. Moreover, he does not have any creditworthiness so as to deposit such huge funds in cash in his accounts. Considering the above returned income and keeping in mind the huge cash deposits in the bank account, to explain the same, I have reason to believe that income of Rs. 11.94 crores has escaped assessment for FY 2009-10, i.e. AY 2010-11. Accordingly, it is a fit case for reopening u/s 147 of the I.T. Act. Sd/- (KAVITA P. KAUSHIK) Dy. Commissioner of Income-tax Central Circle-1(3), Ahmedabad." 7. A copy of the notice issued under Section 148 of the Income-tax Act is available on page no.1 of the paper-book and, on perusal of this notice, it would reveal that it was issued on 08.01.2016. It is, therefore, assumed that the notice under Section 148 was issued on 08.01.2016. Against this reopening of assessment, the assessee has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned Jt. Commissioner. Copy of the same is enclosed herewith for your reference. 3. As the objections raised by you are herewith dispose off, you are requested to attend the office of the undersigned on or before 30.05.2016 with reply to the notice issued u/s 142(1) of the Act dated 12.05.2016. 4. Your explanation should reach the undersigned on or before 30.05.2016. Please note that if you fail to furnish any explanation by the given date, assessment in your case for the assessment year may be finalized u/s 144 of the Income Tax Act, without affording any further opportunity. Non-compliance to the notice will leads to penalty proceedings as per the provisions of Income-tax Act, 1961. Yours faithfully, Sd/- (KAVITA P. KAUSHIK) Dy. Commissioner of Income-tax Central Circle-1(3), Ahmedabad." 8. At this stage, we would like to take note of Section 151 of the Incometax Act which reads as under:- "151. Specified authority for the purposes of section 148 and section 148A shall be,- (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax. He has not recorded the finding that the approval was taken from the competent authority i.e. Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Thus, there was no proper approval for reopening of the assessment and the reopening is, therefore, not valid in the eyes of law. For fortifying ourselves, we put reliance upon the judgement of the Hon'ble jurisdictional High Court in the case of Adani Ports & SEZ Ltd vs. DCIT, reported in [2013] 35 taxmann.com 338 wherein the Hon'ble High Court has allowed the writ petition of the assessee and quashed the reopening under identical circumstances. Similarly, we rely upon the judgment of the Hon'ble Delhi High Court in the case of CIT vs. SPL's Siddartha Ltd, reported in [2012] 17 taxmann.com 138. In view of the above discussion, we allow this ground of cross objection and quash the assessment order. Consequently, all other proceedings would become nullity and the appeal of the Revenue thus stands dismissed. To be precise, after declaring the assessment order null and void, no addition will remain in the hands of the assessee and, therefore, for statistical purposes, groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e during the reassessment proceedings can only be added if addition on an issue for which assessment was reopened is being made. For buttressing his proposition and explaining the position of law, he relied upon the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Mohmed Juned Dadani, reported in [2013] 30 taxmann.com 1. He also made reliance upon the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd., reported in [2011] 331 ITR 236 as well as the judgement of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd Vs. CIT, reported in [2011] 336 ITR 136. He also placed on records the copies of Tribunal orders as well as decision of Hon'ble Delhi High Court in the case of CIT vs. Adhunik Niryat Ispat Ltd in appeal No.2090 of 2010. 15. The learned CIT-DR, on the other hand, took us through the assessment order and submitted that if assessment order is being perused, then it would reveal that the Assessing Officer has made analysis of the account maintained by the assessee with the Bhuj Mercantile Co-op. Bank Ltd. He found certain credits entries in the account - though by account payee cheques but could not be explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the huge cash deposits in the bank account, to explain the same. I have reason to believe that income of Rs. 1.63 crores has escaped assessment for F.Y. 2010-11 i.e. A.Y. 2011-12. Accordingly, it is a fit case for reopening u/s 147 of the Act. Sd/- (KAVITA P. KAUSHIK) Dy. Commissioner of Income-tax Central Circle-1(3), Ahmedabad." 17. A perusal of the above reasons would indicate that the Assessing Officer has reopened the assessment on the ground that the assessee had made deposits in cash aggregating to Rs. 1.63 crores. This cash deposit, in the opinion of the Assessing Officer, was escaped income from the assessment. We have perused the assessment order also, but we do not find any such addition made by the Assessing Officer. He took notice of the fact that a sum of Rs. 7,54,35,000/- was deposited through account payee cheque from four persons/firms namely (i) Ashish Patel, (ii) Kanji Desai, (iii) Vittal Bio and (iv) Platinum. The details of the same are as under:- Name Amount Rs. Ashish Patel (31.05.2010 & 24.02.2011) 65,80,000/- Kanji Desai 1,62,25,000/- Vittal Bio 2,80,60,000/- Platinum 2,45,70,000/- 18. It is pertinent to note that these entries in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1. Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely : (a) where no return of income has been furnished by the assessee although his total income or the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to make a return under Section 139 or in response to a notice under Section 142(1) or 148 of the Act or to disclose fully and truly all material facts necessary for the assessment must also be satisfied. If the requirements of giving jurisdiction to the Assessing Officer to reopen assessment are satisfied, he may 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 the said section. 23. Section 147 of the Act, even without the aid of Explanation 3 thus enabled the Assessing Officer while framing an assessment under Section 147 of the Act, to assess or reassess such income for which he had recorded his reasons to believe had escaped assessment and also any other income which escaped assessment which came to his notice subsequently in the course of the assessment proceedings. 24. Sans explanation (3), Section 147 of the Act, however, by no stretch of imagination, can be construed as to provide that if the reason on which the assessment is reopened fails, the Assessing Officer still can proceed to assess some other income which accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 emplowered 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 issue has not been included in the reasons recorded under sub-section (2) of section 148. This amendment will take effect retrospectively from 1st April, 1989 and will, accordingly, apply in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it seems to subserve. (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful. (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) It cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. 29. Above decision has been referred to and relied upon in several subsequent decisions. Above proposition being well settled, it is not necessary to refer to all such decisions. 30. We may also approach the question from a slightly different angle. It is not in dispute that once an assessment is reopened by a valid exercise of jurisdiction under Section 147 of the Act, it is open for the Assessing Officer to assess or reassess any income which had escaped assessment which comes to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruled in favour of the assessee. 32. Punjab and Haryana High Court in case of Majinder Singh Kang Vs. Commissioner of Income-Tax and anr (supra) ofcourse has sounded a different note. We may, however, notice that the explanatory memorandum to Explanation 3 to Section 147 of the Act was not brought to the notice of the High Court in the said decision. The High Court gave considerable importance on such Explanation 3 to Section 147 of the Act and the language used therein. 33. In the result, we answer the question in the affirmative i.e. in favour of the assessee and against the revenue. All tax appeals are dismissed." 19. Since no addition was made on an issue for which the assessment was reopened, therefore, any other addition is not sustainable. We allow this ground of appeal and consequently delete all other additions made by the Assessing Officer and partly confirmed by the learned CIT(A). The other issues agitated by the assessee as well as by the Revenue in its appeal become redundant in view of the above decision. Therefore, we do not find any merit in the appeal of the Revenue; it is accordingly dismissed, and, Cross Objection of the assessee is thus allowed. 20. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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