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TMI Blog2021 (9) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not raised or pressed arguments on any of other grounds or any other application so moved or pending before us, therefore, in this eventuality, we dismiss all the grounds except ground No. 4 or applications so filed or raised by the assessee as not pressed. 4. Ground No. 4 raised by the assessee relates to challenging the order of ld. CIT(A) in confirming the action of the A.O. in making additions in respect of issues in respect of which proceedings were not initiated and no additions were made on issues on which reassessment proceeding were initiated. In this regard, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the same is reproduced below: "1. Appellant is a corporate (company) assessee incorporated on 07.09.2000, having the main object of purchase, construction and sale of residential flats i.e. Assessee Company is a Builder. 2. The assessee is an income tax assessee since its incorporation and filling their income tax return regularly and continuously and discharged their income tax liability. The assessee had filed thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly connected to the issues on which behalf the matter was re-opened. Means there by such new issue is related to Expenses side while first issue was related to Income side. 8. These new issues were related to Labor charges claimed of Rs. 18,00,000/- and Administration Charges of Rs. 498200/- and alleged that supporting evidences could not have been produced before the Ld. AO which were sufficiently replied with all evidences including ledger account and bank statements which are tagged at page No. 97-109 of PB-I. 9. Considering such supporting the Ld. AO made lump sum addition of Rs. 10,00,000/- stating the reasons for not accepting the claims of the assessee appellant through their verdicts at Para No.2 of Page No. 2 of assessment order existed at Page No. 30 of PB-I." The contents of the written submissions filed before the ld. CIT(A) is reproduced as under: "2.1 From perusal of the reasons recorded (PB: 5) it is submitted that the notice issued u/s 148 is void and therefore complete proceedings are bad in law. The reasons, evidently, are recorded in most mechanical manner due to the following defects: 2.1.1 While forming the belief that income has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has escaped assessment and which has come to his notice subsequently, in the course of proceedings under section 147. 2.2.2 We further submits, that the bare reading of the language of section 147, rather makes it clear, that of course the sine qua non for assumption of jurisdiction is, that the AO should have a reason to believe, that any income chargeable to tax, has escaped assessment, for any assessment year, and on such jurisdiction coming into existence, he is to proceed under that section, but then, he is to assess or reassess "such income", obviously the income, regarding which he has 'treason to believe" to have escaped assessment, for any assessment year, and while so assessing, such "income" of course may make assessment with respect to other income, which also may have escaped, and which comes to his notice subsequently, in the course of the proceedings, but then, if while exercising powers under section 147, the AO comes to conclusion, that the income, with respect to which he has entertained "reason to believe" to have escaped assessment, did not escape, or that it was not liable to tax, then merely because he had initiated proceedings, would not confer on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. As per the facts of the present case, we noticed that the assessee derived income from purchase, construction and sale of residential flats. The assessee filed its return of income declaring total income of Rs. 24,180/-. The case of the assessee was reopened U/s 148 of the Income Tax Act, 1961 (in short, the Act) on the basis of information that the assessee had made immovable properties transactions. Thereafter the A.O. completed the assessment U/s 143(3) r.w.s. 147 of the Act on 17/12/2018 determining total income of the assessee at Rs. 10,24,180/- by making addition of Rs. 10,00,000/-. The ld. CIT(A) has restricted the addition to Rs. 5,00,000/-. 7. We observed from perusal of record that while forming the belief that income has escaped assessment the AO believed that there was failure on part of the assessee to disclose fully and truly all material facts. It is submitted that the proviso to Section 147 is applicable only when the assessment u/s 143(3) or section 148 has taken place prior to such formation of belief of escapement of income. It is pertinent to mention here that in the reasons recorded for issuing notice u/s 148, AO mentioned as under: "It was gathered tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment and which has come to his notice subsequently, in the course of proceedings under section 147 of the Act. 9. From bare reading of the language of section 147 of the Act, rather makes it clear that of course the sine qua non for assumption of jurisdiction is, that the AO should have a reason to believe, that any income chargeable to tax, has escaped assessment, for any assessment year, and on such jurisdiction coming into existence, he is to proceed under that section, but then, he is to assess or reassess "such income", obviously the income, regarding which he has 'reason to believe" to have escaped assessment, for any assessment year, and while so assessing, such "income" of course may make assessment with respect to other income, which also may have escaped, and which comes to his notice subsequently, in the course of the proceedings, but then, if while exercising powers under section 147, the AO comes to conclusion that the income, with respect to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of assessment. No such material was placed before the Tribunal. That being so, the Tribunal, in our opinion, was right in holding that the Income-tax Officer was incompetent to initiate proceedings under section 34(1)(b). The High Court has given no reason to come to the conclusion that there was any subsequent information, on the basis of which the Income-tax Officer could have reassessed the assessee under section 34(1)(b)." The Hon'ble Jurisdictional Rajasthan High Court in the case of Commissioner of Income-tax v. Shri Ram Singh (Raj-HC)2008, 306 ITR 343 wherein it was held that: "32. The result of the aforesaid discussion is that the question framed, in the order dated 23rd May, 2006, is required to be, and is, answered in the manner, that the Tribunal was not justified in holding, that the proceedings for reassessment under section 148/147 were initiated by the AO, on non-existing facts because ultimately the assessee has been able to explain the income, which was believed to have been escaped assessment, was explainable. It is further held, that the AO was justified in initiating the proceedings under section 147/148, but then, once he came to the conclusion, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) 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 of 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 Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, havi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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