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TMI Blog2021 (10) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... That the order dated 14.11.2019 passed u/s 250(6) of the Income-tax Act, 1961 (hereinafter called the Act ) by the Learned Commissioner of Income-Tax (Appeals) -44 New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income Tax Officer, Ward - 12(3), New Delhi in resorting reassessment proceedings u/s 148 of the Act. 2. That the order dated 14.11.2019 passed u/s 250(6) of the Act by the Learned Commissioner of Income-Tax (Appeals) -44, New Delhi is against law and facts on the file in as much as he was not justified to uphold the action of the Learned Income Tax Officer, Ward - 12(3), New Delhi in adding back a sum of ₹ 7,90,50,000/- received by the Appellant Company from M/s Abhinandan Trafin Pvt Ltd as Unsecured Loan by holding that the Appellant Company has failed to prove the genuineness, identity and credit worthiness of the transaction by invoking the provisions of Section 68 of the Act 3. That the order dated 14.11.2019 passed u/s 250(6) of the Act by the Learned Commissioner of Income-Tax (Appeals) -44, New Delhi is against law and facts on the file and contrary to the established and duly accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred to the a/c of' various other accounts of beneficiaries and intermediaries and in turn the same funds were transferred to various other beneficiaries as given in the cash layers of fund transfers. One of such beneficiary is the assessee company M/s Inter Global Steels Pvt. Ltd. who has taken accommodation entry amounting to ₹ 40 lakh from the said non existent paper companies who actually arc not doing any real business and are only paper companies. Analysis of information collected/received: 3. From the above, it can be inferred that the out of beneficiary companies took entries from these shell companies which do not have any real business and was operated only to bring their unaccounted money in the books. In this process these beneficiary companies gradually brought their unaccounted cash back in the books without paying any lax. As per the information received from Investigation wing, it is noticed that the above mentioned assessee has routed its unaccounted income to the tune of ₹ 40,00,000/- and, took bogus accounts entry/entries for non-existent transactions from M/s Divya Drishti group who are in the business of providing accommodatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. However, in cases where no scrutiny assessment has been made even beyond period of 4 years the only requirement is reason to believe. 6.2 In this case, a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made accordingly, in this case, the only requirement to initiate proceedings u/s 147 is reason to believe as recorded above. 6.3 It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed (not assessed) u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. 6.4 In this case, four years but not more than six years have elapsed from the end of the assessment year under consideration and income chargeable to tax which has escaped assessment is more than Rs one lakh, necessary sanction a. issue notice u/s 148 of the Act is being obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sess 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 section 147. 6. The effect of Explanation 3 which was inserted by the Finance (No. 2) Act of 2009 is that even though the notice that has been issued under section 148 containing the reasons for reopening the assessment does not contain a reference to a particular issue with reference to which income has escaped assessment, the Assessing Officer may assess or reassess the income in respect of any issue which has escaped assessment, when such issue comes to his notice subsequently in the course of the proceedings. The reasons for the insertion of Explanation 3 are to be found in the Memorandum explaining the provisions of Finance (No. 2)Bill of 2009. The Memorandum treats the amendment to be clarificatory and contains the following Explanation : 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 empowered to touch upon any other issue for which no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 148 has to be complied with if any other income chargeable to tax has escaped assessment, or which comes to his knowledge subsequently in the course of the proceedings. In other words, when proceedings are already on in respect of one item in respect of the income for which he had already recorded reasons is it necessary that he should record reasons for assessing or reassessing any of the items which are totally unconnected with the proceedings already initiated. Suppose under two heads income has escaped assessment and those two heads are inter-linked and connected, the proceedings initiated or notice already issued under sub-section (2) of section 148 would be sufficient if the escaped income on the second head comes to the knowledge of the officer in the course of the proceedings. But if both the items are unconnected and totally alien then the assessing authority has to follow sub-section (2)of section 148 with regard to the escaped income which comes to his knowledge during the course of the proceedings. Hence, the view of the Punjab and Haryana High Court and the Kerala High Court was that, once the Assessing Officer has reason to believe that income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee can be dealt with ,both as a matter of first principle, interpreting the section as it stands and on the basis of precedents on the subject. Interpreting the provision as it stands and without adding or deducting from the words used by Parliament, it is clear that upon the formation of a reason to believe under section 147 and following the issuance of a notice under section 148, the Assessing Officer has the power to assess or reassess the income, which he has reason to believe had escaped assessment and also any other income chargeable to tax. The words and also cannot be ignored. The interpretation which the Court places on the provision should not result in diluting the effect of these words or rendering any part of the language used by Parliament otiose .Parliament having used the words assess or reassess such income and also any other income chargeable to tax which has escaped assessment , the words and also cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word or . The Legislature did not rest conten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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