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TMI Blog2022 (6) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... of 01.04.2009, closing balance of capital pertaining to financial year 2008-09 which is not relevant to the year in which the addition is made. The CIT (A) has erred in the facts in observing the last year accounts were not audited, it is because no business was done in the last year. Therefore, the addition made is illegal and liable to be deleted. 3. That the ld. CIT (Appeals) has erred in law and facts of the case in confirming the addition of license fee of Rs.326000.00 relevant to the financial year 2009-10 which was paid on 23.03.2009 amounting to Rs.163000.00 and on 30.03.2009 amounting to Rs.163000.00 to the Department and debited in current year, ignoring the document produced. Therefore, the unjustified addition is liable to be deleted. 4. That the ld. CIT (Appeals) has gone wrong in not cancelling the assessment when there was no addition on the ground on which the reassessment proceeding was initiated. The CIT (Appeals) should have cancelled the assessment order on this ground alone. Therefore, the addition is illegal and liable to be deleted. " 3. The ld. Counsel for the assessee, at the outset, referring to grounds of appeal No. 4 submits that assessee is challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for want of bills and vouchers. The Assessing Officer also disallowed opening capital shown by the assessee in his capital account as no explanation was offered by the assessee. There is one more addition which was made by the assessee is in respect of license fee paid by the assessee for want of supporting documents. Other than these three additions there is no other addition or disallowance made by the Assessing Officer, which relates to cash deposits by the assessee made into his bank account. In other words, the Assessing Officer did not make any addition for which the assessment was reopened. 7. In the case of Ranbaxy Laboratories Limited Vs. CIT (supra) the following question came up for adjudication by the Hon'ble Delhi High Court:- " Whether on facts the Tribunal was right in law in holding that the assessing Officer had jurisdiction to reassess issues other than the issues in respect of which proceedings were initiated especially when the reasons for the latter ceased to survive? " The Hon'ble Delhi High Court considering the decision of the Hon'ble Bombay High Court in the case of CIT Vs. M/s. Jet Airways (I) Limited (2011) 331 ITR 236 (Bom.) held that if the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of ss. 148 to 153, assess or reassess such income". This expression was found to be making clear, that existence of the income, for which the AO formed belief, to have escaped assessment, is a precondition, for including any other income chargeable to tax, escaping assessment, and coming to the notice of the AO subsequently, in the course of the proceedings. Thus, unless and until such income, as giving rise to form belief, for escaping assessment, continues to exist, and constitutes a subject-matter of assessment, under s.147 "no other income" coming to the notice of the AO, during the course of the proceedings, can be roped in. 16. In the case In the case of C.J. International Hotels Ltd. (supra) before the Tribunal, the facts were almost similar as in the present case. The Tribunal relied upon the case of Commissioner of Income Tax v. Shri Ram Singh {supra) while holding that the Assessing Officer was justified in initiating the proceedings under Section 147/148 , but then, once he came to the conclusion, that the income, with respect to which he had entertained, his jurisdiction came to a stop at that, and did not continue to possess jurisdiction, to put to tax, any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of Section 147 with effect from 1st April 1989 clearly stipulated that the Assessing Officer has to assessee or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment the former, he cannot independently assess the latter." Section 147 has this effect that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-1 as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under Section 80HH and 80-1 and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80 HH and 80-1 which as per our discussion was not permissible. Had the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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