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TMI Blog2022 (11) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 20.7.2022 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to A.Y. 2012-13. The assessee, inter alia, has challenged the validity of addition made in the reassessment proceedings under section 147 of the I.T. Act. 2. The AO reopened the assessment of the year under consideration by issuing notice u/s 148 of the Act. The relevant portion of the reasons recorded by the assessing officer for reopening of assessment, which depicts the details of escaped income is extracted below:- During the year the assessee company's account was credited income u/s 194A, 194D, 194H 194A aggregating to Rs.6,43,292/- and TDS was deducted. The nature of said incomes credited to the books of accounts of Assessee Company during the year being interest other than securities, insurance commission and brokerage and commission income. On going through the P L A/C, it is observed that total receipts shown in the P LA/c of Rs.5,79,039/- only and claimed credit for TDS. The assessee has under stated the receipts as reflected in the 26AS report. 3. In the case of assessee there was information received from the Pr. Director of Income-tax (Investigation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to make an addition in respect of an altogether new issue. 6. The question as to whether the AO is entitled to make addition on the basis of a new issue, when he has not made any addition on the issues for which the assessment was reopened, was examined by the Hon ble Bombay High Court in the case of Jet Airways Ltd (supra) and it was decided in favour of the assessee as under:- 11. The rival submissions which have been urged on behalf of the revenue and the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependently. Parliament when it enacted the provisions of section 147 with effect from 1- 4-1989 clearly stipulated that the Assessing Officer has to assess 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 of the former, he cannot independently assess the latter. 12. In CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 2971 , the Supreme Court dealt with the following question of law in the course of its judgment:- Where an item unconnected with the escapement of income has been concluded finally against the assessee, how far in reassessment on an escaped item of income is it open to the assessee to seek a review of the concluded item for the purpose of computation of the escaped income? The issue which arose before the Supreme Court was whether, in the course of a reassessment on an escaped item of income could an assessee seek a review in respect of an item which stood concluded in the original order of assessment. The Supreme Court dealt with the provisions of section 147, as they stood prior to the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unjab and Haryana High Court in Vipan Khanna's case (supra) and in the judgment of the Kerala High Court in Travancore Cements Ltd.'s case (supra). This line of authority, would now cease to reflect the correct position in law, by virtue of the amendment which has been brought in by the insertion of Explanation 3 to section 147 by Finance (No. 2) Act of 2009. The effect of the Explanation is that once an Assessing Officer has formed a reason to believe that income chargeable to tax has escaped assessment and has proceeded to issue a notice under section 148, it is open to him to assess or reassess income in respect of any other issue though the reasons for such issue had not been included in the reasons recorded under section 148(2). 14. The second line of precedent is reflected in a judgment of the Rajasthan High Court in CIT v. Shri Ram Singh [2008] 306 ITR 343 . The Rajasthan High Court construed the words used by Parliament in section 147 particularly the words that the Assessing Officer '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 proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. However, insofar as the second line of authority is concerned, which is reflected in the judgment of the Rajasthan High Court in Shri Ram Singh's case (supra), Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab Haryana High Court in CIT v. Atlas Cycle Industries [1989] 180 ITR 3191. The decision in Atlas Cycle Industries' case (supra) held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two grounds mentioned in the notice under section 148 were incorrect or non-existent. The decisions of the Punjab Haryana High Court in Atlas Cycle Industries' case (supra) and of the Rajasthan High Court in Shri Ram Singh's case (supra) would not be affected by the amendment brought in by the insertion of Explanation 3 to section 147.- 16.Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 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, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1.4.1989 continue to hold the field. 18. In that view of the matter and for the reasons that we have indicated, we do not regard the decision of the Tribunal in the present case as being in error. The question of law shall, accordingly, stand answered against the revenue and in favour of the assessee. The appeal is, accordingly, dismissed. There shall be no order as to costs. 7. I am of the view that the ratio laid down by the Hon ble jurisdictional High Court in the above said case would apply to the facts of the present case. In the instant case, the AO has not made any addition on the issues for which the assessment was reopened. However, he has made addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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