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TMI Blog2023 (4) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided that the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148." 3. In this case, in an order passed under section 147/153A of the Income-tax Act, 1961 (for short 'the Act'), the AO made an addition of Rs.59,18,50,000/-. Assessee appealed before the ld. CIT (A) and put forward a ground that since no addition has been made on the subject on which reopening was done, the other addition made in this case is not sustainable inasmuch as the issue is covered by the decision of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 136 and Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom.). Ld. CIT (A) passed an elaborate order and the same may be gainfully read as under :- "4.7 From perusal of the assessment order as well as above facts, it is observed that the Assessing Officer recorded reasons for reopening th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain courts that the Assessing Officer has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment. The corrective exercise embarked upon by "Parliament in the form of Explanation 3 consequently provides that the Assessing Officer may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings though the reasons for such issue were not included in the notice under section 148(2). The decisions of the Kerala High Court in Travancore Cements Ltd. 's case (supra) and of the Punjab & Haryana High Court in Vipan Khanna's case (supra) would, therefore, no longer hold the field. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be tested in the event of a challenge by the assessee. 17. We have 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course, of the proceedings under the section. " 4.11 Hon'ble Delhi High Court in the case of CIT Vs. Software Consultants [2012] 341 ITR 240 (Delhi) held that where Assessing Officer did not make any addition on issue in respect of which reasons were recorded at time of issuing notice under section 148, sequitur is that Assessing Officer could not have made an addition on account of said issue and, thus, Commissioner could not have exercised revisional jurisdiction. The operative part of the judgment is reproduced below: "12. The Division Bench in Ranbaxy Laboratories Ltd. (supra) considered the judgment of the Supreme Court in the case of V Jagamohan Rao v. CIT EPT, 1970} 75ITR 373 and CITv. Sun Engg. Works (P.) Ltd. [J992} 198ITR 297 and has then elucidated: "18. We are in complete agreement with the reasoning of the Division Bench of the Bombay High Court in the case ofCITv. Jet Airways (I) Limited [2011}331ITR 236 (Bom). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer proceeded to reduce the claim of deduction under sections 80HH and 80-1 which as per our discussion was not permissible. Had the Assessing Officer proceeded to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per Explanation 3 to reduce the claim of deduction under sections 80HH and 80-I as well." 4.12 Hon'ble Delhi High Court in the case ofCIT Vs Monarch Educational Society [2016] 387 ITR 416 (Delhi) held that if no addition is made in respect of issues recorded by Assessing Officer for reopening assessment, Assessing Officer cannot make addition on any other issue in reassessment proceedings. The operative part of the judgment is reproduced below: "8. The issue urged by the Revenue stands covered in favour of the Assessee by the decision of this Court in Ranbaxy Laboratories Ltd. v. CIT [2011] 336 ITR 136 (Delhi) which has been followed in CIT v. Software Consultants [2012] 341 ITR 240. In sum, if no addition is made on the basis of the reasons to believe recorded by the AO for reopening the assessment under Section 148 of the Act, resort cannot be had to Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another information was received from DDIT(Inv) Unit3(1), Kolkata vide letter F .No. DDIT/Unit- 3(1)/Kol/Information/18-19/11525 dated 16.03.2018 & ADIT(Inv.), Unit-4(1), Kolkata vide letter F.No. ADIT/U- 4(1)/S-Deb/Ko1/2017- 18/10061-10075 dated 12.03.2018 wherein it was found that assessee had also taken accommodation entries from five other companies. As per details available on record, this information was first confronted to the appellant vide notice u/s 142(1) dated 19.12.2018 i.e beyond a period of six years from end of the assessment year. The assessment was completed on 29.12.2018. If the information was received prior to 29.03.2018, it should have been made part of the reasons for reopening the case. If the information was received after 29.03.2018 in FY 2018-19, the information was received beyond a period of six years from end of the relevant assessment year. To this extent, case of the appellant is on an even stronger footing than the above decisions as claimed by the appellant. 4.15 In view of above facts of the case, it is held that the case of the appellant was reopened on the basis of information relating to accommodation entry received from TVH Trading Company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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