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TMI Blog2024 (5) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to Prathamesh Constructions. It is necessary to note that, first of all, in re-assessment proceedings, the law is clear. An Assessing Officer cannot indulge in a fishing enquiry. In this case, the AO has accepted the contention of the assessee and held that the information report by the Insight portal is accounted for by the assessee in his books and income arising out of those transactions is duly offered for taxation. Therefore, the impugned order dated 21st April 2023 under Section 148A (d) of the Act cannot be sustained. At the same time if the AO wishes to, he could issue a fresh notice under Section 148A (b) of the Act if, that is permitted in law. We are expressing no opinion. In the circumstances, the AO having accepted the explanation of Petitioner, he could not have gone ahead and recommended that it was a fit case where income chargeable to tax has escaped assessment. We would add that the approval granted by the PCIT is also without application of mind. In the approval, it is stated I have perused the facts of the case vis-a-vis information/material available on record and found the case to be fit case for issue of notice u/s 148 of the I.T. Act, 1961. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned notice dated 23rd March 2023 was also made available. Petitioner informed Respondent No. 1 that the income generated from all the transactions referred to in the notice had been offered for taxation and nothing had escaped the assessment. 6. Petitioner received the impugned order dated 21st April 2023 passed under Section 148A (d) of the Act in which it is stated that all transactions reported in Insight portal about gross receipts of Petitioner, interest income received by Petitioner and time deposits made by Petitioner have been verified and the information report by Insight portal is accounted by Petitioner in his books and income arising out of those transactions is duly offered for taxation. The impugned order, however, also stated as under: On detail verification of the records it is also noticed that the assessee has executed sub-contracting work of M/s Prathmesh Constructions which is one of the party with which contract work has been done. A Search action was conducted u/s 132 of the Income Tax Act 1961 on the assessee M/s Prathmesh Constructions. In order to enquire about the genuineness of the sub-contract transactions, details of sub-contracting parties of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the information is accounted for by the assessee. Paragraph 6 of the impugned order reads as under: 6. Thus all the transaction reported in INSIGHT portal about gross receipts of the assessee, interest income received by the assessee and time deposits made by the assessee. It is verified that the information report by the INSIGHT portal is accounted by the assessee in its books and income arising out of those transactions is duly offered for taxation. 6.1 On detail verification of the records it is also noticed that the assessee has executed sub-contracting work of M/s Prathmesh Constructions which is one of the party with which contract work has been done. A Search action was conducted u/s 132 of the Income Tax Act 1961 on the assessee M/s Prathmesh Constructions. In order to enquire about the genuineness of the sub-contract transactions, details of sub-contracting parties of M/s Prathmesh Constructions with their sub-contract agreements were called for from the assessee. The assessee M/s Prathmesh Constructions provided only list of names of subcontractors and the amount of sub-contract. No supporting documents related to these parties were furnished. Present assessee M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciliation of the annexure, mentioned that gross amount paid to Prathamesh Constructions was Rs. 44,58,000/- of which basic amount was Rs. 39,80,357/- and 12% GST was Rs. 4,77,643/-. This has been accepted by the AO in paragraph 6 of the impugned order, which is quoted above. The AO states ...It is verified that the information report by the INSIGHT portal is accounted by the assessee in its books and income arising out of those transactions is duly offered for taxation. 11. Mr. Suresh Kumar submits that in paragraph 7 of the impugned order, the AO is referring to the explanation to Section 147 of the Act, which reads as under: Section 147.- xxxxxxx Explanation .- For the purposes of assessment or reassessment or re-computation under this section, 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, irrespective of the fact that the provisions of section 148A have not been complied with. We do not find that to be the case of the AO in the impugned order nor is it so stated in the affidavit in reply filed. In any case, the Div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 23. 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 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 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 to Explanation 3 to section 147. Parliament must be regarded as being aware of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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