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TMI Blog2024 (7) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 in which it is provided 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. Representatives of both the sides were heard at length. Case records carefully perused. 4. On perusal of the record, we find that assessment u/s 147 was framed pursuant to an information received regarding the assessee from the DDIT [INV]/ Unit - 7(2), New Delhi. Accordingly, after obtaining approval of the competent authority, assessment proceedings u/s 147 of the Act were initiated pursuant to which the assessee filed reply stating that the return filed on 31.07.2019 may be considered wherein the income of Rs. 52,49,05,150/- was declared. 5. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that there are credit entries worth Rs. 139.4 crores in the bank account of the assessee. Accordingly, reasons were recorded before issuance of notice u/s 148 of the Act. The reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Laboratories Limited 336 ITR 136 [Del]. 11. The ld. CIT(A) was convinced with the contention of the assessee and drawing support from the decision relied upon by the assessee, the ld. CIT(A) deleted the impugned addition. 12. We have given thoughtful consideration to the orders of the authorities below. In our considered view, the Assessing Officer has drawn support from Explanation 3 to section 147 of the Act which was inserted by the Finance [No. 2] Act, 2009 w.r.e. 01.04.1989 and the same reads as under: "For the purpose of assessment or reassessment 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, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148." 13. This insertion of Explanation 3 to Section 147 of the Act has been examined and interpreted by the Hon'ble High Court of Bombay in the case of CIT Vs. Jet Airways [I] Ltd [supra]. The relevant part of the judgment is extracted as under: "5. The condition pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgments of the High Courts, prior to the amendment. The Punjab and Haryana High Court, in its decision, in Vipan Khanna v. Asstt. CIT [2002] 255 ITR 2201dealt with the question as to whether, after initiating proceedings under section 147 on the ground that the petitioner had claimed depreciation at a higher rate, the Assessing Officer would be justified in launching an inquiry into issues which were not connected with the claim of depreciation. This question was answered in the negative. A Division Bench of the Kerala High Court held in Travancore Cements Ltd. v. CIT [2008] 305 ITR 1701 ,that upon the issuance of a notice under section 148(2), when proceedings were initiated by the Assessing Officer on issues in respect of which he had formed a reason to believe that income had escaped assessment, it was not open to the Assessing Officer to carry out an assessment, or reassessment in respect of other issues which were totally unconnected with the proceedings that were already initiated and which came to his knowledge during the course of the proceedings. The Division Bench held that in respect of an issue which is totally unconnected to the basis on which the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for reopening the assessment and that it was not open to him to touch upon any other issue for which no reasons have been recorded. This interpretation was regarded by Parliament as being contrary to legislative intent. Hence, Explanation 3 came to be inserted to provide that the Assessing Officer may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under section 147 though the reasons for such issue were not included in the reasons recorded in the notice under section 148(2). 9. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on the assessee a notice undersub-section (1) of section 148; (iii) The Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which has escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice subsequently in the course of the proceedings under the section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect 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 season 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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