9911796707
TMI Blog2024 (7) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi dated 28.06.2021 pertaining to A.Y. 2012-13. 2. The grievance of the Revenue read as under: 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 65,40,00,000/- u/s 68 of the Act on concluding that when on the ground on which the reopening of assessment was based, no additions are made by the Assessing Officer in the order of assessment, he cannot make additions on some other grounds which did not form part of the reasons recorded by him. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in not appreciating explanation 3 of Section 147 of the IT Act, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness and credit worthiness of the transactions in light of provisions of section 68 of the assessee Act and went on to make addition of Rs. 65.40 crores. 10. The assessee challenged the addition before the ld. CIT(A) and vehemently contended that the entire assessment is bad in law in as much as no addition has been made for the reasons for reopening the assessment. Strong reliance was placed on Explanation 3 to section 147 of the Act which was inserted by the Finance Act No. 2, 2009 w.e.f. 01.04.1989 and also on the decision of the Hon'ble Bombay High Court in the case of Jet Airways 331 ITR 236 and Ranbaxy 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retation is contrary to the legislative intent. With a view to further clarifying the legislative intent, it is proposed to insert an Explanation in section147 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 this section, notwithstanding that the reason for such issue has not been included in the reasons recorded under sub-section (2) of section 148. 7. In order to appreciate the reasons for the amendment inserting Explanation 3, it would be necessary to advert to some of the 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 ,tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 148, it is not open to him to assess or, as the case may be, reassess the income under an independent or unconnected issue, which was not the basis of the notice for reopening the assessment. 8. Parliament stepped in to correct what it regarded as an incorrect interpretation of the provisions of section147. The Memorandum explaining the provisions of Finance (No. 2) Bill of 2009 states in this background that some courts had held that the Assessing Officer has to restrict the reassessment proceedings only to issues in respect of which reasons have been recorded 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 amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in conjunction. The Shorter Oxford Dictionary defines the expression also to mean 'further, in addition, besides, too'. The word has been treated as being relative and conjunctive. Evidently, therefore, what Parliament intends by use of the words and also is that the Assessing Officer, upon the formation of a reason to believe under section147 and the issuance of a notice under section 148(2) must assess or reassess: (i) 'such income'; and also (ii)any other income chargeable to tax which has escaped assessment and which comes to his notice 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
