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TMI Blog2024 (11) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cannot be treated as a valid order in the eyes of law. Hon'ble Jurisdictional High Court after sumptuous consideration of explanation 3 to section 147 of the Act, while adjudicating the issue in CIT Vs Jet Airways (I) Ltd. [ 2010 (4) TMI 431 - BOMBAY HIGH COURT] held that when reasons are recorded for bringing to tax 'X' income and no assessment is made on the 'X' income, the AO does not possess the jurisdiction to tax any other income in the reassessment order. This ratio finds reiterated in SV Jadhav [ 2024 (5) TMI 106 - BOMBAY HIGH COURT] and also followed in Ranbaxy Laboratories Ltd. [ 2011 (6) TMI 4 - DELHI HIGH COURT] ACIT Vs MD Mehta [ 2011 (11) TMI 462 - CHATTISGARH HIGH COURT] and Ganesh Housing Corp. Ltd. [ 2012 (4) TMI 419 - GUJARAT HIGH COURT] . Thus, we are of the considered view that, if the income which he has initially formed a reason to believe that such income has escaped assessment, which in fact did not escape assessment owning to operation of provisions of clause (b) of s/s (1) of section 139 of the Act then notice falls out of that particular ground, additional grounds are not available to the Revenue for making additions of any other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter] declaring total income of ₹ 1,68,257/- after considering the gross receipts/income received against (i) interest income, including interest received on balance advanced to two parties viz; M/s Vinod Construction M/s BU Bhandari, (ii) brokerage income and (ii) saving bank interest etc. The said return of the assessee was subjected to scrutiny assessment u/s 143(3) of the Act. In response thereto the assessee explained computation of income and nature source of such cash deposits made by him. In support of explanation the assessee placed on records cogent evidences which inter-alia consisted of cash book, bank passbook/statement, cash deposit slips, cash withdrawal details, loan ledger accounts, brokerage accounts etc. The said explanation that such cash deposits mostly were from past immediate cash withdrawals from bank accounts were verified after finding them in order no addition there account was ultimately made in the assessment framed by the Ld. AO. 2.4 However the verification of loan ledger accounts of M/s Vinod Construction M/s BU Bhandari certain discrepancies were noted and when assessee s explanation could not convincingly clarify such notified discrepanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd raised first-time in present proceedings, the Ld. DR Mr Rajpurohit averred that, said legal ground shall buy no relief to the assessee as while invoking reassessment jurisdiction cash deposit was not only the sole issue but also the interest income undisclosed by the assessee. The notice issued u/s 148 of the Act precisely stated two items of escaped income i.e., (1) cash deposits as well as (2) interest income earned by the assessee from M/s Vinod Construction represented by Mr Vinod Jain. In this case since addition towards one of the items (i.e., escaped interest income) which along-with other item also founded the reasons to believe, is made therefore the Ld. AO was well within his jurisdiction to assess any other item which came to his notice during the course of such reopened assessment. Hence the ratio of CIT Vs Jet Airways (supra) has no application to the case in hand. Coming to the merits of addition sustained by Ld. CIT(A) it is submitted that, on re-verification substantial relief is already granted and only upon appellant s failure to disprove balance addition on merits, the same is sustained, therefore there is much-less merits for further relief. 5. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AO besides making a token addition of interest income of out of the reasons recorded was also made two bullet additions which newly came to his notice during such reopened proceedings; (1) ₹ 10 Lakhs on account of discrepancies in loans advanced to M/s Vinod Construction as unexplained investment u/s 69 of the Act (2) ₹ 2 Lakhs on account of discrepancies in money transactions with M/s BU Bhandari. Thus the former two addition u/s 69 and u/s 69A were made by invoking explanation 3 to section 147 of the Act. Therefore in adjudicating the legal issue under challenge, we have to deal with relevant fraction of provisions of section 139, section 147, and 149 of the Act. 8. In terms of section 139(1)(b) of the Act, a person being other than company or firm is not under obligation to file return of income if the total income of such person (including the total income of any other persons in respect of which such person is assessable) from all five sources of income as subscribed u/s 14 of the Act (heads of income) does not exceed maximum amount not chargeable to tax [ Basic Exemption Limit or BEL hereinafter]. That is to say liability fastened u/s 139(1)(b) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been escapement income of ₹ 46,37,500/- arisen to him from two grounds / items i.e., (1) cash deposits of ₹ 44,75,000/- (2) interest income of ₹ 1,62,500/-, the assessee did file his return in response thereto declaring net taxable income of ₹ 1,68,257/-. The material placed on records evidently suggests that, in arriving at former returned income the appellant did fully consider the gross interest income which was one of the two determinants in forming a believe for invoking the reassessment jurisdiction. The appellant being a person i.e., other than company or firm thus in terms of section 139(1)(b) of the Act was entitled to protected BEL ceiling. Since total taxable income arisen to him from all sources including interest brokerage did not cross the former BEL ceiling, the appellant was absolved from filing requirement, Hence by operation of clause (b) of s/s (1) of section 139 of the Act the addition of interest made while framing the re-assessment u/ 144 r.w.s. 147 of the Act in first place cannot to be said to escaped income, therefore such interest do not solitary could have formed basis for invoking reassessment jurisdiction. On the other hand, rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is no longer res integra, as the Hon'ble Jurisdictional High Court after sumptuous consideration of explanation 3 to section 147 of the Act, while adjudicating the issue in CIT Vs Jet Airways (I) Ltd. (supra) held that when reasons are recorded for bringing to tax 'X' income and no assessment is made on the 'X' income, the AO does not possess the jurisdiction to tax any other income in the reassessment order. This ratio finds reiterated in SV Jadhav Vs ITO [2024, 163 Taxmann.com 263 (Bom)], and also followed in Ranbaxy Laboratories Ltd. Vs CIT [2011, 242 CTR 117 (Del)], ACIT Vs MD Mehta [24 Taxmann.com 147 (Cha)] and Ganesh Housing Corp. Ltd. Vs DCIT [2021, 207 Taxman 180 (Guj)]. 15. In view of the aforestated discussion and judicial precedents we are of the considered view that, if the income which he has initially formed a reason to believe that such income has escaped assessment, which in fact did not escape assessment owning to operation of provisions of clause (b) of s/s (1) of section 139 of the Act then notice falls out of that particular ground, additional grounds are not available to the Revenue for making additions of any other incomes which do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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