9911796707
TMI Blog2024 (11) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment, a strict interpretation of the plain language of Section 147 of the Act, is warranted. We respectfully concur the view of this court as articulated in Ranbaxy Laboratories Limited [ 2011 (6) TMI 4 - DELHI HIGH COURT] and ATS Infrastructure Ltd.[ 2024 (7) TMI 1441 - DELHI HIGH COURT] and Jaguar Buildcon Pvt. Limited. [ 2024 (8) TMI 517 - DELHI HIGH COURT] It is also relevant to note that various courts had taken a view that the reassessment proceedings were confined under Section 147 of the Act only to the issues (reasons to believe) on the basis of which the assessments were reopened. Thus, there was no scope for making any addition other than those which were circumscribed by the reasons to believe as recorded by the AO prior to the issuing a notice under Section 148 of the Act. However, this controversy was set at rest by introduction of Explanation 3 by virtue of the Finance Act, 2009 with retrospective effect from 01.04.1989. Explanation 3 to Section 147 merely clarified that the AO would assess or reassess the income in respect of the issue which had escaped assessment and such other issue, which came to the notice subsequently. However, the said explanation does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 07.03.2014 and F.No. Addl. DIT(Inv.)/U-IV/u/s 148/2013-14/335 dated 10.03.2014 along with detailed report giving working of entry operators with a list of beneficiaries. After making inquiries the Addl. Directors Income Tax, Unit-VI of Investigation in their report has established large amount of tax evasion in the transactions between entry operators and the beneficiaries, it is revealed from the list that the assessee company M/s Sunlight Tour Travels Private Limited (termed as beneficiary) during the previous year 2006-07 relevant to A.Y 2007-08 had taken accommodation entries totaling Rs. 88,00,000/- from the persons/parties (termed as entry operators). This entry has been investigated by the Investigation Wing and found to be given as accommodation entry from entities operators and controlled by Praveen Kumar Jain. The details of which is mentioned below: Beneficiary s Name Amount Entry Operator Bank Dated M/s Sunlight Tour Travels Private Limited 24,00,000 Vanguard Jewels Limited United Bank of India 23.09.2006 M/s Sunlight Tour Travels Private Limited 31,00,000 Alka Diamond Industries Limited United Bank of India 14.09.2006 M/s Sunlight Tour Travels Private Limited 33,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich notice under Section 148 of the Act was issued, were non-existent. The Assessee also challenged the merits of the addition and contested the AO s decision to make an addition of Rs. 6,01,00,000/- under Section 68 of the Act. 8. Whilst, the learned CIT(A) rejected the Assessee s challenge on the ground of the jurisdiction, it accepted that the addition of Rs. 6,01,00,000/- under Section 68 of the Act was not sustainable. 9. The Revenue proceeded to file an appeal against the order dated 12.08.2016 passed by the learned CIT(A) before the learned ITAT. In the said appeal, the Assessee raised an additional ground for supporting the order dated 12.08.2016 passed by the learned CIT(A) by invoking Rule 27 of the Income Tax Appellate Tribunal Rules, 1963. The Assessee contended that since no addition had been made on account of the reasons on the basis of which the reopening of the assessment was sustained no other addition was permissible. 10. The learned ITAT following the decision of the Bombay High Court in Commissioner of Income Tax v. Jet Airways (I.) Ltd.: (2011) 331 ITR 236 as well decision of this court in Ranbaxy Laboratories Limited v. CIT: (2011) 336 ITR 136 accepted the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act as applicable at the material time. The same is set out below: 147. Income escaping assessment. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 and 153 referred to as the relevant assessment year [emphasis added] 15. In Ranbaxy Laboratories Limited v. CIT (supra), this court had noted and interpreted the import of the word and also any other income chargeable to tax and had concluded that the said word clearly indicate that other income could be brought to tax provided an addition was made on the ground on which the assessment was reopened. We consider it apposite to set out the following extracts of the decision in the case of Ranbaxy Laboratories Limited v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of section 147 with effect from April 1, 1989 clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment the former, he cannot independently assess the latter. .. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ('such income') which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt also discussed the case of V. Jaganmohan Rao (1970) 75 ITR 373 (SC) and Sun Engineering (1992) 198 ITR 297 (SC) of the apex court. In the case of Sun Engineering (1992) 198 ITR 297 (SC), the issue before the Supreme Court was whether in the course of reassessment on an escaped item of income an assessee could seek a review in respect of an item which stood concluded in the original order of assessment. The Supreme Court dealt with the provisions of section 147, as they stood prior to the amendment on April 1, 1989. In this context, the Supreme Court held that the expression escaped assessment includes both non-assessment as well as underassessment . The expression assess was defined as referring to a situation where the assessment is made for the first time under section 147, whereas reassess as referring to a situation where the assessment has already been made, but the Assessing Officer has reason to believe that there is underassessment on account of the existence of any of the grounds stipulated in section 147. The Supreme Court referred to the judgment in the case of V. Jaganmohan Rao (1970) 75 ITR 373 (SC) wherein it was held that the object of section 147 enures to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment. *** *** *** 18. We are in complete agreement with the reasoning of the Division Bench of the Bombay High Court in the case of CIT v. Jet Airways (1) Limited (2011) 331 ITR 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 escaped assessment . Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation 3 if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, this controversy was set at rest by introduction of Explanation 3 by virtue of the Finance Act, 2009 with retrospective effect from 01.04.1989. Explanation 3 to Section 147 as applicable at the material time reads as under: Explanation 3. 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. 19. It is apparent from the above that the said explanation merely clarified that the AO would assess or reassess the income in respect of the issue which had escaped assessment and such other issue, which came to the notice subsequently. However, the said explanation does not control the import of the plain language of Section 147 of the Act. Explanation 3 to Section 147 of the Act, merely clarifies that the jurisdiction of the AO was not confined to assessing or reassessing of the income of an Assessee only in respect of the issue, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
