2010 (12) TMI 748

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.... bring to tax any other income that also escaped assessment in the original assessment which in this case is unexplained trade credits. The matter happened to be referred by the Division Bench to the Full Bench because the correctness of the decision of this court relied on by the assessee in their favour, which is the decision reported in Travancore Cements Ltd. v. Asst. CIT [2006] 4 KLT 344 ; [2008] 305 ITR 170 (Ker) was doubted by the Division Bench. We have heard standing counsel appearing for the appellant and counsel appearing for the respondent-assessee in the connected cases.   2. Original assessments completed in the case of the respondent-assessee for the assessment years 2001-02 and 2002-03 were reopened for making income....

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.... Tribunal accepted the assessee's contention and held that the re-assessments completed under section 147, so far as the same relates to assessment of unexplained trade credits, are invalid. It is against this order of the Tribunal, the Department has filed these appeals.   3. In the first place we notice that in the decision of the Supreme Court relied on by the Tribunal, that is, in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC), no such proposition canvassed by the assessee was laid down. Secondly section 147 of the Income-tax Act has undergone various changes and the provision applicable for the relevant assessment years is extracted hereunder for easy reference :   "147. Income escaping assessment.-If the ....

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.... after recording reasons, the Assessing Officer has to complete the income escaping assessment by following the provisions of the Act as if the return furnished against notice under section 148 as one filed under section 139 of the Act. This obviously means that so far as procedure to be followed is concerned, there is no difference between income escaping assessment and regular assessment because the provisions generally provide for issue of notice, hearing of the assessee and taking of evidence, etc., which are the same for regular assessment and income escaping assessment. Therefore in the course of income escaping, assessment, if it comes to the notice of the Assessing Officer that any other item or items of income other than the item o....