TaxTMI 
TaxTMI 
2010 (2) TMI 776
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the facts and in the circumstances of the case, was the ld. CIT(A) right on facts and in law in quashing the reassessment u/s 147 being invalid and refused to consider the additions in the reassessment on merits? 3. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal." 2. Rival contentions have been heard and record perused. The brief facts of the case are that the assessee is engaged in the business of construction, sale and purchase of residential flats. As per the impugned assessment order, the assessee filed an original return at an income of Rs.1,49,790/- on 28.09.2005 wherein only the computation of income was filed without the profit and loss account and balance sheet. A survey u/s 133A was conducted on 17.11.2005 at the business premises of the assessee, and during the survey, copies of the audited balance sheet, income and expenditure statement and other incriminating material were found. As per this income and expenditure statement, the income from construction business on the turnover of Rs.1,54,96,500/- was mentioned at Rs.3,20,000/- and as per the balance sheet, loans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness at Rs.14.44 lakhs. Thus, after taking into account the income declared by the assessee and the addition so made, the total income was assessed at Rs.41,88,100/-. In an appeal filed before the CIT(A), the CIT(A) annulled the assessment by observing that AO has travelled beyond his jurisdiction u/s 147 in view of the ratio of the jurisdictional High Court in the case of Vipan Khanna - 255 ITR 220. The CIT(A) observed that proceedings u/s 147 have been vitiated as no reasons have been recorded while reopening on the additions other than the additions suggested in respect of profit declared in the audited profit and loss account. The CIT(A) further observed that ratio laid down by the Hon'ble Supreme Court in the case of Sun Engineering -198 ITR 297 to the effect that proceedings u/s 147 can be completed only with regard to items of under assessments mentioned in the reasons recorded u/s 147/148, still holds good even after the amendment of Section 147 w.e.f. 1.4.1989. With regard to amended provisions of Section 147, the CIT(A) observed that AO can proceed against assessee u/s 147 if during the course of reassessment proceedings, further additional escaped income is found. Howev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that Explanation to Section 147 was inserted to have a retrospective amendment w.e.f. 1.4.1989 empowering the AO to assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of proceedings under this Section, notwithstanding that the reasons for such issue have not been included in the reasons recorded u/s 148(2) of the IT Act. To negate the proposition laid down in the case of Vipan Khanna (supra), learned DR placed on record the latest decision of Hon'ble Punjab and Haryana High Court in the case of Shakuntala Devi in ITA No.110 of 2009. 7. We have considered the rival contentions and gone through the orders of the authorities below and deliberated upon the case laws cited by the learned AR and learned DR in the factual matrix of the case with regard to validity of reassessment proceedings initiated u/s 147 of the IT Act. Learned DR also placed on record the order of Hon'ble Punjab and Haryana High Court dated 21.7.2009 in the case of CIT vs. Shakuntala Devi, wherein the case law relied on by the CIT(A) in case of Vipan Khanna (supra) was considered. In this case, proceedings initiated u/s 147 were held by CIT(A) to be n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oduced but thereafter statement of the auditor of accounts were recorded wherein he confessed that he has audited the books of account and the same were presented before him. Since evidence found during the survey revealed that the assessee had undertaken construction work on extensive scale and the income declared in the original return filed on 28.9.2005 was at Rs.1.49 lakhs as against income shown in the audited profit and loss account at Rs.3.49 lakhs, the AO found that there was an understatement/escapement of income, accordingly proceedings u/s 147 were initiated by recording following reasons:- "The assessee has filed his return of income for assessment year 2005-06 vide Receipt No.012220 on 28.09.2005 declaring total income of Rs.1,49,792/- which includes income from sale of residential house at Rs.1,20,000/- which was processed u/s 143(1) on 16.01.2006. Survey u/s 133A was conducted on the business premises of Sh.Sandeep Jain S/o Sh.S.K.Jain at E-1/80 Sector-11, Faridabad on 17.11.2005 where incriminating documents were found and impounded. Interalia, impounded documents consists loose papers marked document No,'D-19' of which Page No.102 to 118 is an a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Furthermore, in terms of decision of Kerala High Court in case of A.Sreenivasa Pai - 242 ITR 29, the return filed after survey incorporating the income of construction business as per audited profit and loss account found during survey does not amount to revised return in accordance with provision of Section 139(5) of IT Act. In this case, the Hon'ble Court observed that when an assessee files a revised return, in fact, it is admitted that the original return was not correct and complete and it is intended to be substituted by a revised return which, according to the assessee, is correct and complete. It is quite possible and natural that in submitting a return disclosing full particulars of income in the return, some bona fide omission or some wrong statement may be occurred. In order to obviate this possibility, the Legislature has enacted section 139(5) enabling the assessee to furnish a revised return. But to come under the said provision, the omission or wrong statement that might have occurred or crept in, (i) must be bona fide, and (ii) must have been discovered by the assessee himself. If, however, the omission or wrong statement is discovered by the Department as a resu....