TaxTMI 
TaxTMI 
2013 (6) TMI 624
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....f flats. For the assessment year under dispute, i.e. for asst. Year 2005-06, the assessee filed its return of income on 21- 10.05 declaring a total loss of Rs.1,22,22,805/-. The return was processed u/s 143(1) of the Act. Subsequently, the Assessing Officer initiated proceedings u/s 147 of the Act by issuing a notice u/s 148 of the Act. In course of reassessment proceedings, the Assessing Officer made a reference to the transfer pricing Officer for determining the arms' length price. After receiving the order passed u/s 92CA(5) of the Act by the TPO, the Assessing Officer ultimately passed a draft assessment order on 13-12-2011 making additions on account of transfer pricing adjustments and determined the total income at Rs.13,97,95,042/-. The assessee challenged the draft assessment order before Dispute Resolution Panel (DRP) both on legal issue of reopening of the assessment as well as on merits. 4. In course of hearing before the DRP, the assessee contended that the reopening of assessment was invalid as there was no tangible material before the Assessing Officer to come to a conclusion that income has escaped assessment. It was further contended that there is no nexus betwee....
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.... Appellate Tribunal, Hyderabad Bench in ITA No.748/Hyd/2012 dated 14-9-2012 in case of V. Radhakrishna vs. DCIT. The learned authorised representative for the assessee further submitted that as could be evident from the reasons recorded by the Assessing Officer for reopening the assessment, the assessment was reopened for assessing income escaping on account of advances received from customers profit on which was not offered to tax even though there is increase in work in progress. The Assessing Officer had therefore recorded in his reasons that income of the assessee is to be assessed at the rate of 8% of work in progress. It was submitted that however in the assessment order passed u/s 143 read with section 147 of the Act, the Assessing Officer has not estimated the income on the work in progress but has proceeded to make addition on totally different issues which was not the subject matter of escapement of assessment as per the reasons recorded by the Assessing Officer. 6. It was submitted that unless there is nexus between the income escaping assessment as per the reasons recorded while initiating proceeding u/s 147 of the Act and the income finally assessed in the assessmen....
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....out asking for communication of reason for reopening the assessment. In course of hearing before us, no material has been produced whether after complying to the notice issued u/s 148 of the Act, the assessee has actually sought for the reasons recorded for reopening of the assessment. Only if the assessee has sought for the reasons recorded and the Assessing Officer has not communicated such reasons in course of the proceedings initiated u/s 147 of the Act then only such proceedings will be vitiated as per the ratio laid down by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs. ITO and others which was followed by the co-ordinate Bench of the Tribunal in case of Sri V. Radhakrishna vs. DCIT (supra). So far as the second ground of challenge to the proceedings initiated u/s 147 of the Act is concerned, as can be seen from the order of the DRP, the reasons recorded for reopening of the assessment is as under:- "The assessee company received advances from customers, but had not offered any profit element from those advances even though there is an increase in work-in-progress. The assessee company is following project completion method. Since the Accounting Stan....
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....by Parliament otiose. Parliament having used the words" assess or reassess such income and also any other income chargeable to tax which has escaped assessment", the words "and also" cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word "or". The Legislature did not rest content by merely using the word "and". The words" and" as well as "also" have been used together 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 section 147 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 ....
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....ing the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. 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 assessment and which comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language ....
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.... 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 notice, he would be competent to make assessment of those items. However, the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148." 11. The same view has also been expressed by the Hon'ble Chhattisgarh High Court in case of ACIT vs. Major Deepak Mehta (344 ITR 641) and in an unreported judgment of Hon'ble Gujarat High Court in case of CIT vs. Mohmed Juned Dadani (supra) . Therefore considered in the light of the ratio laid down as aforesaid, it can be seen from the facts on record that the escaped income as per the re....