AI Drafter 
TaxTMI 
TaxTMI 
2019 (1) TMI 586
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....he ld. Authorised Representative, the assessment was completed u/s.143(3) of the Act on 27.03.2014 wherein an addition of F1,50,000/- was made for improper maintenance of stock register. Further, to this, as per the ld. Authorised Representative, assessee received a notice dated 01.06.2015 u/s.148 of the Act seeking a reopening of the assessment. According to the ld. Authorised Representative, the assessee thereupon requested the ld. Assessing Officer to provide with the reasons for resorting to a reopening. Contention of the ld. Authorised Representative was that in the reasons supplied to the assessee, it was mentioned that assessee had credited F6,62,620/- as long term capital gains in his capital account but had not admitted such sum while computing his taxes. However, as per the ld. Authorised Representative, during the re-assessment proceedings, explanation given by the assessee on the long term capital gains through sale of shares, which was exempt and credited in the capital account was provided by the assessee and the ld. Assessing Officer had accepted such claim of the assessee after examining the evidence. However, as per the ld. Authorised Representative, ld. Assessing ....
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....sideration of above facts and findings as discussed above, I have no option but proceed to adopt FIFO method in valuing the closing stock as on 31.03.2011 as under:- Opening stock (old items) : 3,685.450 Add: Purchase (new items) : 29,612.026 Total : 33,297.476 Sales : 29,488.407 Balance (closing stock) : 3,809.069 Apparently, the balance stock i.e., closing stock as on 31.03.2011 is new items and cost price should be adopted at F1,978 per gram. Thus, the closing stock value as on 31.03.2011 comes to F75,34,338/- as against the assessee's claim of closing stock value of F26,20,902/-. There is no short admission of closing stock value for an amount of F49,13,436/- and the same is brought to tax on account of difference in closing stock value. Accordingly, this is added to the income assessed u/s.143(3)''. With regard to the reason for which reassessment was resorted to, ld. Assessing Officer has specifically noted at para 5 of his order, that assessee had explained the long term capital gains with necessary evidences. There was no addition whatsoever made for the reason cited in the notice issued under Section 148 of the Act. In our....
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....e same. 16. In so far as the contention of the petitioner-assessee is concerned, that the impugned order does not seek to reassess its income qua the issue, which formed the basis for reopening the assessment - the respondents/ Revenue sought to rely upon Explanation 3 introduced in Finance (No. 2) Act, 2009, albeit, with retrospective effect, i.e., April 1, 1989. Besides the Explanation, reliance was also placed on the judgment of the Punjab and Haryana High Court in the matter of : Majinder Singh Kang v. CIT [2012] 344 ITR 358 (P&H) ; [2012] 25 taxmann.com 124 (P&H). 17. In order to deal with this submission, it may be relevant to refer to the relevant provisions of section 147 of the Act. "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 proceed ings under this section, or recompute the loss or the depreciation allowan....
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....dings. 18.1. It is only if the original assessment is made under section 143(3) or under section 147 and an attempt to reopen the assessment is made after the expiry of the four (4) years from the end of the relevant assessment year, that the first proviso to section 147 of the Act kicks in, which mandates that no reassessment proceedings can be initiated unless the escapement of income is occasioned by either the reason of failure on the part of the assessee to file a return under section 139 or, in response to notice issued under section 142(1) or section 148 or, on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for carrying out the assessment for the relevant assessment year. 18.2. Since, in the instant case, the original assessment was made under section 143(1) of the Act and the notice under section 148 of the Act for reopening of assessment was issued well within the period of four (4) years, the respondents-Revenue was not required to satisfy the conditions contained in the first proviso. 18.3. Having said so, the Assessing Officer even in such circumstance has to have a reason to believe tha....
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.... hands of the petitioner-assessee under the provisions of section 28(iv) of the Act. 20. The petitioner-assessee, however, challenges this action of the respondents-Revenue, on the ground that it was not permissible for the respondents-Revenue to tax the forfeited share application money, by taking recourse to provisions of section 147 read with section 148 of the Act, unless it assesses to tax that income with reference to which the Assessing Officer had formed reason to believe (within the meaning of section 147), that it had escaped assessment. 21. To my mind, a careful reading of section 147 of the Act would show that it empowers an Assessing Officer to reopen the assessment, if, he has reason to believe, that any income chargeable to tax has escaped assessment for the relevant year, "and also bring to tax", any other income, which may attract assessment, though, it is brought to his notice, subsequently, albeit, in the course of the reassessment proceedings. 21.1. To put it plainly, the purported income discovered subsequently during the course of reassessment proceedings, can be brought to tax, only, if the escaped income, which caused, in the first....
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....and cannot override the necessity of fulfilling 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." (emphasis is mine) 24. This takes me to the last submission made on behalf of the respondents-....