2020 (9) TMI 318

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....ed u/s 147/143(3) of the Act vide orders dated 30.12.2008, the total income as declared by the assessee was accepted by the Assessing Officer. Thereafter, information was received by the AO showing that the assessees had operated bank accounts in Switzerland with HSBC Bank which were not disclosed in their regular books of account or the returns of income. He, therefore, again reopened the assessments and issued notices u/s 148 to both the assessees after recording the reasons. In reply, letters dated 18.03.2013 were filed by both the assessees in the office of the Assessing Officer requesting that returns originally filed by them on 30th July, 2006 may be treated as the returns filed in response to the notices issued u/s 148. During the course of assessment proceedings, both the assesees did not sign the 'Consent Waiver Forms' to facilitate the process of procuring the full details of transactions made through HSBC Bank Jeneva, Switzerland by the AO. They also failed to furnish the copies of their bank statements as required by the AO and finally denied of having maintained any bank accounts with HSBC, Switzerland. On the basis of whatever information received by him, the ....

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.... same was duly supported by judicial pronouncements cited on behalf of the assessee and deleted the additions made by the AO to the total income both the assessees in the assessments completed u/s 147/143(3) of the Act vide orders dated 10.02.2015 holding that if the assessments were reopened on certain issue, but no additions was made on that issue, then it was not permissible to make additions on other issues unless those other issues were connected to the issue on the basis of which the assessments were reopened. 4. Aggrieved by the order of the Ld. CIT(A), the Revenue has preferred these appeals before the Tribunal on the following identical grounds: "1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that in the proceeding u/s 148, no addition can be made on the other issues unless those other issues are connected to the issue on which reopening has been done. 2. That the Ld. CIT(A) has erred by not considering the decision of the Hon'ble Delhi High Court in the case of Jakhotia Plastics (P) Ltd. reported in 94 taxmann.com 96 (SC)." 5. We have heard the arguments of both the sides and also perused the rele....

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....tory in respect to the reopening u/s. 147 of the Act, is that the Parliament by Direct Tax Laws (Amendment) Act 1987 w.e.f. 01.04.1989 had substituted "for reason to believe escapement of income" to 'for reasons to be recorded by him in writing, is of the opinion'' which gave unbridled subjective satisfaction to the AO was later substituted back to 'reason to believe escapement of income'', by the Direct Tax Laws (Amendment) Act, 1989. The Hon'ble Apex Court as well as the Hon'ble High Courts have already held in plethora of cases the test of a prudent person instructed in law in understanding jurisdictional fact and law (mixed question of fact and law) the reason to believe escapement of income (supra). For reopening the assessment by the AO the condition precedent of reason to believe escapement of income is sine qua non. It must be kept in mind that reasons to believe postulates foundation based on information and belief based on reason. Even if there is foundation based on information, still there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Sup....

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....g the assessment was that the assessee has suppressed the actual production of iron ore to the tune of 8,78,079 MT valued at Rs. 1,79,41,61,259/- thereby escapement of income happened and for which precise reason recorded AO invoked the reopening jurisdiction after the assessment was framed u/s. 153A/143(3) of the Act on 28.04.2014 (supra). However, we note that at page 3 of the reassessment order the AO has accepted the contention of the assessee after going through the Form HI filed before DG, Mines and has recorded that he is not drawing any adverse inference so far as production of iron ore by the assessee and did not make any addition/disallowance on this issue for which purpose only he invoked his reopening jurisdiction u/s. 147 of the Act. So, we note that here is a case wherein the AO invoked the reopening jurisdiction for a specific purpose which issue was dropped, then according to assessee and rightly so, the condition precedent for assuming jurisdiction has disappeared/absent, then the AO lacks jurisdiction to proceed further to reassess any other income which he has not taken note in the reasons recorded to reopen. Therefore, the AO ought not to have proceeded to reass....

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....e ratio decidendi laid by the Hon'ble Bombay High Court decision in Jet Airways (I) ltd. (supra). The Hon'ble Punjab &Haryana High court in the case of CIT Vs. Mehak Finvest (P) Ltd. (supra) has followed the Division bench order in Majinder Sing Kang (supra) since it was binding on the same High Court and taking into consideration that the SLP against the Majinder Singh Kang has been dismissed. 10. However, we note that the Hon'ble Bombay High Court in the case of Jet Airways (supra) has considered at length the effect of the insertion of Explanation (3) to sec. 147 of the Act by the Finance No. 2 Act, 2009 retrospectively w.e.f. April 1, 1989 and has laid down the ratio decidendi of the issue before us. We note that the jurisdictional High Court i.e. Hon'ble Calcutta High Court in ITAT No. 60 of 2014 in GA No. 1736 of 2014 CIT Vs. M/s. Infinity Infotech Parks Ltd. has concurred with the view taken by the Hon'ble Delhi High Court judgment in Ranbaxy Laboratories Vs. CIT 336 ITR 136 (Del.) and Hon'ble Bombay High Court in CIT Vs. Jet Airways India Ltd. 331 ITR 236 (Bom.) approved the Tribunal's view on the same which is reproduced as under: ....