2022 (2) TMI 873

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....issions made by the appellant company." Thereafter, the assessee filed additional grounds, which are as follows: "1. Thus, the ld. A.O. has erred in law and on facts in making the addition of unexplained cash credit u/s. 68 of the Act of Rs. 2,67,00,000/- on account of share application money received in cash which did not form part of the reasons recorded. Reliance is placed on the following judicial pronouncement :- i) Commissioner of Income-tax- II v. Mohmed Juned Dadani [2013] 30 taxmann.com 1 (Gujarat) 2. The Ld. AO has erred in law by issuing notice u/s. 143(2) of the Act on 08.02.2010 which was prior to return of income filed by the appellant company in response to notice issued u/s. 148 of the Act on 22.04.2010 as the notice u/s. 143(2) of the Act is to be issued after filing of return of income. 3. The Appellant craves leave to add, alter, amend any ground of cross objection. 4. Hence, in the interest of natural justice, the appellant company requests to admit the above additional legal ground of appeal which is legal in nature, in view of the settled decision of the Hon'ble Supreme Court of India in the case of NTPC 229 ....

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.... with the asssessee company i.e. Varij Builders Pvt. Ltd. 3. It is seen that as per balance-sheet total balance with the bank is shown at Rs. 10,12,354/- and cash in hand is shown at Rs. 15,89,455/-. It is found from the statement of affairs that no accrued income is offered to tax against bank deposits. 4. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment. 5. Notice u/s.148 of the IT Act is issued. Sd/- (P. ANILKUMAR) Income Tax Officer, Ward-8(4), Ahmedabad Dt.3.12.2009" 7. The ld.AR contended that the AO failed to record proper reasons as to what income chargeable tax has escaped from assessment, and what extent of income has escaped from the assessment. In the absence of the same, the reasons are not validly recorded, and therefore, the entire -reassessment proceedings is liable to quashed. In this connection, the assessee has relied upon jurisdictional High Court judgment in the case of CIT Vs.Mohmed Juned Dadani, (2013) 30 taxamnn.com and five other judgments to support his case. 8. In reply, the Ld.DR replied that the AO has recorded proper reasons before initiating re-ass....

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....e under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided .... .... .... 11. As per section 147, the AO has reasons to believe that any income liable to tax has escaped assessment for any assessment year, then he can issue notice under section 148 after satisfying section 149 which prescribed time limit for issuance of notice and quantum of escaped income. But in the present case, the AO has made an observation that no accrued income is offered to tax against bank deposits by the assessee. Further, the AO has not quantified what extent of income has escaped from taxation relevant to the assessment year 2008-09, whereas addition....

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....ceipt, which was taxable in the 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 esc....

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....per Explanation 3 to reduce the claim of deduction under sections 80HH and 80-I as well. 21. In view of our above discussions, the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. Consequently, we answer the first part of question in affirmative in favour of revenue and the second part of the question against the revenue." 12.3 Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd. held as under: "16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his n....