TaxTMI 
TaxTMI 
2022 (9) TMI 99
X X X X Extracts X X X X
X X X X Extracts X X X X
....le. 1.2 That reasons were recorded mechanically without application of mind and therefore do not constitute valid "reason to believe" for assumption of jurisdiction u/s 147 of the Act. 1.3 That in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/143(3) of the Act are invalid and deserve to be quashed as such. 2. That even otherwise, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of service of notice under section 148 of the Act, there was no valid assumption of jurisdiction to frame the impugned assessment and as such, the proceedings initiated were not in accordance with law and therefore, unsustainable. 3. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the disallowance of Rs. 97,49,250/- out of aggregate expenditure incurred of Rs. 1,27,19,231/- incurred on property development expenses for land leveling of Rs. 90,59,338/- and Rs. 36,59,893/- for Road Banvai. 3.1 That while upholding the aforesaid disallowances, the learned Commissioner of Income....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate that the disallowances made and sustained relating to expenses claimed by the appellant in the return of income are without jurisdiction and untenable as they are beyond the scope of order of assessment framed under section 147/143(3) of the Act. 8.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since the proceedings under section 148 of the Act had been initiated on the basis of cash deposits in the bank account in respect of which, no addition had been made in the impugned order of assessment, disallowances made in the order of assessment and sustained in appeal are perse without jurisdiction and therefore, unsustainable." 3. The reasons recorded u/s 147 by the Assessing Officer are as under: "As per information available with this office, the assessee had made huge cash deposits in bank accounts with HDFC Narnaul. On enquiry it was found that that assessee is having one saving bank account No. 06231930006693 and a perusal of the account reveals that following amounts were deposited in this account - SB A/c No. 06231930006693 Sr. No. Date of deposit Amount 1. 22.09.2012 1,50,000/- 2. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ness of capital introduced during the F.Y. 2012-13 by the assessee and since the assessee filed to furnish satisfactory explanation and after treating the amount of Rs.6,00,000/- which was paid for the advance to purchase of land on 07.12.2011 pertaining to the earlier year, the AO added an amount of Rs.17,79,835/- u/s 68 of the Income Tax Act, 1961. 7. Further, taking cue from the balance sheet, the AO made addition on account of unsecured loans received from Sh. Alok Sharma of Rs.10,00,000/-, Sh. Arvind Kumar of Rs.8,50,000/- and Sh. Satinder of Rs.80,000/-. With regard to these loans, it was submitted by the assessee that these loans have been taken in course of business and through the banking channels. The AO has brought this amount to tax u/s 68 of the Act. 8. The AO has also made an amount of Rs.1,36,48,599/- on account of land development expenses. Based on the valuation of closing stock, the AO made an addition of Rs.69,29,647/-. The AO has also made an addition of Rs.19,15,374/- on account of the fee paid to Municipal Committee for development charges. 9. Out of the above addition, the ld. CIT(A) confirmed an amount of Rs.97,49,250/- on account of land developmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also" have been used together and in conjunction. Evidently, 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. Explanation 3 does not 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 accepts the contention of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that in the original assessment the powers of the Assessing Officer were limited to the extent of prima facie adjustment only. On the merits of the additions, the Commissioner (Appeals) followed his order of assessment year 1996-97. On appeal the Tribunal held that the assumption of jurisdiction by initiating reassessment proceedings was valid and reassessment could not be annulled. It was a separate issue that after validly assuming jurisdiction the points on which reassessment was proposed were not added/disallowed. At the same time under section 147 the Assessing Officer could also assess such income which had escaped assessment and which comes to his notice subsequently in the course of the proceedings under section 147. On appeal: Held, that section 148 was supplementary and complementary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and subsection (1) mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax had escaped a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n law, the Tribunal was justified in holding that the reopening done by the Assessing Officer was not in accordance with Section 147 of the I.T. Act when the fact and circumstance indicate otherwise on the basis of substantial evidence brought on record?" 3. We find that the impugned order of the Tribunal while allowing the respondent assessee's appeal has held that there was no reasonable belief in the Assessing Officer to issue the reopening notice seeking to reopen the subject assessment year i.e. A.Y. 2004-05. Besides, the impugned order holds that the order which was passed consequent to reassessment, has not confirmed the addition attributable to the reasonable belief of the Assessing Officer while issuing the reopening notice. The reassessment order has made an addition on an issue which is not a subject matter of the reasons recorded in support of the reopening notice as forming its reasonable belief that income chargeable to tax has escaped assessment. 4. In the above view, the question as formulated becomes academic as our Court in CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236/[2010] 195 Taxman 117 (Bom.) while examining Explanation 3 to Section 147....