TaxTMI 
TaxTMI 
2024 (11) TMI 249
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....of the Act in respect of the assessment year (AY) 2016-17. The learned Tribunal rejected the assessee's appeal. 3. The assessee has projected several substantial questions of law. However, the substantial question that arises is set out below:- "Whether the Income Tax Appellate Tribunal is correct in law and on facts in upholding the order dated 28.03.2024 passed u/s 263 of the Act by completely ignoring the judgments of jurisdictional High Court of Delhi in the cases of CIT vs. Software Consultants reported in 341 ITR 240 and Ranbaxy Laboratories Ltd. vs. CIT reported in 336 ITR 136?" 4. The present appeal is heard on the said question. 5. The assessee had filed its returns for income for the AY 2016-17 on 11.10.2016 declaring a total income of Rs. 49,81,950/-. The said return was processed under Section 143 (1) of the Act and in terms of the intimation dated 14.08.2017 sent under the said provision, an amount of Rs. 4,76,97,220/- was determined as refundable to the assessee. 6. The Assessing Officer (hereafter the AO) issued the notice dated 30.03.2021 under Section 148 of the Act seeking to reopen the assessment for the relevant assessment year - AY 2016-17.....
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....s taken place, clause (b) of Explanation 2 to Section 147 is applicable. Accordingly, in this case, the requirement to initiate proceedings u/s 147 is reason to believe as recorded above. In view of the above stated facts, I am satisfied that at least an income exceeding Rs. 1 lakh chargeable to tax has escaped assessment for the AY 2014-15, within the meaning of section 147 of the Income Tax Act, 1961. In this case, four years have not elapsed from the end of the assessment year under consideration, necessary sanction to issue notice u/s 148 of the Act is being obtained from the Addl. Commissioner of Income Tax, Range-22, New Delhi under the provisions of section 151 (2) of the Income Tax Act, 1961 read with the Taxation and other laws (relaxation and amendment for certain provisions) Act, 2020." 7. Thereafter, notices were issued to the assessee under Section 142 (1) of the Act for assessing the assessee's income chargeable to tax. 8. The assessee filed its objections for initiation of the re-assessment proceedings and also challenged the jurisdiction of the AO, who had issued the said notices on various grounds. Apart from the above, the assessee....
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....ee to submit the details by 21/03/2022. The assessee company filed reply on 21/03/2022 and submitted details of share purchase from INX News Pvt. Ltd. and information TV Pvt. Ltd., and also submitted details of unsecured loan received of Rs. 99,49,00,000/- from M/s Aspire Promoters Pvt. Ltd. Further, assessee submitted notarized share purchase agreement made on E-stamp of Rs. 100/- dated 03/02/2015 and copy of confirmation of M/s Aspire Promoters Pvt. Ltd., INX News Pvt. Ltd. and Information TV Pvt. Ltd. along with bank statements of respective parties reflecting the transactions. The assessee company did not submitted copy of return of income along with financial statement of above three parties. Therefore, in absence of financial statements, the credit worthiness of M/s. Aspire Promoters Pvt. Ltd. could not be verified. 4. Accordingly, the Draft assessment order cum show cause notice dated 27/03/2022 has been issued and served upon the assessee through email/ ITBA for making addition of Rs. 99,49,00,000/- being unexplained cash credit U/s. 68 of the IT Act. In response to the same, the assessee has submitted reply on 28/03/2022 alongwith all required documents, which are....
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....see explained that its gains were limited to the difference between the value at which it had acquired the said debentures and the value at which the same were redeemed by Vatika Limited. Thus, no income had arisen in the hands of the assessee commensurate with the TDS deposited by Vatika Limited. 18. However, the PCIT did not accept the assessee's contention that there was no income chargeable to tax commensurate to TDS, which was the basis of issuance of the notice under Section 263 of the Act. Accordingly, the learned PCIT passed the order dated 28.03.2024 under Section 263 of the Act holding the assessment order passed by the AO as erroneous insofar as it is prejudicial to the interest of the Revenue. According to the learned PCIT, the AO should not have overlooked the said transaction. PCIT held that no enquiry was made by the AO in respect of the aforesaid transaction whereby the asseesee had received a sum of Rs. 140,95,00,000/- from Vatika Limited and further paid a sum of Rs. 145,00,00,000/- to Antonious Developers Private Limited. And, the said amount was required to be added as an income under Section 68 of the Act. The learned PCIT directed the AO to frame an assessm....
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....onfined to assessing only such income in respect of which he had reason to believe had escaped assessment but also extended to assessing / reassessing other income which, during the course of proceedings, he finds had escaped assessment. If the AO finds that the income which he had reason to believe had escaped assessment had not escaped assessment or such reasons could not fructify an assessment, the AO would have no jurisdiction to tax other income. The words "and also as" used in Section 147 of the Act, as applicable, clearly indicate that the assessment / reassessment of income other than income for which the AO had reasons to believe had escaped assessment could only be assessed / reassessed if the income which the AO had reasons to believe had escaped assessment. However, if during the course of the proceedings, the AO was satisfied that the income for which he had reasons to believe had escaped assessment had not escaped assessment, his jurisdiction to assess / reassess under Section 147 of the Act would stand concluded. 25. The Rajasthan High Court in Commissioner of Income Tax v. Shri Ram Singh:(2008) 306 ITR 343 (Raj) had interpreted the language used in Section 147 of....
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....nt of 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 notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance (No. 2) Act of 2009. However, 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 no....
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.... 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. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items, viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under sections 80HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under sections 80HH and 80-I and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-I which as per our discussion was not permissible. Had the Ass....
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....DRs were in her name but the same belonged to the assessee company. This explanation was accepted by the Commissioner of Income Tax (Appeals) in an appeal filed by the said Director in her personal capacity. 30. The FDRs in question pertained to the AY 1993-94. In view of the said information, the AO issued a notice under Section 148 of the Act. In response to the said notice, the assessee filed its return declaring a loss of Rs. 1,02,756/-. During the proceedings initiated pursuant to the reassessment notice issued under Section 148 of the Act, the assessee established its capacity to invest Rs. 20,00,000/- and had also proved the source of the funds. The AO accepted the same and thus, made no addition in respect of the FDRs in question. During the course of the assessment proceedings, the AO also noticed that there was an increase of Rs. 47,00,000/- in the share application money reflected by the assessee company in its books of account. The share application money was received from several persons. The AO thus issued notice to one such person selected on a random basis. The said notice recorded his statement confirming the investment made in the assessee company. 31. Thus,....
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....hares - which was the AO's reason to believe that the assessee's income had escaped assessment - no addition in respect of any other amount could be made to the assessed taxable income of the assessee in proceedings initiated pursuant to the notice dated 30.03.2021 issued under Section 148 of the Act. It follows that the AO's order dated 30.03.2022 could not be held to be erroneous insofar as it is prejudicial to the Revenue on account of not making any addition on account of income from interest on non-convertible debentures of Vatika Limited. Thus, in fact, the PCIT passed an order under Section 263 of the Act, which the AO could not have been passed in the reassessment proceedings. 36. Mr Aggarwal, the learned counsel appearing for the Revenue had submitted that the powers of the Commissioner under Section 263 of the Act are not abridged/restricted by any restriction/limitation in exercise of powers by the AO or on account of any action/inaction/wrong action on the part of the AO. He contends that in view of the above, it is not necessary to deal with the principal contention of the assessee that absent any addition of the income alleged to have escaped assessment in the reas....