TaxTMI 
TaxTMI 
2024 (11) TMI 1416
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.... to the root of the matter, we deem it fit and appropriate to address this preliminary legal ground first. 3. We have heard the rival submissions and perused the materials available on record. The reasons recorded for reopening the assessment for assessment year 2012-13 are enclosed in pages 5 to 10 of the departmental paper book filed before us. The said reasons indicate that assessee had received some accommodation entries to the tune of Rs. 5 lakhs from M/s Star Technologies India Delhi through RTGS. The reasons recorded also indicate that the said receipt transaction of Rs. 5 lakhs from M/s Star Technologies India Delhi was sought to be treated as accommodation entry received by the assessee and since this fact was not disclosed by the assessee in the regular return filed for assessment year 2012-13, the Learned AO concluded that assessee had not made full and true disclosure of credits in the books of accounts neither at the stage of assessment proceedings under section 143(3) of the Act nor during the inquiry proceedings before Investigation Wing Delhi. Since this sum of Rs. 5 lakhs received by the assessee from Star Technologies India Delhi was treated as accommodation en....
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....ld not be any valid formation of belief by the Learned AO that income of the assessee had indeed escaped assessment for the assessment year 2012-13. 5. Further, it was argued by the Learned AR that the Learned AO had formed a belief that the assessee was in receipt of Rs 5 lakhs as accommodation entry from M/s Star Technologies India Delhi, which was sought to be treated as undisclosed income of the assessee together with related commission expenditure of Rs 2,500/- there on. This was the primary reason for formation of belief by the Learned AO to reopen the assessment for assessment year 2012-13. But in the final reassessment order under section 147 of the Act dated 31-12-2018, no addition has been made by the Learned AO on this account. Instead, an addition on account of estimated gross profit was made by the Learned AO finally in the reassessment proceedings. Since the issue mentioned in the reasons recorded for which the assessment was reopened did not find place in the final re-assessment order framed by the Learned AO, it was submitted that the very basis of formation of belief fails. Accordingly, there could not be any valid assumption of jurisdiction for reopening the as....
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....ss or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such issue has not been included in the reasons recorded under sub-section (2) of section 148. This amendment will take effect retrospectively from 1-4-1989 and will accordingly apply in relation to assessment year 1989-90 and subsequent years." 9. By virtue of explanation 3 to section 147 interpretive confusion came to be clarified and thus the decisions rendered by the Punjab & Haryana High Court in the case of Vipin Khanna v. CIT [2002] 255 ITR 220/122 Taxman 1 and Kerala High Court in the case of Travancore Cements Ltd. v. Asstt. CIT [2008] 305 ITR 170/[2009] 179 Taxman 117, no longer hold the field on the subject. 10. The ratio of both the aforecited cases was that upon the issuance of notice under section 148(2), when proceedings were initiated by the Assessing Officer on issues in respect of which he had formed a reason to believe that income had escaped assessment, it was not open to the Assessing Officer to carry out an assessment or reassessment in respect of other issues which ....
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....ower to levy taxes on the entire income which has escaped assessment. The learned counsel relied upon the cases of Supreme Court in CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297/64 Taxman 442 and V. Jaganmohan Rao v. CIT/CEPT [1970] 75 ITR 373. On the other hand learned counsel for the assessee submitted that the words, 'and also' in section 147 signify that unless the Assessing Officer assesses the income with respect to which he has formed reason to believe within the meaning of section 147, it would not be open for him to assess or reassess any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings. Learned counsel relied upon the case of Jet Airways (I) Ltd. (supra) and also CIT v. Shri Ram Singh[2008] 306 ITR 343 (Raj.) and CIT v. Dr. Devender Gupta [2008] 174 Taxman 438 (Raj.). Reliance was also placed in the case of C.J. International Hotels Ltd. v. ITO being IT Appeal No. 2736/Del./2006 dated 24-10- 2008. 13. Similar contention was raised before the Division Bench of Bombay High Court in the case of Jet Airways (I) Ltd. (supra). The Court referred to the interpretation by Raj....
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....ao (supra) wherein it was held that the object of section 147 enures to the benefit of the revenue and it is not open to the assessee to convert the reassessment proceedings as an appeal or revision and thereby seek relief in respect of items which were rejected earlier or in respect of items not claimed during the course of the original assessment proceedings. 15. In Dr. Devender Gupta's case (supra), learned Tribunal has relied upon the judgment of the Punjab & Haryana High Court, in CIT v. Atlas Cycle Industries [1989] 180 ITR 319/46 Taxman 315, and concluded that the basic condition is, that the Assessing Officer has reason to believe, that any income chargeable to tax has escaped assessment, for any assessment year, and it was found, that the section puts no bar on the powers of the Assessing Officer, to put to tax, any other income, chargeable to tax, which has escaped assessment, and which subsequently comes to his notice, in the course of the proceedings, but then, the prefixing words "and also", which succeeded "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 reass....
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....e to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word "or". The Legislature did not rest content by merely using the word "and". The words "and" as well as "also" have been used together and in conjunction." ** ** ** Evidently, therefore, 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 cours....
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....ry, the legality of which would be tested in the event of a challenge by the assessee." 18. We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of V. Jaganmohan Rao (supra). We may also note that the heading of section 147 is "income escaping assessment" and that of section 148 "issue of notice where income escaped assessment". Section 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof 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 has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Explanation (3) if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for i....