TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1676
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....,28,567/-made by the Ld. Assessing Officer, when the Ld. CIT(A) has dropped addition on the issue on which re-opening under Section 148 of the Act had been done. The Ld. CIT(A) ought to have dropped all other addition when, the issue on which Notice under Section 148 of the Act was issued had been dropped. 2. On the facts and in law, the Notice issued under Section 148 of the Act is bad in law and therefore, any consequent assessment order passed shall be also be bad in law. 3. On the facts and in law, Ld. CIT(A) ought to have appreciated, that proceeding under Section 246-251 of the Act are extension of the assessment proceeding. Hence, if the issue on which the Notice under Section 148 issued gets dropped then no other addition can be sustained and hence, other addition is also ought to be dropped. 4. On the facts and in law, Ld. CIT(A) erred in upholding the addition made by Ld. Assessing Officer of interest expense paid on a loan from HUF, of Rs. 5,28,567/-, which is duly declared as income by the HUF in its Return of Income and the HUF has duly paid tax thereon on such income. 5. On the facts and in law, the impugned assessment order is in violation of Provision of....
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....as well which come to his notice during the course of re-assessment in issue which stand on a separate footing altogether. And that case law N. Govindaraju vs. ITO (2015) 60 taxmann.com 333 (Kar.) has already decided the very issue in department's favour. 6. The assessee, on the other hand, quotes CIT (E) v. B. P. Poddar Foundation for Education vs. BP (2022) 448 ITR 695 (Cal.) wherein their lordships; dealing which instance wherein the Assessing Officer had initiated 148/147 proceeding for a single head of income and made various other additions followed by the CIT(A)'s lower appellate findings deleting the former head and upholding the latter ones, concludes that such a reopening itself is not sustainable in law as follows: "3. The respondent assessee filed the return of income for the assessment year under consideration, AY 2009-10, declaring a total income of Rs. NIL. The return was processed under Section 143 (1) of the Act. A survey under Section 133A of the Act was conducted from which it was found that the assessee has deposited money with M/s. Nissan Developers and Properties Pvt. Ltd. to the tune of Rs/ 59,42,709/-. It was further seen that the said company is a specif....
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....and initiating proceedings under Section 147 was illegal and unjustified. It was further contended that the notice under Section 148 was issued after a lapse of 5 years. Further that the assessee had filed detail objections to the reasons for reopening which was never disposed of by the Assessing Officer, the law laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. Versus ITO and Ors.1 was violated. Further, it was contended that in the assessment order the Assessing Officer has raised several other issues which were not forming part of the reasons for reopening as was communicated to the assessee. Further, it was submitted that in the original assessment under Section 143(3) which was completed on 01.03.2011, the Assessing Officer issued notice to the assessee called for document and details which were furnished and the Assessing Officer has recorded his satisfaction in the assessment order dated 01.03.2011. Therefore, it was contended that on the very same facts, reopening could not have been done. (2003) 259 ITR 19 (SC). The assessee placed reliance on the decision of the Hon'ble Supreme Court in CIT Versus Kelvinator India Ltd.2 to support the contenti....
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....r has power to assess the escaped income on such other issues which comes to his notice subsequently, in the course of the proceedings under Section 147 of the Act. By referring to various paragraphs of the said decision, it was submitted that in the latter part of Section 147, it has been provided that "any other income" chargeable to tax which has escaped assessment and which has come to the notice of the Assessing Officer in the course of the proceedings, can also be taxed and that there are two parts to the Section and they which had been joined by the words "and also", cannot be treated as conjunctive but has to be disjunctive. It is submitted that the judgment in the case of Majinder Singh Kang Versus CIT and Ors.6, CIT Versus Atlas Cycle Industries 7 and (2011) 331 ITR 236 (Bom) (2011) 336 ITR 136 2015 SCC Online Kar 7386 (2012) 344 ITR 358 (P&H) (1989) 180 ITR 319 (P&H) CIT Versus Shri Ram Singh 8 were taken note of and the said decision clearly applies to the facts of the case on hand. 6. Mr. Bagaria placed reliance on the decisions in Commissioner of Income Tax Versus Jet Airways (I) Limited 9, Ranbaxy Laboratories Ltd. Versus CIT 10, Principal Commissioner of Income T....
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....ent is one aspect of the matter; if reason exists, the Assessing Officer can undoubtedly assess or reassess such income, for which there is such reason to believe that income chargeable to tax has escaped assessment. Further, it was held that the second part of the Section relates to "any other income" and the question would be as to whether it is to be read in conjunction to the first part or not. It was held that if it is to be read in conjunction, then without there being any addition made with regard to such income for which reason had been given in the notice for reopening assessment, the second part cannot be invoked, but if it is not to be read in conjunction, the second part can be (2014) 367 ITR 769 (P&H) invoked independently even without the reason for the first part to survive. The Court held that the two parts of the Section which had been joined with the words "and also", cannot be read as conjunctive but has to be read as disjunctive. 10. The earliest of the decisions on the point is in the case of Jet Airways. The Hon'ble Division Bench took note of the decision in Shri Ram Singh, Altas Cycle Industries held that after the Amendment of 2009, the Assessing Off....
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....gment of the Rajasthan High Court in Shri Ram Singh [2008] 306 ITR 343, Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab and Haryana High Court in CIT v. Atlas Cycle Industries [1989] 180 ITR 319. The decision in Atlas Cycle Industries [1989] 180 ITR 319 held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two grounds mentioned in the notice under Section 148 were incorrect or nonexistent. The decisions of the Punjab and Haryana High Court in Atlas Cycle Industries [1989] 180 ITR 319 and of the Rajasthan High Court in Shri Ram Singh [2008] 306 ITR 343 would not be affected by the amendment brought in by the insertion of Explanation 3 to Section 147. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment 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 t....
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....ion 3 to Section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh [2008] 306 ITR 3443. Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of Section 147 as they stood after the amendment of April 1, 1989, continue to hold the field. 11. The decision in Jet Airways was followed in Ranbaxy Laboratories wherein it was held as follows: 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 initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under Section 147 regarding assessment or reassessment of the escaped income, he would keep on making roving inquiry and thereby including diff....
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....ished with respect to the reason recorded for issuing notice for reopening the assessment, it would be open for the Assessing Officer to thereafter even assess other income which might have escaped assessment but which may not necessarily satisfy the requirement of nondisclosure of true and full material facts. If in such a situation, the AIR 1985 SC 582 stand of the Revenue is accepted, a very incongruent situation would come about if ultimately the Assessing Officer were to drop the ground on which notice for reopening had been issued but to chase some other grounds not so mentioned for issuance of the notice. In such a situation, even if a case where notice for reopening has been issued beyond a period of four years, the assessment would continue even though on all the grounds on which the additions are being made, there was no failure on the part of the assessee to disclose true and full material facts. In such a situation an important requirement of failure on the part of the assessee to disclose truly and fully all material facts would be totally circumvented. ♣ As already noted, except for the Punjab and Haryana High Court in the case of Majinder Singh Kang Versus C....