TaxTMI 
TaxTMI 
2025 (9) TMI 1716
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....0/- and had disclosed only Rs.57,27,000/- as proceeds for land sales in the income & expenditure account and (ii) regarding some transactions pertaining to TDS deduction, he was of the view that income chargeable to tax has escaped assessment and therefore, he reopened the assessment u/s.147 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') by issuing notice u/s.148 of the Act on 29.06.2021. Thereafter, the AO is noted to have completed the reassessment on 11.05.2023 by disallowing the expenditure of Rs.3,39,90,859/- towards advertisement, wages, salary, JCB expenses, legal and compensation expenses, audit fees and marketing expenses, traveling, meeting and vehicle expenses as well as under Section 40A(3) of the Act. 4. Aggrieved, by the aforesaid action of the AO, the assessee is noted to have filed an appeal before the Ld.CIT(A)/NFAC wherein he raised legal issue challenging the jurisdiction of the AO to have made the additions/disallowances, by contending that even though the AO has reopened the assessment on certain issues [i.e. as stated in the reasons recorded for reopening], without making any additions/disallowances on those issues, the AO erred in makin....
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....produced by the Ld.CIT(A) at Para No.5.2.2 of the impugned order which are reproduced as under]: PAN F.Y in Which transaction was made Name of the assessee Information Description Value in Rs. AVMPS5356G 2013-14 GOVINDA RAJULU SRINIVASAN TDS Statement - Payments to contractors (Section 194C) 44338 TDS Statement - Interest other than interest on securities (Section 194A) 131249 TDS Statement - Insurance commission (Section 194D) 50780 The assessee had filed his return of income on 30.11.2014 admitting total income of Rs. 35,66,120/-for the A.Y. 2014-15. It is noticed from the Department Software (Insight-High Risk CRIU/ VRU Information) that the assessee had sold a immovable property jointly and received sale consideration of Rs.7,55,55,190/. And also made the transactions classified in the aforesaid table. 1. By virtue of the aforesaid transactions, it has transpired that the assessee mentioned in the table above had also not fully and truly disclosed all the material facts necessary for completion of the assessment, for the assessment year 2014-15. 2. Ha....
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....ore we part, we would like to take note of the Ground No.3 raised by the Revenue i.e. Ground No.3 which reads as under: 3. The CIT(A) has not taken into consideration the subsequent amendment made in the Finance Act, 2009. The Finance Act 2009 has inserted Explanation 3 to Section 147 which mandates that Assessing Officer assesses or re assess under section 147 any issue which has escaped assessment when such issue comes to the AO notice and the said issue has not been included in the reasons for reopening. The Explanation 3 to section 147 does not envisage interconnection between reasons for reopening and subsequent addition. The AO is rightly empowered to examine all the issues which arise subsequently during assessment proceedings. 9. We note that similar issue/ground has already been considered by the Hon'ble Madras High Court while deciding the case of Tractors & Farm Equipment Ltd., (supra) wherein the Hon'ble High Court has held as under: 12. Though we have held so, we have also considered the arguments advanced by the learned counsel for the Revenue by referring to Explanation 3 to Section 147 of the Act. The counsel for the assessee is right in his sub....
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....t or reassessment to assess or reassess any other income, which may have escaped assessment but which did not form the subject-matter of the notice under s. 148. This view was adopted in the judgment of the Punjab & Haryana High Court in Vipan Khanna (supra) and in the judgment of the Kerala High Court in Travancore Cements Ltd. (supra). This line of authority, would now cease to reflect the correct position in law, by virtue of the amendment which has been brought in by the insertion of Expln. 3 to s. 147 by Finance (No. 2) Act of 2009. The effect of the Explanation is tha once an AO has formed a reason to believe that income chargeable to tax has escaped assessment and the proceeded to issue a notice under s. 148, it is open to him to assess or reassess income in respect of another issue though the reasons for such issue had not been included in the reasons recorded under 148(2). 21. 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 s. 148 setting out the reasons for the belief that income had escaped assessment. Those j....