TaxTMI 
TaxTMI 
2025 (12) TMI 1035
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....h is not sustainable. The Ld. AR further submitted that the above ground if considered and allowed in favour of the assessee, the rest of the grounds would become academic. Accordingly, we first proceed to adjudicate the legal ground as described above. 2. The assessee for the year under consideration has not filed the return of income. The A.O based on information available with the Department noticed that the assessee has made cash deposits to the tune of Rs. 2,03,09,275/- in the bank account maintained with ICICI bank and had also made cash withdrawals to the tune of Rs. 1,76,13,220/-. Accordingly, the A.O issued a notice u/s. 148 of the Act after recording the reasons "the assessee has made unexplained cash deposits to the tune of Rs. 2,03,09,275/-". The assessee made detailed submissions before the A.O justifying the cash deposits stating that the assessee is in the business of buying used tyres and selling rebuttoned tyres, where the payments towards sales are made by the customers in cash. The assessee also submitted that sales and purchase register in support of the claim. After perusing the details submitted by the assessee, the A.O held that the assessee has made payme....
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....ty u/s 270A are initiated for under reporting of Income which was in consequence of mis-reporting of income." 3. On further appeal, the CIT(A) confirmed the addition made by the A.O. It is relevant to note here that the assessee has raised the legal contentions with regard to addition made by the A.O before the CIT(A) and that the CIT(A) has not given any specific findings in that regard. The assessee is in appeal before the Tribunal against the order of the CIT(A). 4. We have heard the parties and perused the material available on record. The Ld. AR, at the outset, submitted that the A.O reopened the assessment for the reasons that the assessee has made unexplained cash deposits, whereas while concluding the assessment he has made an addition u/s. 40A(3) of the Act towards cash payments made in excess of Rs. 20,000/- under Rule 6DD of the Rules. The ld AR argued that the addition made by the AO is not sustainable as has been held by the Co-ordinate Bench in the case of Shri Murthy vs. ACIT (ITA No.490/Chny/2025 dated 23.04.2025). In this regard we notice that the coordinate bench in the above case has considered a similar issue of the A.O without making any additions towards....
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....ds, if, notice for reopening of the assessment was issued on one aspect, and in the course of reassessment proceedings another aspect was discovered, the reassessment order would be valid, only if, the aspect, which led to the reopening of assessment, continues to form part of the reassessed income. 23. This view, as has been correctly submitted by the learned counsel for the petitioner/assessee, has found resonance with at least three (3) High Courts, i.e., the Bombay High Court, the Gujarat High Court and the Delhi High Court in the following cases: (i) Jet Airways (I) Ltd.'s case (supra) (ii) Mohmed Juned Dadani's case (supra) (iii) Oriental Bank of Commerce's case (supra). 23.1 The only High Court, which has taken a contrary view, as it were, is the Punjab and Haryana High Court in the matter of : Majinder Singh Kang's case (supra). 23.2 In my opinion, with respect, the Court, in rendering the judgment in Majinder Singh Kang's case (supra), ignored the fact that the provisions of Explanation 3 had to be read in conjunction with the main provision, and that, the said explanation cannot override the main provision. 23.3 This....
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....fter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation 3 - For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148." 9. The rival contentions pertain largely to the interpretation of Explanation 3. Section 147 and, in particular, Explanation 3 thereto was interpreted by the Division Bench of the Bombay High Court in Jet Airways (supra). Paragraphs 20 and 21 of the said judgment are set out below: "20. Parliament, when, it enacted Explanation 3 to section 147 by the Finance (No.2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Explanation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in ....
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.... 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 notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends....
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....r, it was held that for every new 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 of the Act. Thus, it was held that the Assessing Officer had jurisdiction to reassess the income other than the income in respect of which the proceedings under section 147 were initiated, but, he was not justified in doing so when the reasons for the initiation of those proceedings ceased to survive. Therefore, the argument advanced by the Revenue placing reliance on Explanation 3 to section 147 i of little avail." 11. In effect, both in Jet Airways and TAFE (supra), the Court held that Section 147 enables the assessing officer to travel beyond the reasons for initiating reassessment proceedings provided such reassessment is also carried out on the grounds or reasons on which reassessment was initiated. On the other hand, if the ground on which reassessment was initiated was no longer available to the assessing officer, the Court held that reassessment cannot be continued on the basis of the original notice under....