TaxTMI 
TaxTMI 
2026 (3) TMI 487
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....turn of the assessee was selected for scrutiny assessment and notice u/s. 143(2) of the Act was issued to the assessee on 27.07.2011. During pendency of scrutiny assessment proceedings, the Assessing Officer (AO) issued notice u/s.148 of the Act on 29.03.2012. The reasons for reopening were provided to the assessee on 21.01.2013 (at page 6 of the paper book). Thereafter, show cause notice was issued by the AO on 25.02.2013. A copy of show cause notice is at page 7 and 8 of the paper book. The assessee filed objections against reopening of assessment on 22.03.2013. A copy of objections against reopening of the reassessment are at pages 9 to 31 of the paper book. The AO without deciding objections of the assessee proceeded to complete the assessment and vide order dated 28.03.2013 completed the assessment determining total income at Rs. 20,12,27,840/-. 2.1. The ld. Counsel for the assessee made two-fold submissions challenging validity of the assessment order. The first contention raised by Shri Sachit Jolly is, that the AO has wrongly assumed jurisdiction u/s.147 of the Act for reopening assessment when the proceedings u/s. 143(3) of the Act were pending and ample time was availa....
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....e ld. Counsel submits that the AO has made addition primarily on three counts i.e. (i) Disallowance of unexplained expenditure by credit cards Rs.4,24,83,676/- (ii) Disallowance on account of lease rental and fuel expenses of private jet Rs.9,65,61,352/- (iii) Liability of Golden Wings Pvt. Ltd. Rs.5,66,91,370/- 3.1. The ld. Counsel for the assessee submits that in so far as addition on account of unexplained expenditure by credit cards is concerned, an identical issue was decided by the Tribunal against the assessee, in assessee's own case for AY 2008-09 in ITA 8466/Del/2019 vide order dated 06.11.2024. With regard to disallowance of Rs. 9,65,61,352/- and liabilities of Golden Wings P. Ltd. Rs. 5,66,91,370/- both these issues were decided in favour of the assessee by Mumbai Bench of the Tribunal in cross appeals in the case of Golden Wings P. Ltd. in ITA No. 5979/Mum/2014 and 6228/Mum/2014 decided on 07.12.2017. He further contended that no such disallowance/addition was made by the AO from AY 2012-13 onwards in the hands of the assessee. 4. Per contra, Shri M.S Nethrapal, representing the department vehemently defended the impugned order and filed....
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....section 143(2) or he can initiate proceedings under section 147 read with Explanation 2(b) as assessment is not complete and there is a case of deemed escapement of income." Thus, the AO exercised his valid statutory option to initiate proceedings u/s 147 upon receipt of investigation material, despite the prior issuance of notice u/s 143(2) on 27.07.2011. 6. Applicability of Explanation 2(b) to Section 147 The Assessee's contention that Section 147 cannot apply because the assessment was "pending" is incorrect. The Tribunal held that such arguments would add a condition to Explanation 2(b) that was not inserted by the Legislature. The order clarifies: "The Assessing Officer has only to show that there is a case of under assessment as mentioned in either of the three clauses to Explanation 2 to section 147." "Clause (b) to Explanation 2... dearly provides that where assessment is not completed, still there could be a case of deemed escapement of income and notice under section 148(1) can be issued irrespective of fact whether... assessment proceedings by way of issuance of notice under section 143(2) are concluded or not". Hon'bl....
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....3. The AO without deciding objections of the assessee passed the assessment order dated 28.03.2013. The AO in remand proceedings before the CIT(A) has admitted the fact that the objections were not disposedof by the AO. The relevant extract of the remand report is reproduced herein below:- "6. Aggrieved with the order passed by the AO, the assessee filed an appeal before the Ld. CIT(A)-28, New Delhi. The Ld. CIT(A)-28, New Delhi vide its letter dated 07.06.2022 has directed to submit the specific and detailed comments on the ground No. 1 & 2 as well as the merit under Rule 46A:- Grounds of Appeal a) 1 & 2- Reassessment proceedings under section 147/148 of the Act were initiated by the Assessing Officer vide notice dated 27.03.2012. Further. prior to notice under section 148, the appellant had already been received notice dated 27.07.2011 issued under section 143(2) of the Act which was duly complied with by the appellant. The reason recorded was furnished to the appellant on 21.03.2013 and show cause notice u/s 144 was also issued on 25.02.2013. In response to the above notice, the appellant filed letter dated 05.03.2013 objecting to the issuance....
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....sely stated, can resort to section 147 be made even whilst the normal assessment proceedings are pending conclusion". The Hon'ble High Court answered the above question as under:- "To find the answer we must keep in perspective that every return of income filed under section 139 may not result in its active and in-depth perusal or consideration by the Assessing Officer as it may receive an automatic onward passage under section 143(1). However, once an inquiry has been initiated by the Assessing Officer, it cannot but result in either the return being accepted as having been correctly computed by the concerned assessee, or for an assessment being conducted and concluded thereon by the Assessing Officer. The provisions of section 147 would have no role to play at this stage of the proceedings. Once a return of income attracts the attention and scrutiny of the Assessing Officer, it is his bounden duty to delve into every aspect thereof. The Assessing Officer is sufficiently empowered to ask for all information necessary for framing the assessment. The only fetter on the amplitude of his discretion is that the assessment must be framed within the time limit set-down by sec....
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....ccepted as correct. It may be argued that thereafter recourse could be taken to section 147, provided fresh material had been received by the Assessing Officer after the expiry of limitation fixed for framing the original assessment. So far as the present case is concerned we are of the view that it is evident that, faced with severe paucity of time, the Assessing Officer had attempted to travel the path of section 147 in the vain attempt to enlarge the time available for framing the assessment. This is not permissible in law." 9. Thus, the Hon'ble Delhi High Court made it explicitly clear that during pendency of regular scrutiny assessment proceeding u/s. 143(3) of the Act, reassessment proceeding u/s. 147/148 of the Act cannot be initiated. Before initiating reassessment proceedings u/s.147/148 of the Act, the AO has to ensure that there are no pending assessment proceedings. In the instant case, the AO initiated parallel reassessment proceedings u/s.147/148 of the Act before completing of scrutiny assessment proceedings u/s. 143(3) of the Act and that to without deciding objections of the assessee. 10. From perusal of the written submissions filed on behalf of the Departme....