TaxTMI 
TaxTMI 
2026 (5) TMI 599
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....ground for which the assessment has been reopened and hence the assumption of jurisdiction is bad in law and invalid. 1.3. It is submitted that when no addition is made in respect of the alleged belief on the basis of which the assessment is reopened, the AO cannot proceed to assess other income or make additions in respect of other items of income not included in reasons for reopening of the assessment. The Appellant prays that the reassessment order may kindly be quashed as illegal and bad in law. II. ADDITTION/ DISALLOWANCE OF INTEREST EXPENSES OF RS. 11,88,050/- 2.1 On the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in upholding the denial of deduction for Interest expense Rs. 11,88,050/- by the learned Assessing Officer. 2.2 The learned Assessing Officer and the CIT(A) failed to appreciate the submissions made and explanations offered to establish that the relevant conditions for deductibility of Interest Expenses have duly been complied with by the Appellant. 2.3 The learned Assessing Officer and the learned CIT(Appeals) failed to appreciate that there exists a direct nexus between....
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....d inasmuch as no addition has been made on the basis of the reasons recorded. It was contended that, in such circumstances, the Assessing Officer cannot proceed to make additions on other issues, in view of the binding judgment of the Hon'ble jurisdictional High Court in CIT v. Jet Airways (India) Ltd. (331 ITR 236).The learned Departmental Representative, on the other hand, relied upon the orders of the lower authorities. 4.1 Thus, the primary issue which arises for determination is whether, in a case where no addition is ultimately made in respect of the issue for which the assessment was reopened, the Assessing Officer retains jurisdiction to make additions on other issues. 5. We have heard the rival submissions of the parties and perused the relevant material placed on record. In the case the reasons recorded has been filed by the assessee, which is available on paper book at page 9 to 11. A perusal of the reasons recorded for reopening clearly reveals that the formation of belief by the Assessing Officer was solely predicated upon alleged unexplained cash deposits in the bank accounts of the assessee during the demonetisation period. For ready reference said reasons ....
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....,32,300/- However, the assessee has admitted a total turnover of Rs. 98,01,66,210/-. In this regard, vide notice dated 03.03.2022, the assessee was requested to explain the nature and sources of the cash deposits of the difference amount of Rs. 23,64,66,090/- [1,21,66,32,300 98,01,66,210] and show cause why the amount of Rs. 23,64,66,090/- should not be added to your total income as unexplained cash credits. In response, the assessee vide reply dated 07.03.2021 submitted that the Assessee, is into business of petrol pump station. It sells, Petrol, Diesel, CNG and related petroleum products. The said pump station is under agency of Bharat Petroleum Corporation Limited (BPCL). Petrol pump station is in the heart of the city. Mostly the customers are retail customers/ citizens staying in the city limits. The turnover declared for such petrol pump station for AY 2017-18 is Rs. 96,02,30,547/-. Further, other income declared is Rs. 70,002/-. Thus, total turnover for such business is Rs. 96,03,00,549. It is further submitted by the assessee that the total cash deposits in his accounts is Rs. 84,47,81,758/- only. The assessee has alleged that the cash deposit rep....
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....t to exercising jurisdiction in the absence of the foundational requirement contemplated under section 147. The relevant finding of Hon'ble High Court is reproduced as under: 12. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recompilation, the Assessing Officer has to serve on the assessee a notice under sub-section (1) of section 148; (iii) The Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section; and (iv) Though the notice under section 148(2) does not include a particular issue with respect to which income has escaped assessment, he may nonetheless, assess or reassess the income in respect of any issue which has ....
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.... also" cannot be read as being in the alternative. On the contrary, the correct interpretation would be 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. 15. The Shorter Oxford Dictionary defines the expression "also" to mean 'further, in addition, besides, too'. The word has been treated as being relative and conjunctive. 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 course of the proceedings under the section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has ....
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....ssessment within the meaning of the section when it has not been charged in the hands of an assessee during the relevant assessment year. The expression "assess" refers to a situation where the assessment of the assessee for particular year is, for the first time, made by resorting to the provisions of section 147. The expression "reassess" refers to a situation where an assessment has already been made but the Assessing Officer has reason to believe that there is under assessment on account of the existence of any of the grounds contemplated by Explanation 1 to section 147. The Supreme Court adverted to the Judgment in V.Jaganmohan Rao v. CIT [1970] 75 ITR 373, which held that once an assessment is validly reopened, the previous under assessment is set aside and the Income-tax Officer has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. The Court held that the object of section 147 endures 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 cla....
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....esses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then, only in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under section 147. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the Assessing Officer were to come to the conclusion, that any income chargeable to tax, which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact that the Assessing Officer entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under section 147." 21. Parliament, when it enacted the Explanation (3) to section 147 by the Finance (No. 2)....
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....ground that income had escaped assessment on a certain issue, the Assessing Officer could 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 Act (No. 2) 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 assessor 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 ....