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2023 (1) TMI 924 - AT - Income TaxReopening of assessment u/s 147 - reasons to believe - addition on account of cash deposit in the bank account - as per AO since, the assessee neither filed his return of income nor furnished any evidence/documents/explanation in regard to such commodity transaction therefore reasons to believe that the transaction were made out of his undisclosed income and profit/loss on such transaction remained explained by the assessee - HELD THAT:- AO has not made addition on the issue recorded in the reasons for reopening the case of the assessee but has made addition altogether on a different account by holding that the assessee could not explain the source of cash deposit in the bank account and in this regard as per provisions of section 147, the AO can assess or reassess 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 of the Act. Once the AO came to the conclusion, that the income, with respect to which he had entertained "reason to believe" to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment. In the case of CIT vs. Dr. Devendra Gupta [2008 (8) TMI 125 - HIGH COURT RAJASTHAN] held Reassessment-Scope-Addition in respect of items other than the one on which notice in given-Income alleged to have escaped assessment in reasons recorded not having been actually found to. Thus on the making of an assessment or 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 the assessment was sought to be reopened on the 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. Explanation-3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. 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 to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. - Decided in favour of assessee.
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