TMI Blog2012 (12) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... i P.F. Jain, AR Revenue by:- Shri J.P. Jangid, Sr. DR ORDER PER D K TYAGI (JM):- These are cross appeals filed against the order of the learned CIT(A)-XVI, Ahmedabad for Assessment Years 2002-03. 2. The assessee has raised various grounds in its appeal. The first ground raised by the assessee reads as under:- 1. The ld. CIT(A) has erred in law and on facts in upholding the order passed u/s 143(3) r.w.s. 147 without disposing of the objections taken for re-assessment proceedings, without confining the proceedings to issues for which reopening was restored to. 2. The facts of the case are that the assessee had filed return of income on 31-10-2002 declaring income of Rs.2,05,48,800/-. The return was processed u/s 143(1) of the Act on 18-02-2003. Thereafter, it was noticed that the assessee has claimed excess deduction u/s 80HHC and therefore the assessment was reopened after recording the following reasons:- During the year under consideration the assessee has claimed deduction amounting to Rs.48,31,566/- u/s.80IB of the I.T. Act However, on the same profit, assessee has claimed deduction amounting to Rs.60,23,163/- u/s.80HHC of the I.T. Act. As per sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a survey action u/s. 133A was carried out on 21.2.2006. During the course of survey, evidences relating to your incorrect claim of deduction u/s. 80IB and also non maintenance of proper records were found. Since the assessment was already reopened no separate reopening is done for these aspects as held by various courts. That where assessment is reopened, assessment proceedings will not be limited to any particular issue but will be opened to all the issues. Since the assessment was reopened within four years where no scrutiny was made, courts have interpreted the powers of the A.O. reopening the assessment liberally. Hon'ble Gujarat High Court in the case of Praful Chunilal Patel reported in 236 ITR has elaborately dealt this aspect. In view of this you are requested to submit complete details and explanation for this assessment." 2.1 Assessee replied on the Issue of reopening by letter dated 23- 03-2006 which is quoted as under: "Notices u/s. 143(2)/142(1) were issued on dated 05/09/2005 and with these notices, assesses was supplied with the reasons recorded for reopening the case u/s. 147 of the I.T. Act. In the submission dated 15/10/2005, your kind attention was drawn to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is set aside in the assessment is only the previous underassessment and not the whole original assessment. The Hon'ble Apex court's observation was with regard to the assessment completed u/s.143(3). In that case a particular view has taken after detailed examination in the original assessment and in the reopened assessment a different treatment was given even when the same was not the point of income escaping assessment. However the same does not apply in the case of assessee where no assessment was completed u/s. 143(3) of the I.T. Act and none of the issue was examined earlier therefore assessee's reliance on this decision is misplaced. There are several decisions which clearly held that once assessment is reopened, it is fully opened on all issues, some of these decisions are reported at: 1. 121ITR69(AP) 2. 142/877 (Madras) 3. 188/612(Kerala) 4. 176/529 (SC) From the above, it can be seen that in the reopened assessment, any issue can be looked into, particularly, when assessment was not completed u/s. 143(3) of I.T. Act. Assessee further cited the decision of Bombay high court reported in 266 ITR 694 where intimation u/s. 143(1) was held to be an order. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... speaking order before passing assessment order and as result the decision of Supreme court in the case of G.K.N. Driveshaft (259 ITR 19) has been violated. The Bombay High Court in the case of Allana Cold Storage Ltd. reported in [2006] 287 ITR 1 has quashed the assessment order because in the said case the objections against reopening were not considered by passing a speaking order. The arguments of the appellant that the objections raised by the appellant have not been disposed off are not correct. The AO has disposed off the objections on page 4 5 of the assessment order. The AO has mentioned that the appellant was communicated about the reopening of the assessment vide letter dated 17.03.2006. Further the AO informed the assessee that the assessment was reopened u/s 147 explanation 2(b) and subsequently survey was conducted on 21.02.2006. During survey evidence relating to incorrect claim of deduction u/s 80IB and non maintenance of records was found. The AO informed the assessee that since the assessment was already reopened no separate reopening was done for deduction u/s 80IB. The AO relied on the decision of Gujarat High Court in the case of Praful Chunilal Palel repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 263. It is nowhere held that the intimation is also an assessment. The third ground is dismissed. The fourth ground is that no discussion and no queries were made in respect of various issues mentioned in the order and further the case laws cited and relied upon in the assessment order were never discussed and no queries for which addition have been made, were made in the course of hearing. This argument of the appellant is not correct. The AO gave a very detailed show cause notice on 17.03.2006. This ground is also rejected. 5. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before us. At the time of hearing, the learned counsel of the assessee submitted that the proceedings u/s 147 were initiated on the ground that the assessee has claimed excess deduction u/s 80HHC, therefore, the AO had reason to believe that income chargeable to tax has escaped assessment but while passing the order u/s 143(3) read with section 147, the claim of deduction u/s 80HHC was not disturbed and the AO accepted the returned income claiming the deduction u/s 80HHC of the Act . Once this was done, the AO has no jurisdiction to go on making further additions, while t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 AO may find to have escaped assessment, and which may come to his notice subsequently, in the course of lings under s. 147. It is a different story that for such other income, the may have recourse to such other remedies, as may be available to him under aw, but then, once it is found, that the income, regarding which he had "reason to believe" to have escaped assessment, is not found to have escaped assessment, the AO is required to withhold his hands, at that only. Once the AO e 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. CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P H) concurred with; Asstt. CIT vs. Rajesh Jhaveri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment and in respect of which the AO has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe is not assessed or reassessed, it would not be open to the AO to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under s. 148(2), the AO accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of s. 147 w.e.f. 1st April, 1989 clearly stipulated that the AO has to or reassess the income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of the proceedings. However, if after issuing a notice under s. 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 to independently assess some other income. If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC) : relied on. The AO may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the assessment proceedings though the reasons for such issue were not included in the notice; however, if after issuing a notice under s. 148, the AO 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 matter of fact not escaped assessment, it is not open to him independently to assess some other income. 8. In view of above and following the aforesaid decisions, we have no he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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