TMI Blog2017 (4) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... h other issue, that comes to his notice subsequently, albeit, in the course of proceedings held under Section 147 of the Act. In other words, 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. In this case, that the impugned order is assailed on the ground that the concerned authority lacked jurisdiction in the matter. The fact that this charge is established is evident, upon a bare perusal of the record of the case. The foregoing discussion qua the merits of the case would show that the impugned order was passed by concerned authority, even though, the necessary jurisdictional facts were absent and without dealing with the objections filed by the assessee qua the notice issued to it for reopening the assessment. Accordingly, the objection advanced by the Revenue, in this behalf, would have to be rejected. Resultantly, in view of the discussion above, the impugned order is set aside. - Decided in favour of assessee - Writ Petition No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on 07.05.2012, the petitioner/assessee was served with a notice under Section 148 of the Act by respondent No.2. The notice, inter alia, alluded to the fact that respondent No.2 had reason to believe that the petitioner/assessee's income for AY 2008-09, had escaped assessment, within the meaning of Section 147 of the Act. The petitioner/assessee was, thus, put to notice that there was a proposal to reassess its income for the said assessment year and therefore, it was required to furnish within a period of thirty (30) days from the date of service of the notice, a return of its income for the relevant assessment year, in the prescribed form to respondent No.2. 4.2. In response thereto, the petitioner/assessee vide communication dated 04.06.2012, wrote to respondent No.2, that it should treat the return already filed as the return, which, it was required to file, in response to the notice issued under Section 148 of the Act. Furthermore, a request was made to respondent No.2 to furnish reasons for reopening the assessment under Section 148 of the Act. 4.3. It appears, that thereafter, on 24.07.2012, respondent No.2 called upon the petitioner/assessee to attend his offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment could not be undertaken by way of fishing or roving enquiry, as if, it was a scrutiny assessment. 5.2. The petitioner/assessee was at pains to highlight the fact that the condition for reopening of assessment, even where it is within a period of four (4) years from the end of the relevant assessment year and pertains to a return, which was processed under Section 143(1) of the Act, the Assessing Officer's belief that the income chargeable to tax had escaped assessment, must have a live link with the formation of such belief. 6. Notwithstanding the aforesaid stance, the petitioner/assessee supplied the information called for by respondent No.2, which included: the books of accounts, and the copies of bank statements and the mutual funds statement. 6.1. The record shows that the objections filed by the petitioner/assessee were not disposed of. On the other hand, respondent No.1, without waiting for the objections to be disposed of, passed the impugned order. 7. As indicated at the outset, the petitioner/assessee's taxable income was pegged at ₹ 2,68,64,646/-, on which, it was called upon to pay a tax, equivalent to ₹ 24,58,189/-. The impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2011] 331 ITR 236 (Bom) ii) CIT V. Mohmed Juned Dadani - Manu/GJ/0061/2013 iii) Oriental Bank of Commerce V. Additional Commissioner of Income Tax - Manu/DE/1935/2014. 11. I may also say that in so far as the first submission was concerned, which is that, objections were not disposed of, as was required under law, reliance was placed on the judgment of the Supreme Court in : GKN Drive Shafts (India) Limited V. ITO - 259 ITR 19 (SC). 12. On the other hand, Mr.Chopda, who appears for the Revenue, emphasised that the impugned order was valid in the eyes of law. Learned counsel further submitted that the objections filed by the petitioner/assessee had been duly considered, while passing the impugned order. Furthermore, learned counsel submitted that the impugned order was appealable under Section 246A of the Act, and, therefore, the instant Writ Petition ought not to be entertained, as an alternative remedy was available to the petitioner/assessee. 12.1. Mr.Chopda further submitted that the impugned order is viable, both on law and on facts, as not only were the objections dealt with in the impugned order, but also on account of the fact that the statutory scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the AO has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years. 14.3. Thus, having regard to the observations made by the Supreme Court, it is clear that the impugned assessment order cannot be sustained, as the objections have not been disposed of. 15. Therefore, had the counsel for the petitioner/assessee not advanced the second submission, which I would deal with hereafter, I may have been inclined to set aside the assessment order on that limited ground alone. Since, the second submission has been made, which is substantive in nature, I would like to deal with the same. 16. In so far as the contention of the petitioner/assessee is concerned, that the impugned order does not seek to reassess its income qua the issue, which formed the basis for reopening the assessment - the respondents/Revenue sought to rely upon Explanation (3) introduced in Finance (No.2) Act, 2009, albeit, with retrospective effect, i.e., 01.04.1989. Besides the explanation, reliance was also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice 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. . (emphasis is mine) 18. A perusal of the aforesaid extract of Section 147 of the Act would show that, if, the Revenue makes an attempt to reopen the assessment, within a period of four (4) years from the date, when, the relevant assessment year ends, then, all that the Assessing Officer has to show is that, he has reason to believe that any income chargeable to tax has escaped assessment for the concerned assessment year and while doing so, he is also empowered to assess any other income, which has escaped assessment and, which comes to his notice, subsequently, albeit, during the course of the assessment proceedings. 18.1. It is, only if, the original assessment is made under Section 143(3) or under Section 147 and, an attempt to reopen the assessment is made after the expiry of the four (4) years from the end of the relevant assessment year, the first proviso to Section 147 of the Act kicks in, which mandates, that no reassessment proceedings can be initiated, unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual funds (from ₹ 2,52,00,000/-, for the year ending 31.03.2007 to ₹ 2,26,21,274/-, for the year ending 31.03.2008), which had not been shown/offered to tax in the form of gain or loss, on account of the sale of investments made in mutual funds. This information, perhaps, was available on record, as the assessee, in his objections dated 30.08.2012, adverted to the fact that the reduction in investment was brought about consequent to redemption being made at par. Respondent No.2 having, perhaps realised the futility of going down this path and, having, during the course of reassessment proceedings, discovered this aspect of the matter, chose to tax the forfeited share application money, on the ground that, it was a receipt, which was taxable in the hands of the petitioner/assessee under the provisions of Section 28(iv) of the Act. 20. The petitioner/assessee, however, challenges this action of the respondents/Revenue, on the ground that it was not permissible for the respondents/Revenue to tax the forfeited share application money, by taking recourse to provisions of Section 147 read with Section 148 of the Act, unless it assesses to tax that income with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the Punjab and Haryana High Court in the matter of : Majinder Singh Kang V. Commissioner of Income-tax, [2012] 25 taxmann.com 124 (Punjab Haryana). 23.2. In my opinion, with respect, the Court, in rendering the judgment in Majinder Singh Kang's case, 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 aspect of the matter has also been brought to fore by the Bombay High Court in : CIT V. Jet Airways - [2011] 331 ITR 236 (Bom). 23.4. The relevant observations made in this behalf are extracted hereafter : ....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 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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