TMI Blog2019 (8) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... tity - As regarding the first argument of the petitioner that the reassessment in fact is of a different entity, this too is not liable to be accepted, inter alia, for the reasons that it still remains a family firm. Initially the father, mother and two sons were the partners and now all what has happened by the reconstitution of the firm is that it remains a firm of father and two sons. Practically it is the same firm, and in any case the present partners cannot escape the liability. From the records presently before this Court also, it is very clear that the dominant partners of the firm continue to be the same. To that extent, there has been no change in the firm, particularly as to the control of the affairs of the firm. The father i.e. Jitendra Kumar Gupta had 10% share of the firm, whereas the remaining 90% share was divided equally between the two sons i.e. Aditya Kumar Gupta and Ashish Kumar Gupta having 45% share each. Thereafter when in the year 2005, the mother was also included as a partner, the sons continued to retain their share and only the share of Jitendra Kumar Gupta was now divided between him and his wife. In the newly constructed firm in the year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and Sri Ashish Kumar Gupta as partners, with its office at Plot No. 11, Sector-4, Sidcul Integrated Industrial Estate Ranipur, Haridwar and the firm M/s Sharda Exports which has the above three partners and Smt. Meenakshi Gupta as partner was dissolved on 31.3.2009. These facts are being stated here as one of the submissions of the learned counsel for the petitioner is that post 2009 there is a different firm than what was for the assessment year 2005-06 to assessment year 2008-09. 4. The firm is in the business of manufacture and export of handmade, hand tufted and hand woven carpets, inter alia, at its factory at Ranipur, Haridwar. For the assessment years 2005-06 to 2008-09 the petitioner claims benefit under Section 80-IC of the Income Tax Act, which is given to a manufacturing unit which derives its income from the manufacturing activity carried out in certain category State . Admittedly for the assessment years, Uttarakhand was one of the State which came under such category and manufacturer was liable to get benefit under Section 80-IC of the Income Tax Act. 5. It may also be necessary to mention here that the Government of India in order to boost indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner for assessment year 2006-07, 2007-08 and 2008-09 as well, which have all been challenged before this Court. 9. The reasons for the reassessment were assigned by the Revenue, by disclosing the material it had discovered from the survey made in the factory premises at Haridwar and other places, which showed that there was no manufacturing activity being carried out at Haridwar in Uttarakhand. In the reasons assigned by the Revenue subsequent to the survey, it has been stated in detail as to what was reflected from the books of accounts and other documents in the survey. The material discovered showed that carpets were actually being exported from Meerut and not from the Haridwar unit. Washing activity and final stage activity was also being carried out at Meerut. Whereas the petitioner claims that apart from spinning and dying of the carpet, all other work are done in Haridwar and according to the learned counsel for the petitioner the major work of manufacturing was being carried out at Haridwar. Yet the consumption of electricity at that time was 3-4 units per day! The exemption claimed by the petitioner for the Assessment Year 2008-09 was Rs. Thirty Seven Crores od ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under what limitations, reassessment can be done is provided under Section 147 to Section 153 of the Income Tax Act. The essential condition for exercising reassessment is that the assessing officer must have a reason to believe that an income chargeable to tax has escaped assessment, for which notices were liable to be given under Section 147/148 of the Act. As there were conflicting opinions of different High Courts as to the limitations on reassessment, i.e. precisely as to whether an assessing officer can also determine on other reasons for reassessment i.e. the reasons other than what were given in the notice (under Section 147/148 of the Act), therefore in order to remove any doubt,Explanation 3 was added to Section 147 by Finance (No. 2) Act of 2009 w.e.f. 01.04.1989. Explanation 3 of Section 147 reads as under:- Explanation 3. For the purpose of assessment or reassessment under this Section, the Assessing Officer may assess or reassess the income in respect of any issue which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this Section, notwithstanding that the reasons for such issue have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income and also any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words and also are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words and also by the Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he father i.e. Jitendra Kumar Gupta had 10% share of the firm, whereas the remaining 90% share was divided equally between the two sons i.e. Aditya Kumar Gupta and Ashish Kumar Gupta having 45% share each. Thereafter when in the year 2005, the mother was also included as a partner, the sons continued to retain their share and only the share of Jitendra Kumar Gupta was now divided between him and his wife. In the newly constituted firm in the year 2005 the share of the partners was as under: 1. Shri Jitendra Kumar Gupta - 7% 2. Smt. Meenakshi Gupta - 3% 3. Shri Aditya Kumar Gupta - 45% 4. Shri Ashish Kumar Gupta - 45% 20. In the newly constructed firm in the year 2009, although the share of the partners is not stated in the writ petition, but the fact is clear that all the earlier three partners i.e. Jitendra Kumar Gupta, Aditya Kumar Gupta and Ashish Kumar Gupta continue to be dominant partners of the firm. 21. In any case, this argument is always available for the petitioner, which can be taken before the assessing authority, which shall not be prejudiced by any remarks in this regard. 22. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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