TMI Blog2019 (8) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case the AO initiated reassessment proceeding u/s 147 with regard to some issue other than the grant of deduction u/s 80-IC, such fact by itself did not extend the limitation period with regard to such issue. Particularly, in view of the fact that this very issue regarding grant of deduction u/s 80IC was the subject matter of disallowance in the intimation u/s 143(1) which was subsequently deleted by the AO in his order u/s 154. If one goes by the ld. CIT s proposition that the grant of deduction u/s 80-IC was erroneous; then it is evident from the facts of the present case that the deduction was consciously allowed by the AO by an order u/s 154/143(1) dated 09.04.2010 and therefore error, if any, had crept in the said order, and not in the latter order u/s 147/143(3) dated 09.02.2016. Respectfully following the ratio decidendi laid down by the Hon ble Apex Court in the case of CIT Vs Alagendran Finance Ltd (supra), we therefore hold that the proceedings u/s 263 had become barred on 31.03.2013 and consequently therefore the impugned order dated 22.03.2018 is held to be bad in law and accordingly quashed. Revision based on order dropping proceeding u/s 147 - We also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order u/s 154, the AO allowed the appellant s claim for deduction u/s 80IC and consequently thereafter the income was assessed at the same sum as originally returned by the appellant. Subsequent thereto, the case of the appellant was reopened u/s 147 vide notice dated 31.03.2015. The reasons provided by the AO for reopening of the assessment was that he was in receipt of information from the Investigating Wing at Delhi regarding some transactions of the appellant with M/s Bhola Motors Pvt Ltd. In the course of re-assessment proceedings, the AO made independent enquiries from M/s Bhola Motors Pvt Ltd and found that there were no discrepancies in the transactions between the appellant and M/s Bhola Motors Pvt Ltd. The AO accordingly re-assessed the income vide order dated 09.02.2016 at the same sum i.e. ₹ 3,51,57,010/- as earlier assessed u/s 143(1)/154 of the Act. . Thereafter the Ld. Pr. CIT invoked section 263 of the Act and show caused the assessee vide notice dated 02.02.2018as follows: (i) As per Section 92E of the I.T. Act, 1961, the audit report is required to be furnished by the due date of 30th September of that assessment year bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed that the notice dated 02.02.2018 issued by the ld. Pr.CIT was barred by limitation. In support of this contention, the Ld. AR placed reliance on the judgment of the Hon ble Supreme Court in the case of CIT Vs Alagendran Finance Ltd (162 Taxman 465). 5. The Ld. AR alternatively contended that the reassessment order dated 09.02.2016 of the AO could not otherwise be regarded as erroneous and prejudicial to the interests of the Revenue since no addition was made on account of the reasons for which the assessment was reopened. Referring to the decisions of the Hon ble High Courts at Delhi, Bombay and Calcutta the Ld AR of the appellant contended that when the AO did not make any addition on the issue for which he exercised reopening jurisdiction u/s 148 then he could not have proceeded with other additions for which no reasons were recorded. As a corollary what the AO could not have done directly while framing the assessment u/s 147, the ld. Pr. CIT could not have done it indirectly by exercising revisionary jurisdiction on other issues u/s 263 of the Act. - CIT Vs Infinity Infotech Parks Ltd (GA No. 1736 of 2014) (Cal HC) - CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) was factually distinguishable because in that case the original assessment was completed u/s 143(3) and not 143(1) and taking note of this fact the Hon ble Supreme Court had held that qua the issues which were the subject matter of the assessment framed u/s 143(3), the period of limitation began from the date of the original assessment order and not the subsequent re-assessment order passed u/s 147 of the Act. To buttress his contention, the ld. CIT, DR relied on the decision of this Tribunal in the case of Vijay Kr. Gupta Vs CIT (142 TTJ 650). 8. The Ld. Pr. CIT, DR further submitted that the AO was empowered to make additions on all other issues apart from which the assessment is sought to be reopened in light of Explanation 3 to Section 147 of the Act. According to him therefore even the appellant s alternative plea did not hold any ground. To support his argument, he relied on the decision of the Hon ble Delhi High Court in the case of Pr.CIT Vs Jakhotia Plastics Pvt Ltd (94 taxmann.com 89). As regards the merits of the case, he supported the order of the ld. Pr.CIT that the claim u/s 80-IC could not have been possibly made in a belated return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inclined to accept the plea put forth by the ld. CIT, DR. It is true that the scope of the adjustment to be carried out in the proceedings u/s 143(1) is limited in nature. Yet in the present case we find that even within the limited scope of the Section 143(1), the AO had applied his mind consciously to the appellant s claim made in the return for availing the deduction u/s 80IC of the Act. Having consciously applied his mind, the AO disallowed such claim and thereby in the intimation issued u/s 143(1), the income assessed was ₹ 7,19,96,170/- which was arrived after the disallowance of the claim u/s 80-IC of the Act. Thereafter, acting upon the petition u/s 154, the AO passed a speaking order dated 19.04.2010 in which the appellant s claim for deduction u/s 80-IC was allowed. We therefore find that on two separate occasions the AO had consciously applied his mind and followed the courses permissible in law with regard to allowability of appellant s claim for deduction u/s 80-IC of the Act. In the facts involved in the present case therefore it cannot be said that the before passing of either of the orders dated 30.11.2009 19.04.2010, the AO had not applied his mind to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee. This is sufficient to answer the question which has been referred. (p. 52) We, therefore, are clearly of the opinion that in a case of this nature, the doctrine of merger will have no application. 14. The Madras High Court in A.K. Thanga Pillai's case (supra), in our opinion, has rightly considered the matter albeit under section 17 of the Wealth-tax Act, 1957 which is in parimateria with the provisions of the Act. Relying on Sun Engg. Works (P.) Ltd.'s case (supra), it was held: Under section 17 of the Wealth-tax Act, 1957, even as it is under section 147 of the Incometax Act, proceedings for reassessment can be initiated when what is assessable to tax has escaped assessment for any assessment year. The power to deal with underassessment and the scope of reassessment proceedings as explained by the Supreme Court in the case of Sun Engg. [1992] 198 ITR 297 , is in relation to that which has escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder as intimation but nonetheless it is an order which is passed under Section 143 whose title heading is Assessment . We also note that Section 246A of the Act enlists various orders against which a right of appeal is provided by the Legislature and under Section 246A(1)(a), an order u/s 143(1) is specifically made an appealable order. We therefore find that if the Legislature has provided right of appeal against an intimation u/s 143(1) then there is no reason to hold that such an order is not amenable to revision u/s 263 by the Commissioner. Hence, merely because in the present case the AO initiated reassessment proceeding u/s 147 with regard to some issue other than the grant of deduction u/s 80-IC of the Act, such fact by itself did not extend the limitation period with regard to such issue. Particularly, in view of the fact that this very issue regarding grant of deduction u/s 80IC was the subject matter of disallowance in the intimation u/s 143(1) which was subsequently deleted by the AO in his order u/s 154 of the Act. If one goes by the ld. CIT s proposition that the grant of deduction u/s 80-IC was erroneous; then it is evident from the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer cannot be regarded as erroneous even if the Assessing Officer had failed to carry out necessary verification and required enquiries in respect of the share application money, as no addition has been made on account of the reasons for reopening, which were recorded before issue of notice under Section 148 of the Act. It has been held that the Assessing Officer could not have made an addition on account of share application money as no addition has been made on account of FDRs of ₹ 20 lacs. The tribunal has noticed and recorded that in the reasons for reopening it was mentioned that the assessee had made investment in form of FDRs of ₹ 20 lacs but in the assessment order passed under Section 147/143(3) of the Act it has been held that the respondent assessee had been able to show and establish the genuineness of and capacity to make the said investment. 10. Similar issue had arisen before this Court in Ranbaxy Laboratories Ltd. v. CIT, [2011] 336 ITR 136/ 200 Taxman 242/ 12 Taxmann.com 74 (Delhi). In the said case, the Division Bench had also examined Explanation 3 to Section 147, which was inserted by Finance (No. 2) Act of 2009 with retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 12. The Division Bench in Ranbaxy Laboratories Ltd. (supra) considered the judgment of the Supreme Court in the case of V. Jagamohan Rao v. CIT EPT, [1970] 75 ITR 373 and CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 / 64 Taxman 442 and has then elucidated: 18. We are in complete agreement with the reasoning of the Division Bench of the Bombay High Court in the case of CIT v. Jet Airways (I) Limited [2011] 331 ITR 236 (Bom). We may also note that the heading of section 147 is income escaping assessment and that of section 148 issue of notice where income escaped assessment . Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per Explanation 3 to reduce the claim of deduction under sections 80HH and 80-I as well. 13. On the second aspect raised by the Commissioner of Income Tax with regard to the Assessing Officer accepting the loss return of ₹ 1,02,756/-, we are of the view that the same did not require exercise of revisionary power under Section 263 of the Act. The observations of the Assessing Officer were only to the extent of stating that he had accepted the return. Benefit of carry forward of loss can be claimed in case a return is filed under Section 139(1). It is not the case of the Revenue that the assessee had tried to claim benefit of carry forward of loss on the basis of the order passed under Section 147/143(3) of the Act. 14. For exercise of power under Section 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the Assessing Officer did not make any additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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