TMI Blog2018 (1) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... though a matter of law, by raising Article 141 of the Constitution of India as mandatory and resulting in nullity of the reassessment proceedings, would be going too far. The Court notices that GKN Driveshafts (supra) has not been assimilated through statute. This aspect is important because in the absence of a consequence spelt out either by statute or through judgment, it cannot be said that invariably every assessee would suffer the same amount of prejudice as to nullify or invalidate the entire assessment proceedings; much will depend on the circumstances of the case. In the present case, the assessee was issued with questionnaires calling for particulars, which it complied with. Especially therefore, there was no prejudicial consequence as is sought to be urged. For these reasons, the ground urged is not tenable and therefore rejected. Tangible material to support the reassessment notice - the original assessment was completed or framed under Section 143(1) of the Act. Furthermore, the notice under Section 147 of the Act was issued within the four years period. Clearly, the framing of assessment itself does not result in judicial application of mind and an order, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce pursuant thereof? The office is directed to register the question as a reference and lay the papers before the Hon ble the Acting Chief Justice subject to whose orders, the matter would be listed before the appropriate Full Bench. - ITA 727/2017, ITA 728/2017 and CM APPL. 31671/2017, ITA 952/2017 - - - Dated:- 22-1-2018 - Hon'ble Mr. Justice S. Ravindra Bhat And Hon'ble Mr. Justice A. K. Chawla For the Appellant : Mr. Asheesh Jain, Sr. Standing Counsel For the Respondent : Dr. Rakesh Gupta, Advocate with Mr. Somil Agarwal, Mr. Rohit Kumar Gupta and Ms. Monika Ghai, Advocates ORDER These three appeals - two by the Revenue, and, one by the assessee-Jakhotia Plastic Ltd., concern common assessment year (A.Y.) 2005-06. The substantive issue calling for decision is the applicability of Section 40(a)(ia) and (3) read with Section 194C of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The Revenue urges that the judgment in Palam Gas Service vs. Commissioner of Income Tax, (2017) 81 Taxmann.com 43 (SC), covers the issue in respect of whether the amounts deducted are paid or payable and therefore, the consequent treatment under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, the Court is of the opinion that there cannot be per se conclusion that failure to furnish reasons would invariably invalidate all the assessment proceedings. The assessee concededly reiterated its returns previously filed; the assessee was put on sufficient notice in the sense, if, it felt aggrieved, it could have approached the Court under Article 226 of the Constitution of India for an order compelling the Revenue to disclose the reasons. More crucially, the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. vs. Commissioner of Income Tax, (2003) 259 ITR 19, no doubt directs the Revenue Authorities and Tax Administration to furnish copy of the reasons and also deal with the representations through a reasoned order. However, to characterise that requirement though a matter of law, by raising Article 141 of the Constitution of India as mandatory and resulting in nullity of the reassessment proceedings, would be going too far. The Court notices that GKN Driveshafts (supra) has not been assimilated through statute. This aspect is important because in the absence of a consequence spelt out either by statute or through judgment, it cannot be said that inva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision in the case of Ranbaxy Laboratories (supra) quoted the relevant observations of the Bombay High Court in the case of Jet Airways (supra) and approved them. The case of Monarch Educational Society (supra) merely followed the two previous decisions. Refuting the arguments of the assessee, learned counsel for the Revenue relied upon the decision in the case of N. Govind Raju vs. Income Tax Officer, Ward-8(2), Bangalore, (2015) 377 ITR 243. The Karnataka High Court on that occasion differed with the view of the Bombay High Court and this Court. After expressly citing Jet Airways (supra) and Ranbaxy Laboratories (supra), it was of the view that the insertion of the Explanation in a provision is for a purpose different than the insertion of a proviso. It was stated that any explanation only clarifies the provision and cannot go beyond or against the main provisions of the Act. It was held by the Karnataka High Court in the case of N. Govind Raju (supra) as follows:- 39. Explanation is also different from Rules framed under an Act. Rules are for effective implementation of the Act whereas Explanation only explains the provision of the Section. Rules cannot go 'beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 148), notwithstanding that the reasons for such issue ('any other income') have not been given in the reasons recorded under section 148(2) of the Act. We are thus in agreement with the view taken by the Punjab Haryana High Court in the cases of Majinder Singh Kang and Mehak Finvest (supra ). 42. Considering the provision of section 147 as well as its Explanation 3, and also keeping in view that section 147 is for the benefit of the Revenue and not the assessee and is aimed at garnering the escaped income of the assessee [viz. Sun Engg.(supra )] and also keeping in view that it is the constitutional obligation of every assessee to disclose his total income on which it is to pay tax, we are of the clear opinion that the two parts of section 147 (one relating to 'such income' and the other to 'any other income') are to be read independently. The phrase 'such income' used in the first part of section 147 is with regard to which reasons have been recorded under section 148(2) of the Act, and the phrase 'any other income' used in the second part of the section is with regard to where no reasons have been recorded before iss ..... 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