TMI Blog2021 (12) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, and such issue comes to his notice subsequently in the course of proceedings under this Section , as the consultancy receipts was very much disclosed by the assessee in the income and expenditure account which was filed along with the original return of income itself. If at all there is any error in the assessment order framed by the ld. AO, it can only be in the original scrutiny assessment order u/s.143(3) of the Act dated 13/12/2010 and not in the re-assessment order framed u/s.143(3) r.w.s. 147 of the Act dated 22/02/2016. Hence, the show-cause notice issued by the ld. CIT(Exemptions) dated 28/02/2017 is squarely beyond the period of two years from the end of the financial year in which the 143(3) assessment was completed as per Section 263(2) of the Act. Hence, it could be safely concluded that the re-assessment framed by the ld. CIT(Exemptions) on 21/03/2018 is squarely barred by limitation. See ALAGENDRAN FINANCE LTD. [ 2007 (7) TMI 304 - SUPREME COURT] - Decided in favour of assessee. - ITA No. 3522/Mum/2018 - - - Dated:- 23-12-2021 - SHRI M.BALAGANESH, ACCOUNTANT MEMBER And SHRI AMARJIT SINGH, JUDICIAL MEMBER Assessee by : Shri Yogesh Thar Revenue by : D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed income resulted in Nil‟ even in the re-assessment proceedings. 3.1. This re-assessment was sought to be revised by the ld. CIT(Exemptions) by issue of show-case notice u/s.263 of the Act dated 28/02/2017. The assessee had shown consultancy fee which was considered as business income in A.Y.2013-14. Similar consultancy fee was also received by assessee amounting to ₹ 75,65,833/- during the year under consideration which according to ld. CIT(Exemptions), should also be considered as business income. Since this was not done by the ld. AO in the re-assessment framed on 22/02/2016, in the opinion of the ld. CIT(Exemptions), the re-assessment order of the ld. AO is erroneous and prejudicial to the interest of the Revenue and hence section 263 proceedings were initiated. 3.2. We find that assessment was originally completed u/s.143(3) of the Act on 13/12/2010. Admittedly, the receipt of consultancy fees of ₹ 75,65,833/- has been duly reflected in the income and expenditure filed by the assessee along with the original return of income filed on 25/03/2009. So, the Assessing Officer had two innings - once during the original scrutiny assessment proceedings an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 of the Act is clear and unambiguous as in terms thereof doctrine of merger applies only in respect of such items which were the subject-matter of appeal and not which were not. The question came up for consideration before this Court in CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297. Therein the assessee raised a contention that once jurisdiction under section 147 of the Act is invoked, the whole assessment proceeding became reopened, which was negatived by the Court opining : Section 147, which is subject to section 148, divides cases of income escaping assessment into two clauses, viz., (a) those due to the non-submission of the return of income or non-disclosure of true and full facts, and (b) other instances. Explanation (1) defines as to what constitutes escape of assessment. In order to invoke jurisdiction under section 147(a) of the Act, the ITO must have reason to believe that some income chargeable to tax of an assessee has escaped assessment by reason of the omission or failure on the part of the assessee either to make a return under section 139 for the relevant assessment year or to disclose fully and truly material facts necessary for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 75 ITR 373 interpreting the provisions of section 34 of the Act was reproduced which reads as under: 'Section 34 in terms states that once the Income-tax Officer decides to reopen the assessment, he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains. It is, therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22, the previous underassessment is set aside and the whole assessment proceedings start afresh. When once valid proceedings are started under section 34(1)(b), the Income-tax Officer had not only the jurisdiction, but it was his duty to levy tax on the entire income that had escaped assessment during that year'. (p. 643) 10. There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would start afresh but the same would not mean that even when the subject-matter of reassessment is distinct a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. . . . (p. 319) It was furthermore held : As a result of the aforesaid discussion, we find that in proceedings under section 147 of the Act, the Income-tax Officer may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under section 148 and where reassessment is made under section 147 in respect of income which has escaped tax, the Income-tax Officer's jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (supra), it was held: Under section 17 of the Wealth-tax Act, 1957, even as it is under section 147 of the Income-tax 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 assessment, and does not extend to reopening the entire assessment for the purpose of redoing the same de novo. An assessee cannot agitate in any such reassessment proceedings matters forming part of the original assessment which are not required to be dealt with for the purpose of levying tax on that which had escaped tax earlier. Cases of underassessment are also treated as instances of escaped assessment. The order of reassessment is one which deals with the assessment already made in respect of items which are not required to be reopened, as also matters which are required to be dealt with in order to bring what had escaped in the earlier order of assessment, to assessment. An assessee who has failed to file an appeal aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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