TMI Blog2022 (12) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion. It is in view of forgoing admitted factual position that we hold that the Assessing Officer had not made any addition pertaining to his three folded reasons of reopening. That being the case, we quote CIT Vs. Jet Airways India Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] holding that such a reopening is not sustainable in law - Decided against revenue. - ITA No.2341/PUN/2017 - - - Dated:- 8-8-2022 - Shri S.S. Godara, JM And Shri Dr. Dipak P. Ripote, AM For the Assessee : Shri Himanshu Gandhi For the Revenue : Shri Arvind Desai ORDER PER S. S. GODARA, JM : 1. This Revenue s appeal for A.Y. 2012-13 is directed against the CIT(A) - 1, Aurangabad s order dated 28/07/2017 passed in case No. ABD/CIT(A)-1 /278/2016-17 involving proceedings u/s. 143 (3) r.w.s. 147 of the Income Tax Act, 1961 ; in short the Act . Heard both the parties. Case file perused. 2. The Revenue pleads the following substantive grounds in the instant appeal. 1. On the facts and in the circumstances of this case, the CIT(A) has erred in not upholding the addition at Rs. 35,00,000/- u/s 68 of the Income tax Act, 1961, whereas creditor company s loan from Shri S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is letter has been filed with abundant caution and there is no requirement mandated in Rule 27 for filing of such letter. We want to support the order of CIT(A) on ground that when no addition made on basis of reason recorded for reopening, then no other addition can be made in reassessment proceeding CIT V/s Jet Airways (I) Ltd. [2010] 195 taxmann 117(Bom HC). This proposition was also mentioned in our bullet point filed on 12.04.2022. We would further like to clarify that we are taking this proposition before the Hon ble Income Tax Appellate Tribunal just to support the order of CIT(A) and not to claim any further relief. Hence, even this issue is not raised before CIT(A), can be taken under Rule 27 of Income Tax Appellate Tribunal just to support the order of the CIT(A) in view of decision of Hon ble Bombay High Court in case of Peter Vaz V/s CIT [2021] 128 taxmann.com 180 (Bombay) (Relevant PARA 38). 4. Mr. Desai vehemently argued that the assessee s instant application under Rule 27 is not maintainable since the CIT(A) has nowhere decided the reopening issue against him. We find that hon ble jurisdictional high court s decision in Peter Vaz (supra) has already rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st content by merely using the word and . The words and , as well as also have been used together and in conjunction. 15. The Shorter Oxford Dictionary defines the expression also to mean 'further, in addition, besides, too'. The word has been treated as being relative and conjunctive. Evidently, therefore, what Parliament intends by use of the words and also is that the AO, upon the formation of a reason to believe under s. 147 and the issuance of a notice under s. 148(2) must assess or reassess : (i) such income; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the AO has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to a situation where an assessment has already been made but the AO has reason to believe that there is underassessment on account of the existence of any of the grounds contemplated by Expln. 1 to s. 147. The Supreme Court adverted to the judgment in V. Jaganmohan Rao vs. CIT (1970) 75 ITR 373 (SC), which held that once an assessment is validly reopened, the previous underassessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. The Court held that the object of s. 147 enures to the benefit of the Revenue and it is not open to the assessee to convert the reassessment proceedings as an appeal or revision and thereby seek relief in respect of items which were rejected earlier or in respect of items not claimed during the course of the original assessment proceedings. 18. The judgment in V. Jaganmohan Rao vs. CIT (supra) dealt with the language of ss. 22(2) and 34 of the Act of 1922 while the judgment in Sun Engg. Works (P) Ltd. (supra) interprets the provisions of s. 147 as they stood prior to the amendment on 1st April, 1989. 19. The effect of the amended provisions came to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion, that any income chargeable to tax, which, according to his 'reason to believe', had escaped assessment for any assessment year, did not escape assessment, then, the mere fact that the AO entertained 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 AO may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under s. 147. 21. Parliament, when it enacted the Expln. (3) to s. 147 by the Finance (No. 2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Expln. 3 to s. 147,. Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain Courts that the AO has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment. The corrective exercise embarked upon by Parliament in the form of Expln. 3 consequently provides that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under s. 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 23. 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 s. 147 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 s. 147 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 AO may assess or reassess such income and also any other ..... 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