TMI Blog2023 (1) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... uently, in the course of proceedings under section 147 of the Act. Once the AO came to the conclusion, that the income, with respect to which he had entertained reason to believe to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment. In the case of CIT vs. Dr. Devendra Gupta [ 2008 (8) TMI 125 - HIGH COURT RAJASTHAN] held Reassessment-Scope-Addition in respect of items other than the one on which notice in given-Income alleged to have escaped assessment in reasons recorded not having been actually found to. Thus on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law as well as on the facts of the case in confirming the addition of Rs. 7,65,000/- on account of Long ash deposits in the bank account as alleged undisclosed income. Hence the addition so made by the AO and confirmed by the ld. CIT (A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A, B, C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 5. The appellant prays your honors indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing. 2. The brief facts of the case are that the assessee is having income from trading of commodity and other sources. He has not filed his return of income originally being the income below taxable limit. The ld. AO has issued the notice u/s 148 on dated 26.03.2018 on the reason that Since, the assessee neither filed his return of income nor furnished any evidence/documents/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (2) of section 148. In this case it is seen that the AO had opened the case on the ground that as per information the assessee has entered into commodity transactions and not filed the return of income for the assessment year 2011-12. During assessment the assessee submitted that he was doing commodity trading through the Reliance Money office and had suffered loss. The reasons recorded by the AO were therefore correct. But despite so called loss the appellant has made cash deposits in the bank account amounting to Rs. 7,65,000/-. The appellant has failed to give an explanation for the same during assessment and appellate proceedings. The AO has rightly held these to be his unaccounted income. In view of the clear provisions of section 147 read with Explanation 3 the addition made by the AO is upheld. This ground of appeal is dismissed. Now the assessee has preferred the present appeal before this Tribunal. 3. Ground Nos. 1 2 raised by the assessee are inter connected and inter related and relate to challenging the order of the ld. CIT (A) on the ground that assessment order passed under section 143(3)/148 dated 11.12.2018 as well as notice under section 148 are bad in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is a different story that for such other income, the AO may have recourse to such other remedies, as may be available to him under law, but then, once it is found, that the income, regarding which he had reason to believe to have escaped assessment, is not found to have escaped assessment, the AO is required to withhold his hands, at that only. Once the AO came to the conclusion, that the income, with respect to which he had entertained reason to believe to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment.-CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P H) concurred with. (b) In the case of CIT vs. Jet Airways (I) LTD 331 ITR 0236 (Bom): Held Reassessment-Scope-Items unconnected with escapement for which notice was issued-When Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings under s. 147.-Vipan Khanna vs. CIT (2002) 175 CTR (P H) 335 : (2002) 255 ITR 220 (P H) and Travancore Cements Ltd. vs. Asstt. CIT (2008) 219 CTR (Ker) 359 : (2008) 305 ITR 170 (Ker) held no longer good law. The heading of s. 147 is Income escaping assessment and that of s. 148 Issue of notice where income escaped assessment . Sec. 148 is supplementary and complimentary to s. 147. Sub-s. (2) of s. 148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of notice to the assessee before the AO proceeds to assess, reassess or recomputed escaped income. Sec. 147 mandates recording of reasons to believe by the AO that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o correct a foundational/substantial error as it was meant so as to meet jurisdictional requirement-Therefore, both impugned notice and impugned order were quashed and set aside-It was made clear that this order would not prohibit Revenue from issuing a fresh notice for reassessment, if requirement of Ss 147/148 were satisfied, including limitation period therein Kindly refer Sumit Balkrishan Gupta v/s ACIT 104 CCH379(Bom.HC)(2019). Thus, cannot be said that it is an irregularity curable u/s. 292B- (h) In the case of Saraf Gramodyog Sansthan vs. ITO 108 ITD 115(Agra)it has been held that Further, AO had referred to wrong bank account number in the reasons recorded by him-Sec. 292B cannot take care of any mistake in recording the reasons because that section refers to return of income, assessment, notice, summons or other proceedings -It does not refer to the reasons recorded by the AO-Any invalid proceedings for assumption of jurisdiction cannot be corrected by s. 292B (i) In the case of Vikram Singh vs. Income Tax Officer (2021) 63 CCH 0044 Lucknow Trib Reassessment-Escapement of income-Case of assessee was reopened u/s. 147 for deposits in bank amounting Rs.11,00,000-He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sustainable-Held, in case of GKN Driveshafts (India) Ltd. Versus Income-Tax Officer and Ors., (2003) 259 ITR 19 (SC) it was held that assessing officer is bound to furnish reasons within a reasonable time and noticee is entitled to file their objection to such notice and assessing officer is bound to dispose of same by passing a speaking order-Though Explanation 3 inserted by amendment empowers assessing officer to assess income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in course of proceedings under Section 147 notwithstanding that reasons for such issue have not been included in reasons recorded under Sub-Section 2 of Section 148, prerequisite is there should be a valid notice-Admittedly, in case on hand, notice was held to be not sustainable-If that be so, assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during reassessment proceedings- Foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid entire edifice sought to be raised on such foundation has to collapse-Tribunal was right in granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible that there may be no approval in original letter or documents. The document of approval may be in the photocopy. And it is also appear that the approval has been given or reach in the office of the ld. AO after the 31.03.2018, the same was much after the reasons recorded. How the approval can be given of all the 36 different assessee s in one documents, all are the independent or separate assessee and reason are different. Thus it all shows how the wrong and illegal manner have been adopted by all the authorities. On this preposition and issue kindly refer the decision of this Honble ITAT in the case of Sh. Satya Naraya Bairwa v/s ITO in ITA No 867 869/Jp/2018 dt. 15.09.2021 Copy is enclosed, wherein under the same facts and circumstances the Honble ITAT has held that 20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos. 7-8 of the paper book and also from the assessment record placed before us, we found that he has given one consolidated approval of 56 different assessee s in one shot through one letter dated 29.03.2016 which is even not signed by him but signed by ITO (T J), who is not a competent authority to give and sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, than why the letter dt. 25.03.2018 was sent again for approval u/s 151 and why the ld. Pr. CIT office has given the approval on 27/28/.03.2018 again. The ld. CIT(A) or AO nowhere has state that the letter dt. 27/28.03.2018 was bogus or incorrect. Further our arguments are the same as has given in the order of Sh. Staya Narayn Bairwa;s order so kindly consider the same here also. Therefore all the proceedings are illegal, invalid, void-ab-initio and liable to be quashed. 4. No income escaped: further it is submitted that the notice u/s 148 can be issued only when there is any escapement of income because S.147 provides that If the Assessing Officer has reason to believe that an income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income because the assessee has not earned income of Rs.10,00,000/- on the commodity transaction as admitted by the ld. AO himself. Which shows that there was no escapement of income by the assessee. Then it cannot be said that there is the escapement of income by the assessee nor proved then the notice issued u/s 148 is invalid. 5. Reason to believe and not reason to suspect: 5.1 It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more redeeming fact which had direct nexus with the subsequent re-assessment proceedings and ramification of the same had culminated into re-assessment orders was the impugned order where AO rejected the objections submitted by Assessees pursuant to notice under Section 147/148. Order passed by AO in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO while rejecting objections Assessee the consequential assessment Orders were liable to be annulled.(para16) Hence in view of the above submissions the action taken u/s 148 and consequent proceedings may kindly be quashed. 5. On the other hand, the ld. D/R supported the orders passed by the Revenue Authorities and also relied upon the report submitted by the AO which is already placed on record. 6. I have heard rival contentions, perused the material on available record and gone through the orders of the revenue authorities. From the facts of the present case, I find that the case of the assessee was reopened by the AO by recording the following reasons :- Since, the assessee neither filed his return of income nor furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under sec. 147. To put it in other words, if in the course of proceedings under sec. 147, the AO were to come to 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. It is a different story that for such other income, the AO may have recourse to such other remedies, as may be available to him under law, but then, once it is found, that the income, regarding which he had reason to believe to have escaped assessment, is not found to have escaped assessment, the AO is required to withhold his hands, at that only. Once the AO came to the conclusion, that the income, with respect to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if such issue comes to his notice in the course of proceedings under this section even though said issue did not find mention in the reasons recorded and the notice issued under s. 148. Since there was confusion prevailing with regard to the powers of the AO to assess or reassess on the issues for which no reasons were recorded, Expln. 3 came to be inserted as clarificatory. Now, after the insertion of Expln. 3, the position is that the AO may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under s. 147 though the reasons for such issue were not included in the reasons recorded in the notice under s. 148(2) on the basis of which he had initiated proceedings under s. 147.-Vipan Khanna vs. CIT (2002) 175 CTR (P H) 335 : (2002) 255 ITR 220 (P H) and Travancore Cements Ltd. vs. Asstt. CIT (2008) 219 CTR (Ker) 359 : (2008) 305 ITR 170 (Ker) held no longer good law. The heading of s. 147 is Income escaping assessment and that of s. 148 Issue of notice where income escaped assessment . Sec. 148 is supplementary and complimentary to s. 147. Sub-s. (2) of s. 148 mandates reasons for issuance of notice by the AO an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt-Scope-Addition in respect of items other than the one on which notice in given-Income alleged to have escaped assessment in reasons recorded not having been actually found to . Also refer AVG Construction Pvt. Ltd v/s ITO Ward 6(2) Jaipur in ITA no. 90/Jp/2020 dt. 02.09.2021 under the same facts and circumstances copy is enclosed. Recently the Honble ITAT Jaipur Bench in the case of Shri Shambhu Dayal Saraf v/s IT in ITA No. 558/Jp/2013 dt 02.07.2018 58 TW 355(Jp), has also held the same view copy of order is enclosed. Therefore, lastly considering the totality of facts and circumstances of the case, submissions of both the parties as well as judicial pronouncements referred in this regard, I am of the view that on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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