TMI Blog2023 (4) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order of ld. CIT (A). DR tried to submit that there are some other High Courts who have taken a contrary view. But, in our considered view, this is not an acceptable proposition in view of the decision of the Hon ble jurisdictional High Court which is a binding. Hence, we uphold the order of ld. CIT (A). Decided against revenue. - ITA No.79/Del./2022 - - - Dated:- 13-4-2023 - Shri Shamim Yahya, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Rakesh Joshi, CA For the Revenue : Mohd. Gayasuddin Ansari, CIT DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the Revenue is directed against the order of ld. CIT (Appeals)-24, New Delhi dated 18.03.2021 pertaining to AY 2011-12. 2. The grounds of appeal taken by the Revenue read as under :- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs. 58,18,50,000/- u/s 68 of the Act on concluding that when on the ground on which the reopening of assessment is based, no additions are made by the Assessing Officer in the order of assessment, he cannot make additions on some other grounds which did not form p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation 3 is reproduced below: Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. 4.9 Hon'ble Bombay High Court considered Explanation 3 to section 147 in the case of CIT v. Jet Airways (1) Ltd. [2011] 331 ITR 236 (Bombay) where it was held that if after issuing a notice under section 148, he accepts contention of assessee and holds that income, for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income; if he intends to do so, a fresh notice under section 148 would be necessary, legality of which would be tested in event of a challenge by assessee. The operative part of the judgment is reproduced below: 15. Parliament, when it enacted the Explanation (3) to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght 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 notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No.2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ( such income '') which escaped assessment and 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 section 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under section 147 though the reasons for such issue were not included in the reasons recorded in the notice under section 148(2) on the basis of which he had initiated proceedings under section 147. Similar question came for consideration before the Division Bench of Bombay High Court in CIT v. Jet Airways (1) Ltd. [2011}3311TR 236. The Court held as under :- 9. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows: (i) The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on the assessee a notice under sub-section (1) of section 148, (iii) The Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of the escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items, viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under sections 80HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under sections 80HH and 80-1 and accordingly reduced the claim on these accounts. 20. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of reassessing the income which escaped assessment and which was the basis for formation of belief in issuing the notice, the order passed on reassessment is bad in law. The operative part of the judgment is reproduced below: 4. In the above view, the question as formulated becomes academic as our Court in CIT v. Jet Airways (I) Ltd.[2011] 331 ITR 236 (Bom.) while examining Explanation 3 to Section 147 of the Act has held that the Assessing Officer has to necessarily assess/re-assess the income which escaped assessment on the basis of the formation of the reasonable belief for opening the assessment. It is only on assessing/reassessing such income which has escaped assessment in the reasons recorded, would it be open to the Assessing Officer to assess/reassess any other income, which came to his notice during the reassessment proceedings. However, in the absence of reassessing the income which escaped assessment and which was the basis for formation of belief in issuing the notice, the order passed on reassessment is bad in law. Hon'ble Supreme Court dismissed SLP against above judgment in the case of PCIT Vs Lark Chemicals (P.) Ltd. in [2018] 99 taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000/- is hereby deleted and above Additional Ground of appeal is allowed. 4. Against the above order, Revenue is in appeal before us. We have heard both the parties and perused the records. 5. Ld. DR could not controvert the submission that no addition has been made in this case on the issue on which reopening was done. He also could not controvert that the Hon ble jurisdictional High Court in the case of Ranbaxy Laboratories Ltd. (supra) has upheld the proposition that if no addition is made for the reason on which reopening was done, other additions could not survive. 6. Per contra, ld. Counsel of the assessee submitted that the issue is squarely covered by the decisions of Hon ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. (supra) and Hon ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra). 7. Upon careful consideration, we note that assessee s case was reopened on the basis of information relating to accommodation entry received from TVH Trading Company Pvt. Ltd. of Rs.26,40,00,000/-. No addition was made in the assessment order on this account since the amount had already been added in the order u/s 153A dated 30.03.2014. The addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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