TMI Blog2024 (2) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order made under Section 153A of the Act and is dated 30 March 2014, the ITAT has adversely commented upon the addition u/s 68 on the ground that the same did not form part of the reasons which were spelt out in the original notice under Section 147 of the Act. Matter requires consideration. We accordingly, admit the instant appeal on the following question of law: A. Whether Ld. ITAT has erred on the facts and circumstances of the case in not appreciating Explanation 3 of Section 147 of the Income Tax Act, 1961 and whether the same would empower the Assessing Officer to assess or reassess income in respect of any issue which has escaped assessment notwithstanding the reasons recorded under sub-section (2) of Section 148 having not alluded to the same or formed the basis for reopening? Let the matter be called again on 27.03.2024. - HON'BLE MR. JUSTICE YASHWANT VARMA And HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Appellant : Mr. Ruchir Bhatia, Sr. SC with Ms. Deeksha Gupta and Mr. Pratyaksh Gupta, Advs. For the Respondent : None ORDER 1. Notice. Although the respondent is stated to have been placed on advance notice, none a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly 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. 5. Our attention was also drawn to the order dated 22 January 2018 passed in ITA 727 of 2017 whereby, while dealing with the impact of that Explanation, the Court had observed as follows: 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. The second ground urged was with respect to the lack of tangible material to support the reassessment notice. Here th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essly 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 'beyond or against the provision of the Act as it is framed under the Act' and if there is any contradiction, the Act will prevail over the Rules. Same is not the position vis- -vis the Section and its Explanation. The latter, by its very name, is intended to explain the provision of the Section, hence there can be no contradiction. Section has to be understood and read handin-hand with the Explanation, which is only to support the main provision, like an example does to explain any situation. 40. In the present case, insertion of Explanation 3 to section 147 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 issuing notice and has come to the notice of the Assessing Officer subsequently during the course of the proceedings, which can be assessed independent of the first part, even when no addition can be made with regard to 'such income', but the notice on the basis of which proceedings have commenced, is found to be valid. 43. In the end it was vehemently argued by the learned counsel for the appellant that the reason to be given under sub-section (2) of section 148 would be the very foundation of the issuance of notice and if it is false or baseless, then ever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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