TMI Blog2024 (2) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... he eyes of law and consequential revision order also passed u/s 263 of the Act deserves to be quashed. Our view is further fortified by the decision of Sh. Pramajit Singh vs. PCIT [ 2023 (12) TMI 1292 - ITAT DELHI] wherein the Tribunal placed reliance on the decision of Software Consultants [ 2012 (2) TMI 18 - DELHI HIGH COURT] AO did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Section 263 of the Act - Appeal filed by the assessee is allowed. - SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER For the Appellant : Dr. Rakesh Gupta, Adv. And Sh. Deepesh Garg, Adv. For the Department : Shri T James Singson, CIT-DR ORDER PER M. BALAGANESH AM : This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jurisdiction u/s 147 is itself is bad in law as the reason recorded would not have led to the formation of belief of escapement of income. (b) That no valid satisfaction/approval u/s 151 was obtained. (c) That impugned reassessment order was passed without complying with the mandatory conditions of section 147 to 151. 6. That the appellant craves the leave to add, amend, modify, delete any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other. 3. The only effective issue to be decided in this appeal is as to whether the Ld. PCIT had validly assumed his revision jurisdiction u/s 263 of the Act both in law and on facts. 4. We have heard the rival submissions and perused the materials available on record. The assessment for the Asst Year 2011-12 was completed u/s 143(3) r.w.s 147 of the Act on 16/11/2019 determining the total income of Rs.3,90,290/- accepting the return of income. The reasons recorded for reopening the assessment are as under:- 11. Reasons for the belief that income has escaped assessment In this case, AIR as well as CIB information for the F.Y. 2010-11 (Relevant to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed on 16/11/2018. In other words, no addition was made by the Ld. AO in the reassessment proceeding in respect of issues that are subject matter of reasons recorded for reopening the assessment. 6. This reassessment was sought to be revised by the Ld. PCIT by invoking his revision jurisdiction u/s 263 of the Act on the issue of capital gains, investment of Rs.5,50,000/- in time deposits with the Axis Bank and deduction u/s 54 of the Act on the ground that the Ld. AO had not made enquiries on the same thereby making his order erroneous and prejudicial to the interest of the Revenue. 7. At the outset, we find once the Ld. AO having recorded the reasons for reopening the assessment and having formed a belief that income of the assessee had escaped assessment, had not made any addition in the reassessment proceedings in respect of issues that are subject matter of reopening. Hence, the very basis of formation of belief for the Ld. AO vanishes. Hence, the Ld. AO could not have framed any reassessment per se. Logically the Ld. AO should have simply dropped the initiation of reassessment proceedings instead of passing a separate reassessment order. Once, the reassessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.20 lacs but in the assessment order passed under Section 147/143(3) of the Act it has been held that the respondent assessee had been able to show and establish the genuineness of and capacity to make the said investment. 10. Similar issue had arisen before this Court in Ranbaxy Laboratories Limited versus CIT, (2011) 336 ITR 136 (Delhi). In the said case, the Division Bench had also examined Explanation 3 to Section 147, which was inserted by Finance (No. 2) Act of 2009 with retrospective effect from 1st April, 1989. Reference was made to the decision of the Bombay High Court in CIT versus Jet Airways India Limited, (2011) 331 ITR 236 (Bom.) in which it has been held as under: 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 subsection (1) of section 148 ; (iii) the Assessing Officer ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT v. Jet Airways (I) Limited [2011] 331 ITR 236 (Bom). We may also note that the heading of section 147 is income escaping assessment and that of section 148 issue of notice where income escaped assessment . Sections 148 is supplementary and complimentary to section 147. Sub-section (2) of section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute the escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer 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 Explanation 3 if during the course of these proceedings the Assessing Officer 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 presumed to have intended to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the order passed under Section 147/143(3) of the Act. 14. For exercise of power under Section 263 of the Act, it is mandatory that the order passed by the Assessing Officer should be erroneous and prejudicial to the interest of the Revenue. In the present case, the Assessing Officer did not make any addition for the reasons recorded at the time of issue of notice under Section 148 of the Act. This position is not disputed and disturbed by the Commissioner of Income Tax in his order under Section 263 of the Act. Sequitur is that the Assessing Officer could not have made an addition on account of share application money in the assessment proceedings under Section 147/148. Accordingly, the assessment order is not erroneous. Thus, the Commissioner of Income Tax could not have exercised jurisdiction under Section 263 of the Act. 15. The question of law is accordingly answered in affirmative against the Revenue and in favour of the assessee. There will be no order as to costs. 19. As mentioned elsewhere, the facts of the case in hand are pari materia same as the facts considered by the Hon'ble High Court [supra]. Therefore, we have no hesitation in setting a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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