TMI Blog2024 (2) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... , if the AO had chosen not to make addition in respect of items for which reasons were recorded by issuing notice u/s. 148 . As discussed, since the AO had chosen not to make addition in respect of the profit of Rs. 15,884/- earned from the commodity transaction made through Star Commodities, the AO had no jurisdiction to make addition u/s. 69. The very fact that the AO had sought make addition on the commodity transaction shows that the AO had no doubts about the genuineness of transaction. The addition of profit is separate and independent of addition made by the AO u/s. 69 of the Act. Thus, ratio of decision in the case of Jet Airways(I) Ltd. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] is squarely applicable to the facts of present case. Therefore, the AO had no jurisdiction to make addition. We, therefore, direct the AO to delete the addition and the appeal filed by the assessee stands allowed. - Shri Inturi Rama Rao, Accountant Member And Shri S. S. Viswanethra Ravi, Judicial Member For the Assessee : Shri Kishor B. Phadke For the Revenue : Shri Ramnath P. Murkunde ORDER PER INTURI RAMA RAO, AM: This appeal filed by the assessee is directed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the commodity transactions done through Star Commodities and J.K. Enterprises are dubious. The profit is nothing but an accommodation entry provided by the said entities to the asessee, drawing support from the Investigation carried out by the Forward Market Commission (FMC), Mumbai. 4. An appeal was filed before the CIT(A) who vide impugned order confirmed the findings of the AO. 5. Being aggrieved, the appellant is in appeal before us in the present appeal. 6. Before us, the ld. AR submitted that the AO had no jurisdiction to make addition of Rs. 72,47,912/- as the AO had chosen not to make addition of Rs. 15,884/-, being the profit earned from the commodity transactions, which formed the basis to believe that income escaped assessment of tax. In this regard, the ld. AR placed reliance on the following judgments : 1. CIT Vs. Jet Airways(I) Ltd. (2011) 331 ITR 236 (Bombay). 2. Bharati Vidyapeeth Vs. ACIT (2013) 33 taxmann.com 576 (Pune-Trib). 3. PCIT Vs. Alag Securities (P) Ltd. (2020) 425 ITR 658 (Bombay). 4. M.s, Laukik Paper Industries Ltd. Vs. DCIT ITA Nos.507 to 510/PUN/2020 and ITA Nos. 301 to 303/PUN/2021, dt. 24-04-2023 7. On the other ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads as under : 13. The effect of the amended provisions came to be considered in two distinct lines of precedent on the subject. The first line of authority, to which a reference has already been made earlier, adopted the principle that where the Assessing Officer has formed a reason to believe that income has escaped assessment and has issued a notice under section 148 on certain specific issues, it was not open to him during the course of the proceedings for assessment or reassessment to assess or reassess any other income, which may have escaped assessment but which did not form the subject-matter of the notice under section 148. This view was adopted in the Judgment of the Punjab and Haryana High Court in Vipan Khanna's case ( supra ) and in the judgment of the Kerala High Court in Travancore Cements Ltd.'s case ( supra ). This line of authority, would now cease to reflect the correct position in law, by virtue of the amendment which has been brought in by the insertion of Explanation 3 to section 147 by Finance (No. 2) Act of 2009. The effect of the Explanation is that once an Assessing Officer has formed a reason to believe that income chargeable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer 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 Explanation 3 consequently provides that the Assessing Officer may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings though the reasons for such issue were not included in the notice under section 148(2). The decisions of the Kerala High Court in Travancore Cements Ltd.'s case ( supra ) and of the Punjab Haryana High Court in Vipan Khanna's case ( supra ) would, therefore, no longer hold the field. However, insofar as the second line of authority is concerned, which is reflected in the judgment of the Rajasthan High Court in Shri Ram Singh's case ( supra ), Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab Haryana High Court in CIT v. Atlas Cycle Industries [1989] 180 ITR 3191. The decision in Atlas Cycle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat has arisen for decision in these appeals, both as a. matter of first principle, based on the language used in section 147(1) 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 section 147(1) 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 Assessing Officer may assess or reassess such income and also any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words and also are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words and also by the Rajasthan High Court in Shri Ram Singh's case ( supra ). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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