TMI Blog2024 (3) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... use the notice involved matters which were the subject matter of revision u/s 263 - when the order of assessment u/s 143(3) of the Act has been remanded to the AO to enquire into and make a fresh assessment, the question of entertaining reasonable belief that the income chargeable to tax has escaped assessment does not arise, much less the assessment when the assessment proceedings are still pending. The concept of reason to believe comes in picture if the income chargeable to tax has escaped assessment. So long as the assessment is pending, the assessing authority cannot have any such reason to believe that income chargeable to tax for the assessment year in question has escaped assessment. Income cannot be said to have escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal Commissioner of Income Tax ( PCIT ), Mumbai-3 passed an order under Section 263 of the Act on 10th March 2021, setting aside the assessment order under Section 143(3) of the Act dated 28th December 2017 with a direction to the Assessing Officer ( AO ) to verify the issues mentioned in the PCIT s order. While that assessment was in progress, the impugned notice dated 26th March 2021 under Section 148 of the Act came to be issued. The reasons recorded to believe there was escapement of income subject to tax are almost identical to the reasons based on which the order under Section 263 of the Act came to be passed. 2. Mr. Naniwadekar submits, as per the 3rd proviso to Section 147 of the Act, which was in force at the relevant time, i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority cannot have any such reason to believe that income chargeable to tax for the assessment year in question has escaped assessment. Income cannot be said to have escaped assessment within the meaning of this section if the assessment proceedings in respect of that income and/or issue are still pending and have not culminated into a final order. The underlying principle is how can an escapement of income from an assessment be predicted before an assessment is complete. Thus, it was not open for the AO to invoke powers under Sections 147 and 148 of the Act. In our view, so long as the assessment proceeding in respect of certain income subsists, income cannot be said to have escaped assessment. Such proceedings, if initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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