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TMI Blog2024 (8) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... d not respond to the request for rectification, but made a tax demand for AY 2013-14. Thereafter, the respondent issued a notice on 28.03.2018 under Section 148 of the Income Tax Act seeking to reopen the assessment. The said notice did not set out the reasons for believing that there was escaped assessment. Pursuant to a request from the petitioner for such reasons, the respondents provided the reasons by letter dated 09.05.2018. The respondents cited the transaction relating to the deletion of the fixed assets value of lands from the books of account, where were converted as partnership assets when M/s.Positive Housing Private Limited and JDA Consultancies Private Limited were admitted to partnership, and thereafter removed after the execution of deeds of cancellation by the parties. 2. Upon receipt of notice calling for particulars of the above transaction, the petitioner provided an explanation on 15.10.2018 and also raised objections to reassessment on the grounds that the relevant documents were already available with the respondents and that the assessment cannot be reopened on a change of opinion and without tangible material. The notice was challenged at that point of tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tractors and Farm Equipment Limited v. Assistant Commissioner of Income-tax(TAFE), 2018 SCC OnLine Mad 13767, particularly paragraph 16 thereof, where the Division Bench of this Court followed the ratio of Jet Airways. iii) Martech Peripherals Pvt. Ltd. v. Deputy Commissioner of Income-tax Company Circle IV and another, 2017 SCC OnLine Mad 18889, particularly paragraphs 42 to 49 thereof. iv) Commissioner of Income Tax (Exemption), Kolkata v. B.P.Poddar Foundation For Education, ITAT/143/2021, judgment dated 13.09.2022, particularly paragraph 14 thereof. v) The Principal Commissioner of Income Tax-1, Mumbai v. Lark Chemicals P. Ltd., Income Tax Appeal No.1083 of 2015, judgment dated 28.02.2018. vi) Principal Commissioner of Income Tax 1 v. Lark Chemicals P. Ltd., Special Leave Petition (Civil) Diary No(s). 34183 of 2018(SC). 4. Learned counsel also submitted that the writ petition was filed in March 2022 assailing the notice under Section 148, and that this Court granted an interim stay of the impugned order on 30.03.2022. In spite of the order of interim stay, he submitted that the respondents proceeded to issue the assessment order on 31.03.2022. Even solely on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Delhi High Court concluded that the reassessment proceedings were justified. He also placed for consideration the order of the Supreme Court dated 14.10.2022 declining to entertain the Special Leave Petition against the judgment of the Delhi High Court. iv) Sunil Jain v. Assistant Commissioner of Income Tax Circle (Delhi) (Sunil Jain), W.P(C).6036 of 2022, judgment dated 22.07.2022, particularly paragraphs 17 to 20 thereof. v) Sunil Jain v. Income Tax Department, (2023) 154 taxmann.com 14(SC), whereby the Special Leave Petition against the judgment of the Delhi High Court was rejected. vi) S.Sundaram Pillai v. V.R.Pattabiraman 1985(1) SCC 591, regarding the interpretation of explanation clauses in statutes. vii) N.Govindaraju v. Income-tax Officer, Ward - 8(2), Bangalore (Govindaraju), (2015)60 taxmann.com 333 (Karnataka). 7. Upon considering the rival contentions, the first issue that falls for consideration is whether the petitioner has made out a case to exercise discretionary jurisdiction. Learned senior standing counsel for the respondents relied on the judgment of the Division Bench of the Delhi High Court in Sunil Jain to contend that jurisdiction under Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain largely to the interpretation of Explanation 3. Section 147 and, in particular, Explanation 3 thereto was interpreted by the Division Bench of the Bombay High Court in Jet Airways. Paragraphs 20 and 21 of the said judgment are set out below: "20. Parliament, when, it enacted Explanation 3 to section 147 by the Finance (No.2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Explanation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain courts that the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147 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 as it stands postulates that 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 cumulativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment proceedings provided such reassessment is also carried out on the grounds or reasons on which reassessment was initiated. On the other hand, if the ground on which reassessment was initiated was no longer available to the assessing officer, the Court held that reassessment cannot be continued on the basis of the original notice under Section 148, and that a fresh notice is necessary. 12. Learned senior standing counsel submitted that the interpretation placed on Section 147 in Maninder Singh Kang and Govindaraju should be adopted. In view of the binding decision of the Division Bench of this Court in TAFE, the course of action canvassed by learned senior standing counsel is not open and his contention cannot be countenanced. 13. Keeping the above legal position in mind, it becomes necessary to examine the assessment order to determine the basis of such order. In paragraph 15 of the assessment order, the assessing officer recorded findings with regard to the transaction that triggered reassessment proceedings. The findings recorded therein are as under: "15. Consequent to the directions of the Range Head, the value of the properties that were brought into the books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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