THE CHANDOR GUIRDOLIM CAVORIM URBAN CO - OPERATIVE CREDIT SOCIETY LIMITED,PANAJI vs. INCOME TAX OFFICER, WARD - 1, MARGAO

We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a Cooperative Society and return of income for A.Y. 2019-20 has not been filed. Based on the information about the transaction to the tune of Rs.5,18,56,479/- carried out by the assessee in the form of time deposits, cash deposits with the Goa State Cooperative Bank Ltd. as well as TDS statement from Canara Bank, Chandor, re-assessment proceedings were initiated. Assessee filed the return in compliance to notice u/s.148 of the Act and also claimed deduction u/s.80P of the Act at Rs.26,33,610/-. Details as called for by the Assessing Officer have been supplied by the assessee based on which ld. Assessing Officer was satisfied with the source of funds utilized for the cash deposits as well as time deposits. Thus on the reasons for which reopening proceedings were carried out, no addition has been made by the Assessing Officer after being satisfied with the details filed by the assessee. However, while concluding the assessment proceedings, ld. Assessing Officer has denied the deduction u/s.80P of the Act at Rs.26,33,610/-. Though ld. Assessing Officer has mentioned addition u/s.69A of the Act in the assessment order, however, on perusal of the Balance Sheet and Income and Expenditure Account, it is apparent that the net income for the year at Rs.26,33,610/- for which the assessee claimed deduction u/s.80P of the Act has been denied. Under these given facts and circumstances, the reassessment proceedings have been challenged on the ground that since no addition has been made for the issue referred in the reasons recorded for reopening proceedings, ld. Assessing Officer could not have made any other addition/disallowance other than the issue referred in the reasons recorded unless a fresh notice u/s.148 of the Act is issued to the assessee so as to give n opportunity to reply to the reasons recorded for alleged escapement of income.

We take note of the ratio laid down by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Jet Airways (I) Ltd. (2010) 195 Taxman 117 (Bombay) where the principle has been laid down “that section 147 of the section 147 has an effect that Assessing Officer has to assess or reassess income ('such income') which escaped assessment and which was basis of formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during course of proceedings. However, if after issuing a notice u/s.148, he accepts contention of assessee and holds that income, for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income; if he intends to do so, a fresh notice u/s.148 would be necessary, legality of which would be tested in event of a challenge by assessee”. This principle laid down by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Jet Airways (I) Ltd. (supra) squarely applies on the facts of the instant case and since ld. Assessing Officer has not issued fresh notice u/s.148 of the Act for making disallowance on new issue which was not raised in the original notice u/s.148 of the Act, re-assessment proceedings deserves to be quashed as invalid and bad in law. We accordingly order so and set aside the finding of ld.CIT(A). Thus, assessee succeeds on the legal issue. Dealing with remaining ground raised by the assessee on merit would be merely academic in nature and therefore held to be infructuous.

In the result, the appeal of the assessee is allowed.