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Income Tax Appellate Tribunal, DELHI
Before: SHRI R.S. SYAL
Per R.S.Syal, Vice President :
This appeal by the assessee arises out of the order passed by the Ld.
CIT(A) on 11.12.2017 in relation to the assessment year 2002-03.
The only grievance raised through various grounds is against the confirmation of addition of Rs. 25,06,400/-.
Briefly stated the facts of the case are that some information was received by the Assessing Officer from Directorate of Investigation that the assessee had received accommodation entry amounting to Rs.5,25,000/- from M/s. Suma Finance and Investment Limited. Notice u/s 148 was issued. During the course of assessment proceedings, the Assessing Officer further found that the assessee had deposited cash of Rs.25,06,400/- in Corporation Bank, Karol Bagh, New Delhi. Not convinced with the assessee’s explanation, the Assessing Officer made addition of Rs.25,06,400/-, apart from the addition of Rs.5,25,000/- for which reassessment proceedings were initiated. The Ld. CIT(A) got convinced with the assessee’s explanation about the genuineness of transaction of Rs.5,25,000/-. He, therefore, deleted such addition. The other addition of Rs.25,06,400/- was sustained against which the assessee has come up in appeal before the Tribunal.
I have heard the rival submissions and perused the relevant material on record. It can be seen from the discussion made supra that the AO resorted to the re-assessment on account of one reason. The addition so consequently made stood deleted in the first appeal. No material has been brought on record to demonstrate that the Revenue has preferred any appeal against the impugned order deleting the addition of Rs.5,25,000/-.
Section 147 provides that: “If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section…’. A bare perusal of the above provision manifests that the AO is fully empowered to bring to tax any other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings u/s 147, apart from the income escaping assessment on which the AO formed reason to believe about the escapement of income and
The use of words ‘and’ between the income escaping assessment forming reasons to believe for issuing notice u/s 148 and other income chargeable to tax which escaped assessment and comes to the notice of the AO in the course of the proceeding, amply shows that the existence of the former is a pre-condition for taxing the latter. To put it simply, if the grounds set out in the re-assessment notice are non- existent, i.e., either no addition is made on such grounds or the addition so made does not pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to the notice of the AO during the course of proceedings u/s 147. Without there being such a deterrent, the AO would acquire an unhindered power to initiate re- assessment at the drop of a hat without any legally sustainable reasons and then make other additions resulting in multiplicity of proceedings, which the legislature has sought to curb. Any lawful jurisdiction to make addition on account of other incomes coming to the notice of the AO during the course of proceedings u/s 147 can be acquired only on the foundation of a validly acquired jurisdiction on legally sustainable items of income escaping assessment forming reasons for issuing notice u/s 148.
In other words, if the AO fails to acquire a valid jurisdiction to make re- assessment on the basis of his reasons, then, he is also debarred from making additions for other incomes chargeable to tax which escaped assessment and come to his notice subsequently in the course of proceedings u/s 147. The Hon’ble jurisdictional High Court in CIT vs. Chiel Communications India Pvt. Ltd. (2013) 354 ITR 549 (Del) and CIT VS. Adhunik Niryat Ispat Ltd. (2011) 63 DTR 0212 (Del) has held to this extent. Similar view has been taken by the Hon’ble Bombay High Court in CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom). When I test the facts of the instant case on the touchstone of the principle as discussed hereinabove, it turns out that the solitary reason taken note of by the AO before issuing notice u/s 148 is non-existent and, resultantly, there is no question of making any other addition. I, therefore, set aside the assessment order passed by the AO u/s 147 read with section 143(3) of the Act. As such, there is no need to discuss the merits of the other addition impugned in this appeal made by the AO which has been upheld in the first appeal. As the AO is not competent to make any other
Rs.25,06,400/- so made is liable to be and hereby deleted.
In the result, the appeal of the assessee is allowed.
(Order Pronounced in the Open Court on 20/06/2018)