RAJESH PRADHAN,JALPAIGURI vs. ITO, WARD - 1(3), JALPAIGURI , JALPAIGURI

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “SMC” KOLKATA Before Shri S.S, Godara, Judicial Member ITA No.1587/Kol/2018 Assessment Year:2008-09 Rajesh Pradhan Income Tax Officer, बनाम / C/o Subash Agarwal & Ward-1(3), Central V/s. Assocaites, Siddha Gibson, Revenue Building, 1, Gibson Lane, Ssuite-213, Nayabasti, P.O. & 2nd Floor, Kolkata-700069 Dist. Jalpaiguri, Pin- [PAN No.AKJPP 6193 N] 735101

.. अपीलाथ� /Appellant ��यथ� /Respondent Shri Subash Agarwal, Advocate अपीलाथ� क� ओर से/By Appellant Shri S. Venkatramane, Addl. CIT-SR-DR ��यथ� क� ओर से/By Respondent 22-01-2019 सुनवाई क� तार�ख/Date of Hearing 28-02-2019 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R This assessee’s appeal for assessment year 2008-09, arises against the Commissioner of Income-tax (Appeals)-Jalpaiguri’s order dated 06.06.2018 passed in case No.02/citas/JAL/2016-17 involving proceedings u/s. 147 r.w.s. 144 of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused. 2. It transpires at the outset that the Assessing Officer had initiated sec. 147 r.w.s 148 proceedings against the assessee alleging capital introduction in the farm M/s R.R. Enterprise to the tune of ₹4.50 lac staying different figures in his two tax audit reports for the very financial year. The Assessing Officer thereafter finalized re- assessment in issue dated 22.03.2013 adding sundry credits amounting to ₹4,37,491/- as bogus u/s 68 of the Act as upheld in lower appellate proceedings. 3. The assessee’s first and foremost argument raised during the course of hearing is that the Assessing Officer had not made any addition for the above stated sole

ITA No.1587/Kol/2018 A.Y. 2008-09 Rajesh Pradhan Vs. ITO Wd-1(3), JAL Page 2 reason of re-opening and therefore, the impugned sundry credits (supra) as well as re- assessment itself are not liable to be sustained. The Revenue strongly supports both the lower authorities’ action to this effect. I find in this backdrops of facts that this tribunal’s co-ordinate bench’s decision in ITA No.634/Kol/2017 Sanju Jalan vs. ITO decided on 10.01.2018 holds that such re-assessment in case of no addition made regarding reason recorded of re-opening but on some different issues is not liable to be upheld as under:- “18. The ld. Counsel for the assessee submitted that on the other grounds of appeal vi., Gr.No.6 to 8, it is the plea of the assessee before us that when an assessment is reopened for one reason but no addition is made in the reassessment proceedings in respect of that reason or when the said addition is deleted, then, no further addition can be made in the reassessment proceedings. In this regard ld. Counsel for the assessee placed reliance on the decision of the Hon’ble Bombay High Court in the case of CIT vs. Jet Airways India Ltd., 331 ITR 326 (Bom), wherein the Hon’ble Bombay High Court held that if AO does not assess income for which reasons were recorded u/s 147 of the Act, he cannot assess other income u/s 147 of the Act. The Hon’ble Court observed that (i) S. 147 provides that the AO may assess the income which has escaped assessment “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”. Explanation 3 to s. 147 inserted by F (No. 2) Act, 2009 w.r.e.f 1.4.1989 provides that the AO “may assess or reassess the income in respect of any issue … notwithstanding the reasons for such issue have not been included in the reasons recorded …” ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 (ii) The words “and also” indicate that reassessment must be with respect to the income for which the AO has formed an opinion and also in respect of any other income which comes to his notice subsequently. However, if the AO accepts the objection of the assessee and does not assess the income which was the basis of the notice, it is not open to him to assessee income under some other issue independently; (iii) Explanation 3 to s. 147 was inserted to supersede the judgments in Vipin Khanna 255 ITR 220 (P&H) & Travancore Cements 305 ITR 170 (Ker) where it was held that the AO could not assess income in respect of issues unconnected with the issue for which the notice was issued. However, Explanation 3 does not affect the judgments in Shri. Ram Singh 306 ITR 343 (Raj) & Atlas Cycle Industries 180 ITR 319 (P&H) where it was held that if the AO accepted that the reasons for which the notice was issued were not correct, he would cease to have jurisdiction to proceed with the reassessment; (iv) Explanation 3 lifts the embargo inserted by judicial interpretation on the making of a s. 147 assessment in respect of items not referred to in the recorded reasons. However, it does not and cannot override the substantive

ITA No.1587/Kol/2018 A.Y. 2008-09 Rajesh Pradhan Vs. ITO Wd-1(3), JAL Page 3 part of s. 147 that the income for which the notice was issued must be assessable. The learned DR relied on the order of the CIT(A). 19. We have considered the submission of the learned counsel for the Assessee in the light of the judgment of the Hon’ble Bombay in the case of Jet Airways (I) Ltd. (Supra). We are of the view that on the facts and in the circumstances of the present case the ratio laid down by the Hon’ble Bombay High Court in the case of Jet Airways India Ltd. (supra)is squarely applicable. As we have already seen that the assessment was reopened for the reason that the jewellery purchased by the Assessee was from undisclosed sources and the purchases were bogus. That addition has not been sustained now. The Assessing Officer however, proceeded to make an addition on account of Long Term Capital Gain (LTCG) on sale of shares. This was clearly beyond 10 ITA No.634/Kol/2017 Sanju Jalan A.Yr.2012-13 10 the scope of the proceedings under section 148 of the Act. The Assessing Officer, therefore, could not have proceeded to make the impugned addition of bogus LTCG. Similar view has been expressed by the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories vs. CIT, ITA 148 of 2008 dated 3/6/2011. The Hon’ble Delhi High Court followed the decision of the Hon’ble Bombay High Court in the case of Jet Airways (supra). In that view of the matter we hold that the addition by treating the LTCG as bogus cannot be sustained as it was beyond the scope of the proceedings under section 147 of the Act. We therefore delete the said addition also and allow Ground No..6 to 8. . 20. In view of the above conclusions we are of the view that the issue with regard to the validity of initiation of re-assessment proceedings u/s 147 of the Act does not require any consideration. 21. In the result, the appeal is allowed.” I adopt the detailed discussion mutatis mutandis quash the impugned assessment for the said precise reason. Ordered accordingly. 4. This assessee’s appeal is allowed. Order pronounced in open court on 28/02/2019 Sd/- (S.S. Godara) Judicial Member Kolkata, *Dkp/Sr.PS �दनांकः- /02/2019 कोलकाता आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Rajesh Pradhan, C/o Subash Agarwal & Associates, Siddha Gibson, 1, Gibsono Lane, Suite-213, 2nd Floor, Kolkata-69 2. ��यथ�/Respondent-ITO Ward-1(3), Central Revenue Building, Nayabasti, P.O. & Dist. Jalpaiguri, Pin-735101 3. संबं"धत आयकर आयु%त / Concerned CIT 4. आयकर आयु%त- अपील / CIT (A) 5. &वभागीय �)त)न"ध, आयकर अपील�य अ"धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड+ फाइल / Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ"धकरण, कोलकाता ।