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

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ITA 1587/KOL/2018Status: DisposedITAT Kolkata28 February 2019AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if reassessment proceedings are initiated for a specific reason, but no addition is made on that ground, and instead, additions are made on different issues, such reassessment is not sustainable. The addition made was beyond the scope of the original reassessment notice.

What were the facts?

The Assessing Officer initiated reassessment proceedings under Section 147/148 alleging capital introduction in a firm based on differing figures in tax audit reports. The reassessment added sundry credits as bogus under Section 68, but the original reason for reopening was not addressed.

What were the issues?

Whether reassessment proceedings are valid when the addition made is on an issue different from the original reason for reopening. Whether additions made on grounds not forming the basis of the reassessment notice can be sustained.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 68

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(5)Show list

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Income Tax Appellate Tribunal, KOLKATA BENCH “SMC” KOLKATA

Before: Shri S.S, Godara

.. 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 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 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

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