ASSISTANT COMMISSIONER OF INCOME TAX, COIMBATORE V. KAMATCHIPURAM VELLINGIRI JAYARAMAN, COIMBATORE

ITA 2777/CHNY/2024

AI Insights

The case involves the Assistant Commissioner of Income Tax, Non-Corporate Circle-2, Coimbatore as the appellant and Shri Kamatchipuram Vellingiri Jayaraman as the respondent. The dispute arose from the reassessment of the assessee's income for the Assessment Year 2017-18, where the Assessing Officer reopened the case to verify the source of investment in immovable property and subsequently made additions based on other expenses and unexplained cash credits. The Commissioner of Income Tax (Appeals) found the reopening invalid and the additions unjustified, a decision which the Tribunal upheld.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312615 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Ranbaxy Laboratories Ltd. v. CIT, Jakhotia Plastics (P.) Ltd. Vs. Principal Commissioner of Income-tax, Martech Pheripherals Pvt Ltd, Vs. DCIT, Jet Airways (I) Ltd. v. CIT, Dr. Devendra Gupta v. CIT, Anand Cine Services (P.) Ltd. v. Assistant Commissioner of Income-tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D. KOMALI KRISHNA
• Assessee Lawyers: VENKATSWAMI; ITP; CHINTHALA SUNDARA RAO
• Keywords: Set aside; Reassessment proceedings; Unexplained cash credit; Depreciation; Reopening of assessment; Reason to believe
• Section: 147; 143(3); 142(1); 68; 37(1)

Judgement Text

" आयकर अपीलीय अिधकरण, ‘सी’ \u000fा यपीठ, चे\u0014ई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘C’ BENCH, CHENNAI \u0016ी मनु क ुमा र िग\u001bर ,\u000fा ियक सद एवं \u0016ी एस . आर . रघुना था , लेखा सद क े सम& BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.2777/Chny/2024 & C.O.No.27/Chny/2025 (In ITA No.2777/Chny/2024) (िनधा\u0005रण वष\u0005 / Assessment Year: 2017-18) The Assistant Commissioner of Income Tax, Non-Corporate Circle-2, Coimbatore. Vs Shri Kamatchipuram Vellingiri Jayaraman, 17, Sundaram Bros Layout Ramanathapuram-641 045. PAN:ADJPV-7536-L (अपीलाथ\u000f/Appellant) (\u0010\u0011यथ\u000f/Respondent/Cross Objector) अपीलाथ\u000fक\u0014ओरसे/ Appellant by : Ms. D.Komali Krishna, CIT \u0010\u0011यथ\u000fक\u0014ओरसे/Respondent by : Mr.Venkatswami, ITP & Mr. Chinthala Sundara Rao, PCIT (Retired.) सुनवाईक\bतारीख/Date of hearing : 24.04.2025 घोषणाक\bतारीख /Date of Pronouncement : 29.04.2025 आदेश आदेश आदेश आदेश / O R D E R PER MANU KUMAR GIRI, JM: The captioned appeal filed by the revenue is directed against the order of the Ld. Ld. Commissioner of Income Tax (Appeals), Chennai-20 [CIT(A)] dated 31.08.2024 for Assessment Year 2017-18. In this appeal, a Cross Objection No.27/Chny/2025 is also filed by the assessee. 2. The registry has noted delay of 148 days in filing the cross objection. Considering the reasons stated in the affidavit by the Assessee, we condone the delay and treat the reasons as ‘sufficient cause’ and admit the cross objection for adjudication. 3. The revenue has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and In law. 2 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 2. The Ld CIT(A) erred in holding the re-opening u/s 147 of the Act as Invalid by relying on case laws prior to the amendments made in the Act by Finance Act 2016 in respect of section 147 of the Act w.e.f.01/06/2016 wherein under Explanation 3 It is mentioned that - \"For the purposes of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub- section (2) of section 148” for allowing the appeal of the assessee.' 3. The Ld. CIT(A) erred In not appreciating that the assesse failed to discharge his duty of full disclosure of consolidated Profit & Loss account of three businesses as Explanation 1 to section 147 of the Act reads clearly (as introduced by Finance Act 2016 w.e.f. 01/06/2016),\" Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure with the meaning of the foregoing proviso\". 4. The Ld, CIT (A) erred in not taking cognizance of the fact that the issue of re-opening the incomes under the ambit of the re-assessment proceedings decided in Ranbaxy Laboratories Ltd. v. CIT [2011] 12 taxmann.com 74/200 Taxman 242 (Delhi)/336 ITR 136 (Delhi)/[2011] 242 CTR 117 (Deihl) have been overruled by the The SUPREME COURT OF INDIA in Jakhotia Plastics (P.) Ltd. Vs. Principal Commissioner of Income-tax [2018] 94 taxmann.com 96 (SC). 5. For these grounds and any other ground Including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.” 4. The assessee has raised the following grounds of cross objection: 1.The order passed by the Ld.CIT(A)in so far as it is favorable to the Respondent/Cross Objector is just and proper and the same does not require interference, on the facts and circumstances of the case. 2. The Ld. CIT(A) has rightly followed the judicial discipline in relying on the decision of jurisdictional High Court of Madras in the case of Martche Pherpipherals Pvt Ltd, Vs. DCIT (2017) 394 ITR 733 (Mad) and only thereafter she held the reopening as bad in law. 3 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 3.Though the decisions of other High Courts in the cases of Jet Airways and Ranbaxy Laboratories are cited, the Ld. CIT(A) ultimately relied on the jurisdictional High Courts decision's and therefore there is no legal infirmity in her decision. 4.The Ld. CIT(A) is legally correct in relying on jurisdictional High Court's decision in the case of Martech Pheripherals (supra) and at that point of time there was no other decision of Hon'ble Supreme Court on this issue in favour of the Department. Even the SLP dismissal by Hon'ble SC in the case of Jakhotia Plastics without any discussion on merits does not amount to laying down of law. The Hon'ble Supreme Court has only left the decision to the HC of Delhi by this SLP dismissal. 5.The Ld.CIT(A) has rightly held that when there is no addition on the issue on which reopening was done, no other addition can be made on other issues. This has no effect on the decision of jurisdictional High Court in the case of Martech Phephericals supra as that amendment was already there on the statute when this decision was rendered. 6.Notwithstanding the above, the Ld.CIT(A) has rightly observed that reopening is bad in law without any fresh material suggesting escapement of income when the appellant had made full disclosures during earlier scrutiny proceedings and for that reason also, reopening is held as bad in law. The appellant submitted an the financial statements before the AO during the course of assessment proceedings u/s.143(3) wherein the investment in Showri Palem land was already shown. 5. Brief facts of the case are as under: 5.1. The assessee is an individual carried out Real estate business under the name K.V. Jayaraman Real estate. He conducted hotel business in the name of \"Hotel Cheran'. He also carried out agricultural activities under the name 'Palani Farm', The assessee had filed return of income originally for A.Y 2017-18 declaring a loss of Rs.4,48,718/-. The case of the assessee was re-opened for scrutiny u/s 147 to verify the source of the immovable property purchased by him to the tune of Rs.39,42,000/- . The AO issued notice u/s 148 to the assessee on 27.03.2017. In response to the notice 148, the assessee filed return of income on 13.12.2021 declaring a total income of Rs. 0/-. In response to notice under 4 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 section 142(1) the AR had submitted Income Computation statement. Profit & Loss Account for the AY 2017-18, Balance Sheet as on 31.03 2017, details of assets etc. The AO has not made any addition on the above issue and claim of the assessee was accepted by AO. During reassessment proceedings, the AO noticed from Profit & Loss Account for the AY 2017-18 that the assessee had claimed development charges of Rs.20,42,500/-. The assessee was asked details of the same vide notice u/s 142(1) dated 28.02.2022, with supporting vouchers, which were not produced. He had produced a ledger for the same and the expenses were in Cash and booked below Rs 20,000/-, Therefore the expenses claimed by the assessee was disallowed to the tune of 50% i.e, Rs. 10,21,250/- and added to the total income. Further, during reassessment proceedings, the assessee was also asked to furnish details of Other expenses to the tune of Rs.39,19,696/- vide notice u/s 142(1) dated 28.02.2022, with supporting vouchers, which were not produced. He produced a ledger for the same and the expenses were in Cash and intentionally booked below Rs.20,000/- The same expenses were NIL in the previous year and the AR did not furnish the nature of the expense and how it is related to the business. Therefore, the same was disallowed and added to the total income. From the Balance Sheet, it was seen that there was a credit entry of Rs.2,44,77,368/- under the head 'Palani Farm'. The source of the Credit entry was asked vide Notice u/s 142(1) dt. 15.3.2022, to which the assessee had stated that the amount pertains to agri land advance from previous years kept separately in Palani Farm account. However, upon perusal of the Balance Sheet filed with the Audit report filed in e filing portal for the AY 2016-17 and the Income Tax Return for the 5 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 AY 2016-17, the said credit entries were not to be found. The split- up for the unsecured loans of Rs.2,32,05,785/- as per the ITR of the AY 2016-17 pertains to advances from Real Estate Account', 'Hotel Cheran', 'Rent Advance', 'Land Advance'. From the Cash book furnished by the assessee, it was found that there were receipts in cash amounting to Rs.2,93,50,000/- under the name of Palani Farm' on the various dates, establishing that the Credit entries were introduced in AY 2017-18. Therefore, the sum of Rs. 2,93,50,000/- was added as unexplained credits u/s 68 as the sum was credited in the books of accounts in AY 2017-18 and was used for Cash deposits in the Bank accounts, for which the assessee had failed to satisfactorily offer an explanation for the source. The assessment was completed by the AO u/s 143(3) r.w.s 147 as under:- Income returned u/s 148 (-) 4,48,718/- Add: Disallowance of other expenses and development charges u/s 37(1) Rs. 49,40,946/- Unexplained cash credits u/s 68 Rs. 2,93,50,000/- Total income Rs. 3,38,42,228/- 6. Aggrieved, assessee challenged the order of assessment u/s 143(3)/147 dated 30.03.2022 before the ld. CIT(A). 7. The ld. CIT(A) in its order from paras 7-7.8 has reproduced the reasons for reopening, relevant portion of Profit and Loss account, the ledger relating to Sowripalayam land purchase, relevant portions of the case law citations relied and held as under: 6 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 “7.8 Thus, the case laws clearly imply that the additions made by AO on issues independently, other than the reason for which the reassessment proceedings were initiated is not sustainable by law. Moreover, as per discussions made above, reopening cannot be done without any new material that has not been fully and truly disclosed by the appellant for the year. Therefore, reopening the case is held to be bad in law. Consequently, grounds of appeal 1 & 2 are allowed. Since, that appellant gets relief on these grounds itself, there is no need for separate adjudication in respect of other grounds of appeal.” 8. The ld. DR for the revenue submitted that Ld CIT(A) has erred in holding the re-opening u/s 147 of the Act as invalid by relying on case laws prior to the amendments made in the Act by Finance Act 2016 in respect of section 147 of the Act w.e.f. 01/06/2016 wherein under Explanation 3 It is mentioned that - \"For the purposes of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148” for allowing the appeal of the assessee. The Ld.DR further submitted that the CIT(A) failed to appreciate the fact that the assesse failed to discharge his duty of full disclosure of consolidated Profit & Loss account of three businesses as Explanation 1 to section 147 of the Act reads clearly (as introduced by Finance Act 2016 w.e.f. 01/06/2016),\" Production before the Assessing Officer of account books or other evidence 7 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure with the meaning of the foregoing proviso. The Ld.DR further alleged that the Ld, CIT(A) erred in not taking cognizance of the fact that the issue of re-opening the incomes under the ambit of the re- assessment proceedings decided in Ranbaxy Laboratories Ltd. v. CIT [2011] 12 taxmann.com 74/200 Taxman 242 (Delhi)/336 ITR 136 (Delhi)/[2011] 242 CTR 117 (Deihl) have been overruled by the SUPREME COURT OF INDIA in Jakhotia Plastics (P.) Ltd. Vs. Principal Commissioner of Income-tax [2018] 94 taxmann.com 96 (SC). 9. The assessee objected the legality of the assessment order passed u/s.143(3) r.w.s. 147 of the Act on the following grounds:- The assessee’s case for AY 2017-18 was re-opened and a notice u/s 148 was issued on 31.03.2021. In response, the assessee filed return on 13.12.2021 showing the same income as declared in the original return u/s 139(1). The re-opening notice was issued apparently to verify the source of investment in an immovable property purchased by the assessee during the relevant year for a consideration of Rs.39,00,000/- as admitted by the AO in the first para of the assessment order itself For issuing notice u/s 148, the mandatory condition is that there should be some information based on which the AO should form a belief that income has escaped assessment. In the assessee’s case, the AO has no information whatsoever in his possession which can remotely give rise to a belief 8 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 that income has escaped assessment for AY 2017-18. The AO has not shown any basis for forming a belief that investment made in the immovable property was out of undisclosed source of income. The AO himself admits that the re-opening was made for the purpose of verifying the source of investment on this property to the tune of Rs.39,42,000/-. Various Courts have unanimously held that re-opening of assessment is not permitted for undertaking any verification of income/investments. The assessee therefore, submits that the re-opening of the assessment itself was made on wrong grounds and to that extent it is not in accordance with the law. During the re-assessment proceedings, the assessee submitted necessary details called for in respect of sources of investments in the impugned property and the AO was satisfied with those details. The AO also confirmed that no income representing investment in the immovable property had escaped assessment and accordingly no addition on this count was made in the re-assessment order which is now under dispute. Whereas the reason for re-opening the assessment failed, the AO proceeded to examine certain other issues during the re-assessment proceedings and made additions in the assessee’s case. This is not in accordance with the provisions of section 147. In support of this proposition, the assessee relies on the following judicial decisions:- 1. CIT vs. Jet Airways (1) Ltd. [2011] 331 ITR 236 (Bom) 2. CIT vs. Dr. Devendra Gupta [2011] 336 ITR 59 (Raj) 3. Ranbaxy Laboratories Ltd vs. CIT [2011] 336 ITR 136 (Del) 9 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 The assessee submitted that in the above decisions, the Courts held that if after issuing notice u/s 148 the AO accepts the contention of the assesse and holds that the income which he has initially formed a reason to belief had escaped assessment, has a matter of fact not escaped assessment, it is not open to him to independently assess some other income. As the AO in the assessee’s case has exceeded his jurisdiction in making additions on some other issues for which no reasons were recorded before issue of notice u/s.148, therefore, reassessment order passed by the AO is liable to be quashed. Now assessee is in further appeal before us. 10. We have heard the rival submissions and perused the record and case laws cited at the bar. We have also gone through the reasons for reopening, paras 7-7.8 of the ld . CIT(A) order. 11. We find that on the similar issue, the Hon’ble jurisdictional High Court in the case of Martech Peripherals (P.) Ltd. v. Deputy Commissioner of Income-tax, Company Circle IV(1), Chennai [2017] 81 taxmann.com 73 (Madras)/[2017] 394 ITR 733 (Madras) has held as under: 20. The petitioner/assessee, however, challenges this action of the respondents/Revenue, on the ground that it was not permissible for the respondents/Revenue to tax the forfeited share application money, by taking recourse to provisions of Section 147 read with Section 148 of the Act, unless it assesses to tax that income with reference to which the Assessing Officer had formed reason to believe (within the meaning of Section 147), that it had escaped assessment. 10 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 21. To my mind, a careful reading of Section 147 of the Act would show that it empowers an Assessing Officer to reopen the assessment, if, he has reason to believe, that any income chargeable to tax has escaped assessment for the relevant year, ''and also bring to tax\", any other income, which may attract assessment, though, it is brought to his notice, subsequently, albeit, in the course of the reassessment proceedings. 21.1 To put it plainly, the purported income discovered subsequently during the course of reassessment proceedings, can be brought to tax, only, if the escaped income, which caused, in the first instance, the issuance of notice under Section 148 of the Act, is assessed to tax. 22. Explanation 3, to my mind, supports this approach, which emerges upon a plain reading of the said provision, along with the main part of Section 147 of the Act. The emphasis in this behalf is on the expression ''and also bring to tax'' appearing in the main part of Section 147 in relation to the right of the Revenue to assess taxable income discovered during reassessment proceedings. In my view, Explanation its 3, clearly, expounds that the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment and such other issue, that comes to his notice subsequently, albeit, in the course of proceedings held under Section 147 of the Act. In other words, if, notice for reopening of the assessment was issued on one aspect, and in the course of reassessment proceedings another aspect was discovered, the reassessment order would be valid, only if, the aspect, which led to the reopening of assessment, continues to form part of the reassessed income. 23. This view, as has been correctly submitted by the learned counsel for the petitioner/assessee, has found resonance with at least three (3) High Courts, i.e., the Bombay High Court, the Gujarat High Court and the Delhi High Court in the following cases: (i) Jet Airways (I) Ltd.'s case (supra) (ii) Mohmed Juned Dadani's case (supra) (iii) Oriental Bank of Commerce's case (supra). 23.1 The only High Court, which has taken a contrary view, as it were, is the Punjab and Haryana High Court in the matter of : Majinder Singh Kang's case (supra). 11 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 23.2 In my opinion, with respect, the Court, in rendering the judgment in Majinder Singh Kang's case (supra), ignored the fact that the provisions of Explanation 3 had to be read in conjunction with the main provision, and that, the said explanation cannot override the main provision. 23.3 This aspect of the matter has also been brought to fore by the Bombay High Court in: Jet Airways (I) Ltd.'s case (supra). 23.4 The relevant observations made in this behalf are extracted hereafter: \". . . . . However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the 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 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. . . . . \"(Emphasis is mine) 12. In the case of Anand Cine Services (P.) Ltd. v. Assistant Commissioner of Income-tax [2024] 169 taxmann.com 236 (Madras) the jurisdictional High Court held as under: 8. The next question to be examined is whether the impugned notice and proceedings consequent thereto are liable to be interfered with. Section 147 of the Income Tax Act, which is central to this determination, as it stood then, in relevant part, is set out below: \"147. Income escaping assessment - 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 12 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 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, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation 3 - For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148.\" 9. The rival contentions pertain 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 (supra). 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 of the Kerala High Court in Travancore Cements Ltd., [2009] 179 Taxman 117/305 ITR 170 (Kerala) and of the Punjab and Haryana High Court in Vipan Khanna, [2002] 122 Taxman 1/255 ITR 220 (Punjab & Haryana) would, therefore, no longer hold the field. However, in so far as the second line of authority is concerned, which is reflected in the judgment of the Rajasthan High Court in Shri Ram Singh, [2008] 306 ITR 343 (Rajasthan), Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab and Haryana High Court in CIT 13 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 v. Atlas Cycle Industries, [1989] 46 Taxman 315/180 ITR 319 (Punjab & Haryana). The decision in Atlas Cycle Industries, [1989] 46 Taxman 315/180 ITR 319 (Punjab & Haryana) held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two grounds mentioned in the notice under section 148 were incorrect or nonexistent. The decisions of the Punjab and Haryana High Court in Atlas Cycle Industries, [1989] 46 Taxman 315/180 ITR 319 (Punjab & Haryana) and of the Rajasthan High Court in Shri Ram Singh, [2008] 306 ITR 343 (Rajasthan) would not be affected by the amendment brought in by the insertion of Explanation 3 to section 147. 21. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment of reassessment on grounds other than those on the basis of which a notice was issued under section 148. Setting out the reasons, for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance (No.2) Act of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income (\"such income\") which escaped assessment and which was the basis of the 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 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 14 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 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 cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion to Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words \"and also\" by the Rajasthan High Court in Shri Ram Singh, [2008] 306 ITR 343 (Rajasthan). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147 as they stood after the amendment of April 1, 1989, continue to hold the field.\" 10. When the same issue came up for consideration before the Division Bench of this Court in TAFE (supra), the Division Bench of this Court cited Jet Airways with approval and followed the ratio laid down therein. Paragraph 16 of the judgment of the Division Bench of this Court is as under: 16. The decision in the case of Jet Airways (cited supra) was referred to by the High Court of Delhi in the case of Ranbaxy Laboratories Limited v. CIT [2011] 12 taxmann.com 74/200 Taxman 242/336 ITR 136 (Delhi), wherein it was held that the Legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. Further, it was held that for every new issue coming before the Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under section 148 of the Act. Thus, it was held that the Assessing Officer had jurisdiction to reassess the income other than the income in respect of which the proceedings under section 147 were initiated, but, he was not justified in doing so when the reasons for the initiation of those proceedings ceased to survive. Therefore, the argument advanced by the Revenue placing reliance on Explanation 3 to section 147 i of little avail.\" 11. In effect, both in Jet Airways and TAFE (supra), the Court held that Section 147 enables the assessing officer to travel beyond the reasons for initiating reassessment proceedings provided such reassessment is also carried out on the grounds or reasons on 15 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 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. 13. In this present appeal, the case has been reopened for scrutiny u/s 147 to verify the source of the immovable property purchased for a consideration of Rs.39,42,000/- and no addition has been made in assessment in respect of the reasons recorded for reopening. However, the AO has made additions on account of other expenses and development charges u/s 37(1) of the Act and addition u/s 68 as unexplained cash credits. 14. Therefore, in the light of the Hon’ble Jurisdictional High Court judgments referred supra, we find that the ld. CIT(A) was justified in allowing the appeal of the assessee on this issue. Hence, respectfully following the judgment of the Jurisdictional High Court referred supra we held that the reassessment cannot be continued on the basis of the original notice under Section 148. Consequently, we set aside the assessment order dated 30.03.2022 passed u/s 143(3) r.w.s 147 of the Act. 15. In result, appeal of the revenue is dismissed, where as the Cross objection of the assessee is allowed. Order pronounced in the open court on 29th April, 2025 Sd/- Sd/- (एस . आर . रघुनाथा) ( मनु क ुमार िग\u001bर ) ( S.R.Raghunatha ) ( Manu Kumar Giri) लेखा लेखा लेखा लेखा सद\u0003य सद\u0003य सद\u0003य सद\u0003य / Accountant Member \u000fाियक सद / Judicial Member 16 ITA No. 2777/Chny/2024 & C.O.No.27/Chny/2025 चे\u0019ई/Chennai, \u001bदनांक/Date: 29.04.2025 DS आदेश क\u0007 \bितिलिप अ\u000eेिषत/Copy to: 1.Appellant 2.Respondent/Assessee 3. आयकर आयु\u0013/CIT Chennai/Madurai/Coimbatore/Salem 4. िवभागीय \bितिनिध/DR 5. गाड फाईल/GF. "