G.M.Pens International P Ltd., CHENNAI V. DCIT, CHENNAI

CO 108/CHNY/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9659 (ITAT-CHENNAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Gift; Depreciation; Retrospective amendment; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . , ' # , $ & BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO . 2123/MDS/2014 & C.O.NO.108/MDS/2014 (IN ITA NO.2123/MDS/2014) (ASSESSMENT YEAR: 2007-08) THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-II(2), 515, WANAPARTHY BLOCK, CHENNAI-34. VS M/S. G.M.PENS INTERNATIONAL P.LTD., 2, JANAKPURI, VELACHERY BYPASS ROAD, CHENNAI-600 042. PAN: AAACG1150E ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. N.RENGARAJ, CIT /RESPONDENT BY : MR. N.QUADIR HOSEYN & MR. S.K.KHAJA MUYEENUDDEEN, ADVOCATES /DATE OF HEARING : 27 TH MAY, 2015 /DATE OF PRONOUNCEMENT : 29 TH JULY, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THE APPEAL AND THE CROSS OBJECTION ARE FILED BY T HE REVENUE AND ASSESSEE RESPECTIVELY AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI DA TED 11.03.2014 FOR THE ASSESSMENT YEAR 2007-08 ARISING OUT OF THE ORDER PASSED UNDER SECTION 143(3) READ WITH SEC TION 147 OF THE ACT. 2. IN THE REVENUES APPEAL, SEVERAL GROUNDS WERE RA ISED CHALLENGING THE ORDER OF THE COMMISSIONER OF INCOME TAX 2 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 (APPEALS) IN HOLDING THAT REASSESSMENT ORDER PASSED UNDER SECTION 147 IS NOT VALID AND ALSO SEVERAL GROUNDS ON ADDITIONS/DISALLOWANCES ON MERITS. 3. BRIEF FACTS ARE THAT THE ASSESSEE COMPANY FILED RETURN OF INCOME ELECTRONICALLY ON 31.10.2007 ADMITTING LOSS FROM BUSINESS OF ` 8,31,78,170/- WHICH WAS ACCEPTED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT ON 31.12.2009 UNDER SECTION 143(3) OF THE ACT. SUBSEQU ENTLY, ASSESSMENT WAS REOPENED UNDER SECTION 148 BY ISSUE OF NOTICE UNDER SECTION 148 AND REASSESSMENT WAS COMPL ETED ON 25.03.2013 UNDER SECTION 143(3) READ WITH SECTIO N 147 OF THE ACT DETERMINING BUSINESS LOSS AT ` 7,54,85,650/- AND CAPITAL GAINS AT ` 2,60,04,503/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) CHALLENGING VALIDITY OF REOPENING OF ASSESSMENT UND ER SECTION 147 STATING THAT ASSESSING OFFICER MADE VARIOUS ADDITIONS/DISALLOWANCES OTHER THAN THOSE SPECIFIED IN THE REASONS FOR REOPENING OF ASSESSMENT. THEREFORE, ASS ESSEE CONTENDED THAT REOPENING OF ASSESSMENT IS INVALID. THE 3 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 ASSESSEE ALSO CONTENDED THAT VARIOUS ADDITIONS/DISALLOWANCES MADE IN THE REASSESSMENT A RE NOT SUSTAINABLE. THE COMMISSIONER OF INCOME TAX (APPEAL S) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE F INDINGS OF THE ASSESSING OFFICER AND THE REASONS RECORDED FOR REOPENING OF ASSESSMENT HELD THAT REOPENING IS BAD IN LAW AGA INST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER IN REOPENING OF ASSE SSMENT. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT REOPENING OF ASSESSMENT IS VALID AS THERE WAS ESCAPEMENT OF INCO ME AS NOTICED BY THE ASSESSING OFFICER IN THE REASONS REC ORDED FOR REOPENING OF ASSESSMENT. REFERRING TO REASONS RECOR DED BY THE ASSESSING OFFICER, DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSING OFFICER HAS STATED THAT ASSESSEE HAS CLAIMED 30% OF RENTAL INCOME ON VARIOUS PROPERTIES LEASED OUT AS EXPENSES AND ALSO DEPRECIATION ON SUCH PROPE RTIES. THEREFORE, SINCE THE DEPRECIATION CANNOT BE ALLOWED ON SUCH LEASED OUT PROPERTIES, THE ASSESSING OFFICER RECORD ED A 4 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 REASON THAT INCOME TO THE EXTENT OF DEPRECIATION A LLOWED IS ESCAPED ASSESSMENT. THEREFORE, DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSING OFFICER INSTE AD OF DISALLOWING DEPRECIATION, DISALLOWED REPAIRS TO BUI LDINGS AND IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE A SSESSING OFFICER HAS NOT ACTED UPON THE REASONS RECORDED. TH E DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSION ER OF INCOME TAX (APPEALS) WENT WRONG IN HOLDING THAT ASS ESSMENT IS NOT REOPENED BASED ON THE REASONS RECORDED AND T HE ADDITIONS/DISALLOWANCES WERE MADE OTHER THAN THOSE MENTIONED IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT. 5. COUNSEL FOR THE ASSESSEE VEHEMENTLY SUPPORTS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT ASSESSING OFFICER HAS NOT ACTED UPON T HE REASONS FOR REOPENING AND HE HAS MADE ADDITIONS/DISALLOWANCES WHICH WERE NOT MENTIONED IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT AND TH EREFORE, ASSESSMENT IS BAD IN LAW IN VIEW OF THE DECISION O F THE 5 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JE T AIRWAYS (I) LTD. (331 ITR 236) AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIE S LTD. VS. CIT (336 ITR 136). 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE DECISIONS RELIED ON. THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUE OF NOTICE UNDER SECTION 148 AND THE REASONS FOR REOPENING OF ASSESSMENT HAVE BEEN STATE D AS UNDER:- THE ASSESSEE COMPANYS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 WAS TAKEN UP FOR SCRUTINY AND ORDER DATED 31.12.2009 WAS PASSED U/S. 143(3) OF THE ACT. IT HAS BEEN SUBSEQUENTLY NOTICED THAT THE ASSESSEE HAS LET OUT THREE PROPERTIES AT RADHA MOHAN STREET, MYLAM ROAD AND PANDIYAN STREET AND HAS CLAIMED 30% OF RENTAL INCOME AS REPAIRS. A PERUSAL OF DEPRECIATION SCHEDULE REVEALS THAT ASSESSEE HAS CLAIMED DEPRECIATION ON THE ENTIRE BLOCK OF BUILDINGS. SINCE THE ASSESSEE HAD LET OUT THE ABOVE THREE PROPERTIES, THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM THE DEPRECIATION ON THE ABOVE THREE PROPERTIES. HENCE, I HAVE REASON TO BELIEF THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF DEPRECIATION CLAIMED ON THE LET OUT PROPERTIES HAS ESCAPED ASSESSMENT. THE ASSESSEE COMPANY HAS RECEIVED RENT OF ` 19,73,569/- FROM GMP PROPERTIES PVT.LTD. AS PER TDS CERTIFICATE IN RESPECT OF THE PROPERTY AT 6 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 45, PANDIYAN STREET, SANKARAN AVENUE. HOWEVER, THE RENTAL INCOME HAS NOT BEEN OFFERED TO TAX. HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THIS EXTENT HAS ESCAPED ASSESSMENT. HOWEVER, WHILE COMPLETING THE ASSESSMENT, THE ASSES SING OFFICER MADE THE FOLLOWING ADDITIONS/DISALLOWANCES: - 1. CAPITAL EXPENSES : ` 64,69,088/- 2. REPAIRS & MAINTENANCE EXPENSES : ` 4,32,432/- 3. ADDITION ON ACCOUNT OF LEASE RENT FROM AGRI.LANDS ` 4,00,000/- 4. LONG TERM CAP.GAINS ON SALE ` 10,14,49,153/- OF AGRI.LANDS 7. AS COULD BE SEEN FROM THE REASONS RECORDED FOR REOPENING OF ASSESSMENT, THE ASSESSING OFFICER STAT ED THAT THE ASSESSEE HAS CLAIMED 30% RENTAL INCOME AS REPAI RS ON BUILDINGS AND ALSO CLAIMED DEPRECIATION. SINCE THE ASSESSEE HAD LET OUT THREE PROPERTIES ASSESSEE IS NOT ENTITL ED TO CLAIM DEPRECIATION ON THE PROPERTIES AND THEREFORE HE HAD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF DEPRECIATION CLAIMED ON LET OUT PROPERTIES HAD ESCA PED 7 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 ASSESSMENT. ANOTHER REASON RECORDED FOR REOPENING O F ASSESSMENT IS THAT ASSESSEE RECEIVED RENT OF ` 19,73,569/- FROM M/S. GMP PROPERTIES PVT. LTD. AS PER TDS CERTI FICATES. HOWEVER, RENTAL INCOME HAS NOT BEEN OFFERED TO TAX. THEREFORE, ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THIS EXTENT HAS ESCAPED ASSESSMENT. WHILE COMPLETING THE REASSESSMENT AS ST ATED ABOVE, THE ASSESSING OFFICER MADE ADDITIONS/DISALLO WANCES ONLY IN RESPECT OF CAPITAL EXPENSES, REPAIRS AND MA INTENANCE EXPENSES, LEASE RENTAL INCOME FROM AGRICULTURAL LAN DS AND ASSESSED LONG TERM CAPITAL GAINS ON AGRICULTURAL LA NDS. THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION/DISALLO WANCE IN RESPECT OF DEPRECIATION ON THE LET OUT PROPERTIES OR ANY ADDITION IN RESPECT OF RENT RECEIVED FROM M/S.G.M.P ROPERTIES PVT. LTD. IN SUCH CIRCUMSTANCES, COMMISSIONER OF IN COME TAX (APPEALS) HELD THAT ASSESSING OFFICER HAS NOT M ADE ANY ADDITION/DISALLOWANCE WHICH WAS SAID TO HAVE BEEN E SCAPED ASSESSMENT IN THE REASONS RECORDED FOR REOPENING OF ASSESSMENT BUT HAS MADE VARIOUS OTHER ADDITIONS/DISALLOWANCES NOT MENTIONED IN THE REASON S FOR 8 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 REOPENING OF ASSESSMENT AND THEREFORE, ASSESSMENT I S BAD IN LAW. WHILE HOLDING SO, THE COMMISSIONER OF INCOME T AX (APPEALS) RELIED ON THE DECISIONS OF BOMBAY HIGH CO URT IN THE CASE OF JET AIRWAYS AND DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. OBSERVING AS UNDER:- AS OBSERVED BY THE DIVISION BENCH OF BOMBAY HIGH COURT IN CLT V. JET AIRWAYS (1) LTD. (331 ITR 236 ) (BORN), THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER TH E AMENDMENT OF 2009 (WITH RETROSPECTIVE EFFECT FROM 01.04.1989) CAN, THEREFORE, BE SUMMARISED AS FOLLOW S: (I) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR; (II) UPON THE FORMATION OF THAT BELIEF AND BEFORE HE PROCEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION, THE ASSESSING OFFICER HAS TO SERVE O N THE ASSESSEE A NOTICE UNDER SUB-SECTION (1) OF SECT ION 148, (III) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEVE, 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 PROCEEDING S UNDER THE SECTION; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH IN COME HAS ESCAPED ASSESSMENT, HE MAY NONETHELESS, ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHIC H HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE, OF THE PROCEEDIN GS UNDER THE SECTION.' 9 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 WHILE DELIVERING THE ABOVE JUDGMENT, THE DIVISION BENCH OF BOMBAY HIGH COURT ALSO REFERRED TO THE INTERPRETATION GIVEN BY RAJASTHAN HIGH COURT IN THE CASE OF CIT V.SHRI RAM SINGH (306 ITR 343)(RAJ) WHEREIN IT WAS OBSERVED AS UNDER:- IT IS ONLY WHEN, IN PROCEEDINGS UNDER SECTION 147 THE ASSESSING OFFICER, ASSESSES OR REASSESSES ANY INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, WITH RESPECT TO WHICH HE HAD 'REASON TO BELIEVE' TO BE SO, THEN ONLY, IN ADDITION, HE CAN ALSO PUT TO TAX, THE OTHER INCOME, CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT, AND WHICH HAS COME TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF PROCEEDINGS UNDER SECTION 147. TO CLARIFY IT FURTHER, OR TO PUT IT IN OTHER WORDS, IN OUR OPINION, IF IN THE COURSE OF PROCEEDINGS UNDER SECTION 147, THE ASSESSING OFFICER WERE TO COME TO THE CONCLUSION, THAT ANY INCOME CHARGEABLE TO TAX, WHICH, ACCORDING TO HIS 'REASON TO BELIEVE', HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, DID NOT ESCAPE ASSESSMENT, THEN, THE MERE FACT THAT THE ASSESSING OFFICER ENTERTAINED A REASON TO BELIEVE, ALBEIT EVEN A GENUINE REASON TO BELIEVE, WOULD NOT CONTINUE TO VEST HIM WITH THE JURISDICTION, TO SUBJECT TO TAX, ANY OTHER INCOME, CHARGEABLE TO TAX, WHICH THE ASSESSING OFFICER MAY FIND TO HAVE ESCAPED ASSESSMENT, AND WHICH MAY COME TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF PROCEEDINGS UNDER SECTION 147.' BASED ON THE ABOVE JUDGMENTS, THE HIGH COURT OF DEL HI IN THE CASE OF RANBAXY LABORATORIES LTD V. CIT [201 1 ](336 ITR 136 )(DEL), HAS HELD THAT ONCE REASONS FO R INITIATION OF REASSESSMENT PROCEEDINGS CEASED TO SURVIVE, THE ASSESSING OFFICER WILL LOSE THE JUSTIF ICATION TO ASSESSEE 'ANY OTHER INCOMES'. IN THIS CASE, THE 10 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 ASSESSING OFFICER REOPENED THE ASSESSMENT FOR ASSESSING EXPENSES CLAIMED UNDER CLUB FEES, GIFTS A ND PRESENTS AND PROVISION FOR LEAVE ENCASHMENT. HOWEVER, THE ASSESSING OFFICER IN HIS REASSESSMENT ORDER U/S.143(3) R.W.S.147, HAS NOT MADE ANY ASSESSMENT ON THESE ITEMS. INSTEAD, THE ASSESSING OFFICER REDUCED THE ASSESSEE'S CLAIMS OF DEDUCTIONS U/S.80HH AND 80-I. THE COURT HAS HELD THAT IN THE ABSENCE OF ANY ADDITIONS (ASSESSMENT) MADE ON THE ISSUES WHICH FORMED THE REASONS FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER WILL NOT HAVE THE JURISDICTION TO ASSESS ANY OTHER INCOMES. THE HEAD NOTE OF THE JUDGMENT IS AS UNDER: RANBAXY LABORATORIES LTD V. CIT ( 2011) 336 ITR 136 (DELHI): SECTION 147 OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - GENERAL - WHETHER IF DURING COURSE OF REASSESSMENT PROCEEDINGS, ASSESSING OFFICER COMES TO CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN REASONS TO BELIEVE AS RECORDED FOR INITIATION OF PROCEEDINGS AND NOTICE, HE WOULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEMS - HELD, YES- WHETHER, HOWEVER, LEGISLATURE COULD NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO 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 REASONS TO BELIEVE, ON BASIS OF WHICH HE ASSUMED JURISDICTION - HELD, YES WHETHER FOR EVERY NEW ISSUE COMING BEFORE ASSESSING OFFICER DURING 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 - HELD, YES - 11 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 ASSESSING OFFICER REOPENED ASSESSEE'S ASSESSMENT ON GROUND THAT ITEMS, VIZ., CLUB FEES, GIFTS AND PRESENTS AND PROVISION FOR LEAVE ENCASHMENT HAD ESCAPED ASSESSMENT - DURING REASSESSMENT PROCEEDINGS, ASSESSING OFFICER WAS SATISFIED WITH JUSTIFICATIONS GIVEN BY ASSESSEE REGARDING AFORESAID ITEMS BUT FOUND DEDUCTION UNDER SECTIONS 80HH AND 80-I AS CLAIMED BY ASSESSEE TO BE NOT ADMISSIBLE - HE, CONSEQUENTLY, WHILE NOT MAKING ADDITIONS ON ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC., REDUCED CLAIM OF DEDUCTION UNDER SECTIONS 80HH AND 80-I - WHETHER ASSESSING OFFICER HAD JURISDICTION TO REASSESS ISSUES OTHER THAN ISSUES IN RESPECT OF WHICH PROCEEDINGS WERE INITIATED - HELD, YES WHETHER, HOWEVER, SINCE ASSESSING OFFICER HAD NOT MADE ANY DISALLOWANCE IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS AND, THUS, REASONS FOR INITIATION OF REASSESSMENT PROCEEDINGS CEASED TO SURVIVE, THERE WAS NO JUSTIFICATION IN REDUCING CLAIM OF DEDUCTION UNDER SECTIONS 80HH AND 80-1 - HELD, YES THUS, FROM THE ABOVE JUDGMENTS AND THE PROVISIONS OF SECTIONS 147 AND 148, AS STOOD NOW, AT LEAST ONE ISSUE/REASON, BASED ON WHICH THE ASSESSMENT IS REOPENED SHO ULD SURVIVE IN THE FINAL ASSESSMENT ORDER IN ORDER TO RETAIN THE JURISDICTION FOR COMPLETING THE REASSESSMENT. ONLY THEN THE ASSESSING OFFICER CAN PROCEED TO CONSIDER A NY OTHER ISSUE, WHICH MAY COME TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, IN THE REASSESSMENT. ON THE CONTRARY, IF THE ASSESSING OFFICER FEELS THAT ALL THE ISSUES/REASONS, BASED ON WHICH THE ASSESSMENT IS REOPENED, ARE SATISFIED IN FAVOUR OF THE ASSESSEE; OR FAILS TO MAKE ANY ASSESSMENT ON SUCH 12 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 ISSUES / REASONS, THE ASSESSING OFFICER WILL CEASE TO HAVE THE JURISDICTION TO PROCEED WITH THE REASSESSMENT PROCEEDINGS AND CONSEQUENTLY CANNOT INCLUDE/CONSIDER ANY OTHER ISSUE (OTHER THAN THOSE RECORDED IN THE REASONS OF REOPENING) FOR REASSESSMENT . IN THE PRESENT CASE, AS DETAILED ABOVE, THE ASSESSMENT IS REOPENED FOR (I) DISALLOWING THE DEPRECIATION CLAIMED ON THE LET-OUT BUILDINGS AND (II) ASSESSING THE RENTAL INCOME FROM THE PANDIYAN STREET PROPERTY. HOWEVER, APPARENTLY SATISFIED WITH THE DETAILS/EXPLANATIONS FLIED THE ASSESSEE, THE ASSESSING OFFICER HAS NOT ASSESSED ANY INCOME ON ACCOUNT OF THESE TWO REASONS IN HIS REASSESSMENT ORDER U/S.143(3) R.W.S.147 OF THE ACT. THUS, HAVING NOT FOUND ANY ESCAPEMENT OF INCOME IN ANY OF THE ISSUES, FOR THE ASSESSMENT IS REOPENED, AND HAS NOT MADE ANY ASSESSMENT ON SUCH ISSUES, THE ASSESSING OFFICER CEASED TO HAVE THE JURISDICTION FOR REASSESSMENT U/S.147 OF THE ACT. CONSEQUENTLY, THE ASSESSING OFFICER'S ACTION OF REASSESSMENT, BY CONSIDERING OTHER ISSUES LIKE DISALLOWANCE OF EXPENSES, DETERMINATION OF CAPITAL GAINS ON SALE OF AGRICULTURAL LANDS ETC, IS NOT VALID AND CANNOT SURVIVE. THUS, THE ACTION OF ASSESSING OFFICER IN MAKING REASSESSMENT U/S.143(3) R.W.S.147 CANNOT BE SUSTAINED ON THIS REASON ALONE. 8. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS) AND THE DECISIONS IN THE CASE OF JET AIRWAYS (SUPRA) AND RANBAXY LABORATORIES LTD. (SUPR A), WE ARE IN AGREEMENT WITH THE FINDINGS OF THE COMMISSIO NER OF INCOME TAX (APPEALS) THAT ACTION OF THE ASSESSING O FFICER IN MAKING REASSESSMENT BY CONSIDERING OTHER ISSUES LIK E 13 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 DISALLOWANCE OF EXPENSES, DETERMINATION OF CAPITAL GAINS ON SALE OF AGRICULTURAL LANDS ETC. ARE NOT VALID AS TH E ASSESSING OFFICER FAILED TO APPLY THE REASONS RECORDED FOR RE OPENING OF ASSESSMENT IN COMPLETING THE REASSESSMENT PROCEEDIN GS. IN OTHER WORDS, THE ASSESSING OFFICER HAS NOT ACTED UP ON THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WHICH HE BELIEVED THAT INCOME HAD ESCAPED ASSESSMENT. THUS, THE ACTION OF THE ASSESSING OFFICER IN MAKING REASSESSM ENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT IS BAD IN LAW. 9. THE REVENUE HAS RAISED SEVERAL GROUNDS ON MERITS WHICH WERE DECIDED BY THE COMMISSIONER OF INCOME TA X (APPEALS) IN FAVOUR OF THE ASSESSEE . SINCE WE HAVE HELD THAT REASSESSMENT IS BAD IN LAW, WE ARE NOT INCLINED TO GO INTO THE MERITS OF ADDITIONS/DISALLOWANCES MADE IN THE REASS ESSMENT ORDER AND THIS WILL BE ONLY AN ACADEMIC EXERCISE. I N OUR OPINION, EVEN THE COMMISSIONER OF INCOME TAX (APPEA LS) SHOULD NOT HAVE GONE INTO MERITS OF VARIOUS ADDITIONS/DISALLOWANCES MADE IN THE REASSESSMENT WH EN IT 14 ITA NO.2123/MDS/2014 & C.O. NO.108/MDS/2014 WAS HELD BY THE COMMISSIONER OF INCOME TAX (APPEALS ) THAT REASSESSMENT ITSELF IS BAD IN LAW. 10. THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS). SINCE WE HAVE UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFRU CTUOUS AND THE SAME IS DISMISSED ACCORDINGLY. 11. IN THE RESULT THE APPEAL OF THE REVENUE AND CRO SS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2015. SD/- SD/- ( . ) ( ! #$ ) (D.KARUNAKARA RAO) (CHALLA NAGENDR A PRASAD ) & / ACCOUNTANT MEMBER #' & / JUDICIAL MEMBER # /CHENNAI, ) /DATED 29 TH JULY, 2015 SOMU '-. /. /COPY TO: 1. APPELLANT 2 RESPONDENT 3. 0 () /CIT(A) 4. 0 /CIT 5. . ''4 /DR 6. 6 /GF .