ACIT, Circle-1(2), Hyderabad V. Divya Shakti Granites Ltd, Hyderabad

CO 73/HYD/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8714 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 13-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Business income; Depreciation; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion; Reassessment proceedings
• Section: 143(3); 10B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1228 TO 1230/HYD/11 ASSESSMENT YEAR: 2003-04 TO 2005- 06 ACIT, CIR-1(2), HYDERABAD. - VS M/S. DIVYA SHAKTI GRANITES LTD., HYDERABAD. PAN:AABCD0680K {APPELLANT) (RESPONDENT) C.O. NOS. 71 TO 73/HYD/11 ASSESSMENT YEAR: 2003-04 TO 2005- 06 M/S. DIVYA SHAKTI GRANITES LTD., HYDERABAD. PAN:AABCD0680K . VS ACIT, CIR-1(2), HYDERABAD. {APPELLANT) (RESPONDENT) DEPARTMENT BY : SRI M.H. NAIK ASSESSEES BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING : 20-6-2013 DATE OF PRONOUNCEMENT : 28-6-2013 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER. THESE SET OF APPEALS BY THE DEPARTMENT AND CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST A C OMMON ORDER DATED 27-4-2011 PASSED BY THE CIT (A) II, HYDERABA D PERTAINING TO THE ASSESSMENT YEARS 2003-04 TO 2005 -06. SINCE ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 2 COMMON AND IDENTICAL ISSUES ARE INVOLVED IN ALL THE SE APPEALS AND CROSS OBJECTIONS, THESE ARE TAKEN UP TOGETHER A ND DISPOSED OF BY THIS COMBINED ORDER FOR THE SAKE OF CONVENIEN CE. WE WILL FIRST DEAL WITH CROSS OBJECTIONS OF THE ASSESSEE AS THE ASSESSEE HAS RAISED THE LEGAL ISSUE WITH REGARD TO THE VALID ITY OF THE PROCEEDINGS INITIATED U/S 147 OF THE ACT. C.O NO.7 1/HYD/11 IS TIME BARRED BY 32 DAYS WHEREAS THE OTHER TWO C.OS B EING CO NOS. 72 AND 73 OF 2011 ARE TIME BARRED BY 22 DAYS. THE ASSESSEE HAS FILED A PETITION SUPPORTED BY AN AFFID AVIT EXPLAINING THE CAUSE OF DELAY. AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, WE ARE INCLINED TO CONDONE THE DELAY IN F ILING THESE C.OS AND ADMIT THEM FOR DISPOSAL. ALL THESE C.OS H AVE BEEN FILED ON THE FOLLOWING COMMON GROUNDS:- I) THE REOPENING U/S 147 OF THE IT ACT OF THE ASSESSMENT ORIGINALLY COMPLETED ON THE SAME SET OF FACTS CONSIDERED WHILE MAKING ASSESSMENT U/S 143(3) AMOUNTED TO CHANGE THE OPINION AND THEREFORE INVALID. II) THE ASSESSMENT OF ANY OTHER INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT IS INVALID IN LAW AS THE PROCEEDINGS U/S 147 ARE INVALID AND AS THE INCOME BELIEVED TO HAVE ESCAPED ASSESSMENT WAS ACTUALLY FOUND NOT TO HAVE ESCAPED ASSESSMENT. 2. BRIEFLY THE FACTS RELATING TO THE ISSUE ARE THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND PROCESSING OF GRANITE SLABS AND TILES. THE ASSESSEE FILED ITS RETURN FOR THE AFORESAID ASSESSMENT YEAR CLAIMING E XEMPTION U/S 10B OF THE ACT SINCE THE ENTIRE SALE IS THROUGH EXP ORT. THE ASSESSMENTS WERE COMPLETED FOR ASST. YEAR 2003-04 U /S 143(1) OF THE ACT AND FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 3 U/S 143(3) OF THE ACT BY ACCEPTING THE EXEMPTION CL AIMED U/S 10B OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICE R INITIATED PROCEEDINGS U/S 147 OF THE ACT REOPENING THE ASSESS MENT FOR ALL THE AFORESAID ASSESSMENT YEARS HAVING REASON TO BEL IEVE THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF EXEMPTI ON BEING WRONGLY ALLOWED U/S 10B, OF THE ACT AS THE ASSESSEE IS NOT ENGAGED IN ANY MANUFACTURING ACTIVITY AND THEREFORE THE EXEMPTION WAS NEEDED TO BE WITHDRAWN. IN COURSE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSEE OBJECTED TO THE REOPENING OF THE ASSESSMENT BY CONTENDING THAT THE ASSESSMENT CANNOT BE REOPENED ON A MERE CHANGE OF OPINION. IT WAS CONTENDED BY THE ASSESSEE THAT DURING THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE HAD SUBMITTED ALL THE RELE VANT MATERIALS AND RECORDS AND THE ASSESSING OFFICER HAV ING EXAMINED ALL MATERIALS AND COMPLETED THE ASSESSMENT BY ALLOWING EXEMPTION U/S 10B, REOPENING OF THE ASSESS MENT ON CONSIDERING THE VERY SAME MATERIAL WOULD AMOUNT TO CHANGE OF OPINION. THE ASSESSING OFFICER COMPLETED THE ASSES SMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT ALLOWING DE DUCTION U/S 10B OF THE ACT. HOWEVER, THE ASSESSING OFFICER DISA LLOWED THE CLAIM OF SET OFF OF UNABSORBED DEPRECIATION BROUGHT FORWARD FROM THE ASSESSMENT YEARS 1995-96 AND 1996-97. THE ASSE SSEE BEING AGGRIEVED OF THE ASSESSMENT ORDER PASSED FOR THE AFORESAID YEARS U/S 143(3) READ WITH SECTION 147 PR EFERRED AN APPEAL BEFORE THE CIT (A). 3. BEFORE THE CIT (A), THE ASSESSEE CHALLENGED THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT AS WELL AS THE ME RITS OF DISALLOWANCE. THE CIT (A) WHILE UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER IN INITIATING PROCEEDINGS U/S 147 OF THE ACT FOR ALL THE ASSESSMENT YEARS HOWEVER ALLOWED THE ASSESS EES ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 4 CONTENTION WITH REGARD TO MERITS OF THE DISALLOWANC ES AND ACCEPTED THE ASSESSEES CLAIM OF SET OFF OF UNABSOR BED DEPRECIATION RELATING TO THE ASSESSMENT YEARS 1995- 96 TO 1996- 97 AGAINST THE BUSINESS INCOME FOR THE ASSESSMENT Y EARS 2003- 04, 2004-05 AND 2005-06 AND ACCORDINGLY ALLOWED THE APPEALS OF THE ASSESSEE. 4. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE AS SESSEE SUBMITTED BEFORE US THAT THE REOPENING OF THE ASSES SMENT AS PER THE REASONS RECORDED IS ON THE GROUND THAT EXEMPTIO N U/S 10B WERE NEEDED TO BE WITHDRAWN SINCE GRANITE INDUSTRY IS NOT ELIGIBLE FOR SUCH EXEMPTION. IT WAS SUBMITTED THAT HOWEVER WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFI CER HAS ALLOWED THE EXEMPTION CLAIMED U/S 10B OF THE ACT A S WAS THE CASE IN THE ORIGINAL ASSESSMENT ORDER. HOWEVER, TH E ASSESSING OFFICER RESORTED TO DISALLOWING THE CLAIM OF SET OF F OF UNABSORBED DEPRECIATION BROUGHT FORWARD FROM THE ASSESSMENT YE AR 1995-96 AND 1996-97. IT WAS SUBMITTED THAT THE DISALLOWANC E OF CLAIM OF SET OFF OF UNABSORBED DEPRECIATION WAS NOT THE SUBJ ECT MATTER OF REOPENING OF THE ASSESSMENT AS PER THE REASONS RECO RDED. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT CANNOT ASSESS OR REASSESS AN INCOME WITHOUT ASSESSING OF THE INCOME WHICH WAS THE SUBJECT MATTER OF REOPENING AS PER THE REASONS RECORDED. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE FOL LOWING DECISIONS:- I) CIT VS. JET AIRWAYS (I) LTD. (331 ITR 336 (BO M.) II) RANBAXY LABORATORIES LTD. VS. CIT (336 ITR 136 (DEL ] III) CIT VS. SHRI RAM SINGH (306 ITR 343) (RAJ.) ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 5 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTING THE ORDERS OF THE REVENUE AUTHORIT IES ON THIS ISSUE SUBMITTED THAT EVEN IF THE REOPENING IS MADE ON ONE ISSUE, THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO ASSESS ANY OTHER ESCAPED INCOME IF IT COMES TO HIS NOTICE IN T HE COURSE OF REASSESSMENT PROCEEDINGS. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE DECISIONS CITED BEFORE US. IT IS QUITE EVIDENT FRO M THE ORDERS OF THE REVENUE AUTHORITIES THAT ASSESSMENTS IN ALL THE AFORESAID ASSESSMENT YEARS WERE REOPENED FOR WITHDRAWING THE EXEMPTION CLAIMED U/S 10B OF THE ACT AS ACCORDING TO THE ASSE SSING OFFICER, GRANITE INDUSTRY CANNOT BE CONSIDERED AS A MANUFACT URING ACTIVITY. HOWEVER, WHILE COMPLETING THE ASSESSMENT S FOR THE AFORESAID YEARS U/S 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESSING OFFICER HAS NOT DISTURBED THE EXEMPTION C LAIMED U/S 10B OF THE ACT WHICH WAS ALLOWED IN THE ORIGINAL AS SESSMENT. ON THE OTHER HAND, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF SET OFF OF UNABSORBED DEPRECIATION RELATING TO ASSE SSMENT YEARS 1995-96 AND 1996-97 AGAINST THE BUSINESS INCOME DEC LARED FOR THE AFORESAID ASSESSMENT YEARS. THUS, IT IS VERY M UCH CLEAR IN THE REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS MADE ASSESSMENT OF INCOME OTHER THAN THE INCOME WHICH WA S SUBJECT MATTER FOR REOPENING AS PER THE REASONS RECORDED W HILE INITIATING PROCEEDINGS U/S 147 OF THE ACT. IN OTHE R WORDS, THE REASONS RECORDED FOR REOPENING THE ASSESSMENT HAS N O NEXUS WITH THE INCOME ULTIMATELY ASSESSED U/S 147 OF THE ACT. THE ASSESSING OFFICER WITHOUT ASSESSING THE ESCAPED INC OME AS PER THE REASONS RECORDED HAS CONSIDERED SOME OTHER INCO ME WHICH WAS NEVER THE SUBJECT MATTER OF REOPENING AS PER TH E REASONS ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 6 RECORDED. THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF JET AIRWAYS (I) LTD. (SUPRA) WHILE EXAMINING THE IDENT ICAL ISSUE HELD AS UNDER:- I NTERPRETING THE PROVISION AS IT STANDS AND WITHOUT ADDING OR DEDUCTING FROM THE WORDS USED BY PARLIAME NT, IT IS CLEAR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND FOLLOWING THE ISSUANCE OF A N OTICE UNDER SECTION 148, THE ASSESSING OFFICER HAS POWER TO ASSESS OR REASSESS THE INCOME WHICH HE HAS REASON T O BELIEVE HAD ESCAPED ASSESSMENT, AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. THE WORDS' AND ALSO' CANN OT BE IGNORED. THE INTERPRETATION WHICH THE COURT PLAC ES ON THE PROVISION SHOULD NOT RESULT IN DILUTING THE EFF ECT OF THESE WORDS OR RENDERING ANY PART OF THE LANGUAGE U SED BY PARLIAMENT OTIOSE. PARLIAMENT HAVING USED THE WO RDS' ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT', THE WORDS 'AND ALSO' CANNOT BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRARY, THE CORR ECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BE ING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFICA NCE THAT PARLIAMENT HAS NOT USED THE WORD 'OR'. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING TH E WORD 'AND'. THE WORDS' AND' AS WELL AS 'ALSO' HAVE BEEN USED TOGETHER AND IN CONJUNCTION. THE SHORTER OXFORD DICTIONARY DEFINES THE EXPRESSION' ALSO' TO MEAN FURTHER, IN ADDITION BESIDES, TOO. THE WORD HAS BEEN TREATED AS BEING RELATIVE AND CONJUNCTIVE. EVI DENTLY THEREFORE, WHAT PARLIAMENT INTENDS BY USE OF THE WO RDS 'AND ALSO' IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDER SECTION 148(2) MUST ASSESS OR REASSESS: (I) SUCH INCOME; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE WORDS 'SUCH INCOME' REFER TO THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT, AND IN RESPECT OF WHICH THE ASSESSING: OFFICER HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT. HENCE, THE LANGUAGE WHICH HAS BEEN USED BY PARLIAMENT IS INDIC ATIVE OF THE POSITION THAT THE ASSESSMENT OR REASSESSMENT MUST BE IN RESPECT OF THE INCOME IN RESPECT OF WHIC H HE HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF THE PROCEEDINGS AS HAVING ESCAPED ASSESSM ENT. ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 7 IF THE INCOME, THE ESCAPEMENT OF WHICH WAS THE BASI S OF THE FORMATION OF THE REASON TO BELIEVE IS NOT ASSES SED OR REASSESSED, IT WOULD NOT BE OPEN TO THE ASSESSING O FFICER TO INDEPENDENTLY ASSESS ONLY THAT INCOME WHICH COME S TO HIS NOTICE SUBSE QUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION AS HAVING ESCAPED ASSESSMENT. IF UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148(2), THE ASSESSING OFFICER ACCEPTS THE OBJECTIONS OF THE ASS ESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WA S THE BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HI M TO ASSESS INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. PARLIAMENT WHEN IT ENACTED THE PROVISIONS OF SECTIO N 147 WITH EFFECT FROM APRIL 1, 1989 CLEARLY STIPULATED T HAT THE ASSESSING OFFICER HAS TO ASSESS TO REASSESS THE INC OME WHICH HE HAD REASON TO BELIEVE HAD ESCAPED ASSESSME NT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH C AME TO HIS NOTICE DURING THE PROCEEDING. IN THE ABSENCE OF THE ASSESSMENT OR REASSESSMENT OF THE FORMER, HE CANNOT INDEPENDENTLY ASSESS THE LATTER. THE HIGH COURT FURTHER HELD AS UNDER:- EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESS MENT OF REASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER SECTION 14 8. SETTING OUT THE REASONS, FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HE LD 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 CONT ENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER TH E SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS E FFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSES S THE INCOME (' SUCH INCOME') WHICH ESCAPED ASSESSMENT AN D WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER I NCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVE R, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPT ED THE ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 8 CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOM E WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE H AD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESC APED 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 B Y THE ASSESSEE. WE HAVE APPROACHED THE ISSUE OF INTERPRETATION THAT HAS ARISEN FOR DECISION IN THESE APPEALS, BOTH AS A MAT TER OF FIRST PRINCIPLE, BASED ON THE LANGUAGE USED IN SECT ION 147 AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. W E AGREE WITH THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT SECTION 147 AS IT STAND S POSTULATES THAT UPON THE FORMATION OF A REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T FOR ANY 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 ESCAP ED ASSESSMENT. THE WORDS AND ALSO' ARC USED IN A CUMULATIVE AND CONJUNCTIVE SENSE. TO READ THESE WOR DS AS BEING IN THE ALTERNATIVE WOULD BE TO REWRITE THE LANGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPPORTED BY THE BACK GROUND 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. PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DECISION. WHILE IT IS OPEN T O PARLIAMENT, HAVING REGARD TO THE PLENITUDE ITS LEGI SLATIVE POWERS TO DO SO, THE PROVISIONS OF SECTION 147 AS THEY STOOD AFTER THE AMENDMENT OF APRIL 1, 1989, CONTINU E TO HOLD THE FIELD. 7. THE HONBLE DELHI HIGH COURT ALSO FOLLOWED THE AFORESAID RATIO IN CASE OF RANBAXY LABORATORIES LTD. VS. CIT (336 ITR 136) (DELHI) WHEREIN IT WAS HELD AS UN DER:- WE ARE IN COMPLETE AGREEMENT WITH THE REASONING OF THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. JET AIRWAYS (I) LIMITED (2011) 331 ITR 23 6 (BOM). WE MAY ALSO NOTE THAT THE READING OF SECTIO N 147 IS INCOME ESCAPING ASSESSMENT AND THAT OF SECTION 148 ISSUE NOTICE WHERE INCOME ESCAPED ASSESSMENT. SECTIONS 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO SECTION 147. SUB-SECTION (2) OF SECTION 148 MANDAT ES REASONS FOR ISSUANCE OF NOTICE BY THE ASSESSING OFF ICER ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 9 AND SUB-SECTION (1) THEREOF MANDATES SERVICE OF NOT ICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEEDS TO ASSESS, REASSESS OR RECOMPUTE THE ESCAPED INCOME. SECTION 147 MANDATES RECORDING OF REASONS TO BELIEV E BY THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE T O TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. AS PER EXPLANATION 3 IF DURING THE COURSE OF THESE PROCEEDINGS THE ASSESSING OFFIC ER COMES TO CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS W ERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WO ULD BE COM PETENT TO MAKE ASSESSMENT OF THOSE ITEMS. HOWEVER, THE LEGISLATURE COULD NOT BE PRESUMED TO H AVE INTENDED TO GIVE BLANKET POWERS TO THE ASSESSING OF FICER THAT ON ASSUMING ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQUIRY AND THEREBY INCLUDING DIFFERE NT ITEMS OF INCOME NOT CONNECTED OR RELATED WITH THE REASONS TO BELIEVE, ON THE BASIS OF WHICH HE ASSUME D JURISDICTION. 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. 8. THIS BENCH OF THE TRIBUNAL ALSO IN A RECENT ORD ER PASSED IN THE CASE OF M/S SWARNADHARA IJMII INTEGRATED TOWNS HIP DEVELOPMENT COMPANY, MADHAPUR, HYDERABAD VS. DCIT (ITA NO.1803/HYD/2011 DATED 21-6-2013 FOLLOWING THE AFOR ESAID RATIO HAS HELD THAT THE ASSESSING OFFICER CANNOT A SSESS ANY OTHER INCOME WITHOUT ASSESSING THE INCOME WHICH WAS THE SUBJECT MATTER OF REOPENING. FOLLOWING THE RATIO L AID DOWN AS ABOVE, WE ARE OF THE VIEW THAT IN A PROCEEDING U/S 147 OF THE ACT, THE ASSESSING OFFICER IS EMPOWERED TO ASSESS A NY OTHER ESCAPED INCOME WHICH COMES TO HIS NOTICE IN COURSE OF THE REASSESSMENT PROCEEDINGS ALONG WITH ESCAPED INCOME WHICH WAS THE SUBJECT MATTER OF REOPENING AS PER THE REASONS RECORDED THEREIN. WITHOUT ASSESSING THE INCOME AS PER THE RE ASONS RECORDED, THE ASSESSING OFFICER CANNOT ASSESS ANY O THER INCOME WHICH WAS NOT THE SUBJECT MATTER OF REOPENING. THER EFORE, IN THE ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 10 FACTS OF THE PRESENT CASE, THE ASSESSING OFFICER CO ULD NOT HAVE INDEPENDENTLY ASSESSED SUCH OTHER INCOME WITHOUT AS SESSING THE INCOME WHICH ESCAPED ASSESSMENT AS PER THE REASONS RECORDED AND ON THE BASIS OF WHICH THE PROCEEDINGS U/S 147 W ERE INITIATED. CONSIDERING THE TOTALITY OF FACTS AND T HE CIRCUMSTANCES IN THE LIGHT OF THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS DISCUSSED HEREIN ABOVE, WE ARE OF THE VIEW THAT THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF TH E ACT FOR THE AFORESAID ASSESSMENT YEARS I.E., 2003-04, 2004-05 A ND 2005-06 ARE LEGALLY UNSUSTAINABLE AND ACCORDINGLY WE ANNUL THE AFORESAID ASSESSMENT ORDERS. THUS, THE GROUNDS RAISED IN TH E CROSS OBJECTIONS ARE ALLOWED. 9. IN THE RESULT, ALL THE C.OS ARE ALLOWED. ITA NOS. 1228 TO 1230/HYD/2011 (DEPARTMENTAL APPEAL S) :- 10. IN VIEW OF OUR DECISION IN C.O NOS.71 TO 73/HYD /2011 ANNULLING THE ASSESSMENTS ON LEGAL ISSUE, THE APPEA LS FILED BY THE DEPARTMENT HAVE BECOME INFRUCTUOUS AND HENCE DE SERVE TO BE DISMISSED. 11 IN THE RESULT, ALL THE DEPARTMENTAL APPEALS ARE DISMISSED AS INFRUCTUOUS. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 -06 -2013. SD/- (CHANDRA POOJARI) SD/- (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: THE 28 TH JUNE, 2013. ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 11 COPY FORWARDED TO: 1. ACIT, CIRCLE- 1(2), HYDERABAD. 2. M/S. DIVYA SHAKTI GRANITES LTD., 7-1-58, DIVYA SHAK TI COMPLEX, AMEERPET, HYDERABAD. 3. CIT (A)-II, HYDERABAD. 4. CIT CONCERNED, HYDERABAD. 5. THE DR, INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD. JMR* ITA NOS1228 TO 1230 OF 2011 DIVYASHAKTI GRANITES LTD., HYD. ================== 12