M.Baskaran, CHENNAI V. ACIT, CHENNAI

ITA 120/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8077 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2016
• Court: TRIBUNAL
• Assessee Lawyers: M KARUNAKARAN SHRI CLEM
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 50C; 147; 148; 12; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO.120/MDS/2016 / ASSESSMENT YEAR : 2008-09 SHRI M. BASKARAN, BY L/R SMT. B. AHANTHI, 11/5, VALIAMMAL STREET, ALAGAPPA NAGAR, KILPAUK, CHENNAI 600 010. PAN : AAFPB 8375 E V. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(2), CHENNAI - 34. (/ APPELLANT) (/ RESPONDENT) / /APPELLANT BY : SHRI M. KARUNAKARAN, ADVOCATE / /DEPARTMENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT !' / DATE OF HEARING : 19.10.2016 #$ !' / DATE OF PRONOUNCEMENT : 10.11.2016 & / O R D E R PER CHANDRA POOJARI: ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, CHENNAI DATED 14.10.2015 PERTAINING TO ASSESSMENT YEAR 2008-09. 2 I.T.A. NO.120/MDS/16 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEA L IS THAT THE LD. CIT(A) ERRED IN REJECTING THE SUBMISSIONS OF TH E ASSESSEE THAT IN THE RE-ASSESSMENT THE AO CANNOT MAKE ANY OTHER ADDI TION WHEN AN ADDITION OR WHICH ASSESSMENT WAS RE-OPENED WAS NOT JUSTIFIED. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE FIL ED RETURN OF INCOME ON 01.10.2008 ADMITTING INCOME OF 1,18,91,300/- WHICH INCLUDED A SUM OF 54,91,518/- BEING PROFIT ON SALE OF LAND SHOWN AS INCOME FROM BUSINESS. SUBSEQUENTLY, THE ASSESSM ENT U/S. 143(3) R.W.S.147 OF THE ACT WAS COMPLETED ON 24.02. 2014 DETERMINING A TOTAL INCOME OF 2,48,47,300/- INTER ALIA PREFERRING ADDITIONS ON ACCOUNT OF STOCK IN TRADE CONVERTED IN TO FIXED ASSETS AND U/S.40A(3) OF THE ACT. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD. CIT(A). ON APPEAL, LD. CIT(A) DELETED THE ADDITION OF 24,56,000/- RELATING TO STOCK IN TRADE CONVERTED INTO FIXED ASSETS. HOWEVE R, LD. CIT(A) SUSTAINED THE ADDITION U/S.40A(3) OF THE ACT. AGAI NST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. A.R. SUBMITTED THAT LD. CIT(A ) ERRED IN REJECTING THE SUBMISSIONS OF THE ASSESSEE THAT IN T HE RE- ASSESSMENT, THE AO CANNOT MAKE ANY OTHER ADDITION, WHEN AN ADDITION OR WHICH ASSESSMENT WAS REOPENED WAS NOT J USTIFIED. 3 I.T.A. NO.120/MDS/16 FURTHER, HE SUBMITTED THAT THE AO REOPENED THE ASSE SSMENT AS IF INCOME AROSE WHEN THE ASSET WAS CONVERTED FROM FIXE D ASSET INTO STOCK IN TRADE WITHOUT ANY SALE DURING THE YEAR WHI CH WAS HELD AS NOT CORRECT BY THE CIT(A). SINCE THE ASSESSMENT WA S RE-OPENED ONLY THAT ISSUE AND THE SAME HAVING BEEN DELETED BY CIT(A) THE AO IS PRECLUDED FROM MAKING THE ADDITION U/S.40A(3) OF THE ACT. LD. A.R. RELIED ON THE DECISION OF PUNJAB & HARYANA HIG H COURT REPORTED IN 331 ITR 236 AND ALSO THE DECISION OF TH E SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS LTD. (88 ITR 192) AND HE ALSO RELIED ON THE FOLLOWING JUDGMENTS : I) CIT VS. JET AIRWAYS (I) LTD. IN 331 ITR 236(BO M.) II) CIT VS. DR. DEVENDRA GUPTA IN 336 ITR 59(RAJ.) III) RANBAXY LABORATORIES LTD. VS. CIT IN 336 ITR 1 36(DEL) IV) CIT VS. MOHAMED JUNDED DONDI IN 355 ITR 172(GUJ .) V) ACIT VS. MAJOR DEEPAK MEHTA IN 344 ITR 641 (CHHA TISGARH) 5. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE OR DER OF THE CIT(A) AND PLACED RELIANCE ON THE JUDGMENT OF KARNA TAKA HIGH COURT IN THE CASE OF GOVINDARAJU VS. ITO IN 377 ITR 243. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IALS ON RECORD.THE QUESTION ARISES FOR OUR CONSIDERATION IS WHEN NO ADDITION WAS MADE ON THE REASONS, FOR WHICH THE ASSESSMENT W AS REOPENED, IS IT OPEN TO THE ASSESSING OFFICER TO ASSESS SOME OTHER INCOME 4 I.T.A. NO.120/MDS/16 INDEPENDENTLY OTHER THAN THE REASONS RECORDED ?. TH IS QUESTION WAS EXAMINED BY BOMBAY HIGH COURT IN THE CASE OF JET AI RWAYS (I) LTD. LATTER THIS JUDGMENT WAS CONSIDERED BY THE HYDERAB AD BENCH IN THE CASE OF M/S. VANSUN ERECTORS PVT. LTD. V. ITO ( ITA NO.456/HYD/2012 DATED 5.4.2013), WHEREIN IT WAS HEL D AS UNDER : 10. IN THE CASE OF TRAVANCORE CEMENTS V/S. ADDL. CIT AND ANR. (305 ITR 178), IT WAS HELD THAT EXPLANATIO N OF S.147 OF THE ACT DOES NOT IN ANY MANNER EVEN PURPOR T TO EXPAND THE POWER TO THE ASSESSING OFFICER UNDER S.147 OF THE ACT. IN ANY CASE, AN EXPLANATION CANNO T EXPAND THE SCOPE AND SPEECH OF THE MAIN BODY OF TH E STATUTORY PROVISION. IN THE LEADING DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT JET AIRWAYS (I ) LTD. (331 ITR 236), WHILE CONSIDERING AN IDENTICAL SITUATION, THE HONBLE HIGH COURT, INTERPRETED THE PROVISIONS OF S.147 OF THE ACT HAS HELD THAT THE SI TUATION WOULD NOT BE DIFFERENT BY VIRTUE OF INTRODUCTION OF EXPLANATION 3 TO THE SAID SECTION. IT HAS BEEN HELD IN THAT CASE THAT IF UPON ISSUANCE OF NOTICE UNDER S.1 48 OF THE ACT, THE ASSESSING OFFICER DOES NOT ASSESS THE INCOME, WHICH HE HAD REASON TO BELIEVE HAS ESCAPED ASSESSMENT AND WHICH FORMS THE BASIS FOR THE ISSUAN CE OF NOTICE UNDER S.148 OF THE ACT, IT IS NOT OPEN TO ASSESSING OFFICER TO ASSESS INDEPENDENTLY ANY OTHER INCOME, WHICH DOES NOT FORM THE SUBJECT MATTER OF T HE NOTICE. IT ALSO OBSERVED THAT FOR EVERY NEW ISSUE C OMING BEFORE THE ASSESSING OFFICER, DURING THE PROCEEDIN GS OF ASSESSMENT OR RE-ASSESSMENT OF ESCAPED INCOME, WHICH HE INTENDS TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER S.148 OF THE ACT. IN THE PRESENT CASE BEFORE US, SINCE NO ADDITIONS W ERE MADE IN RELATION TO THE GROUNDS FOR WHICH THE ASSESSMENT WAS REOPENED, THE SCOPE OF ADDITIONS CANNOT BE ENLARGED TO INCLUDE INCOMES WHICH ARE NOT WITHIN THE REALM OF THE RE-OPENING OF THE ASSESSMEN T. 5 I.T.A. NO.120/MDS/16 THE REOPENING OF THE ASSESSMENT, AS PER THE REASONS RECORDED FOR THAT PURPOSE, WAS ONLY IN RELATION TO RECONCILIATION OF RECEIPTS SHOWN IN THE TDS CERTIFI CATES AND THE RECEIPTS CREDITED IN PROFIT & LOSS ACCOUNT, AND HENCE, FOLLOWING THE DECISION OF THE BOMBAY HIGH CO URT IN THE CASE OF JET AIRWAYS (SUPRA), WE FIND THAT TH E IMPUGNED RE-ASSESSMENT MADE BY THE ASSESSING OFFICER CANNOT BE UPHELD. 7. FURTHER, CO-ORDINATE BENCH OF THE TRIBUNAL, HYDERAB AD IN THE CASE OF SWARNADHARA IJMII INTEGRATED TOWNSHIP DEVEL OPMENT COMPANY V. DCIT (HYD) [27 ITR (TRIB) 736] DATED 2 1 ST JUNE, 2013, WAS ALSO FOLLOWED THE JUDGMENT OF THE BOMBAY HIGH C OURT AND HELD AS UNDER : 8. WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY EXAM INED THE DECISIONS CITED BEFORE US. AT THE OUTSET WE MAY MEN TION THAT THERE IS A SMALL ERROR IN THE ORDER OF THE DRP WITH REGARD TO THE ASSESSMENT YEAR IN DISPUTE WHICH IS WRONGLY MENTION ED AS 2008- 09 INSTEAD OF 2005-06. THE FIRST GROUND OF CHALLENG E OF THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 147 OF TH E ACT IS ON THE ISSUE OF NON COMMUNICATION OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. IT IS THE CONTENTION OF THE ASSESSE E THAT BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT COMMUNICATED THE REASONS FOR REOPENING OF ASSES SMENT. HOWEVER, FROM THE REPORT OF THE DCIT-III (3)/HYDERA BAD DATED 8-8-2012 SUBMITTED TO THE DRP WHICH HAS BEEN EXTRAC TED IN THE ORDER OF THE DRP, IT IS TO BE NOTED THAT THE DCIT H AS REPORTED THAT IN RESPONSE TO THE NOTICE ISSUED U/S 148, THE ASSESSEE FURNISHED INFORMATION CALLED FOR IN THE SAID NOTICE WITHOUT ASKING FOR COMMUNICATION OF REASON FOR REOPENING THE ASSES SMENT. IN COURSE OF HEARING BEFORE US, NO MATERIAL HAS BEEN P RODUCED WHETHER AFTER COMPLYING TO THE NOTICE ISSUED U/S 14 8 OF THE ACT, THE ASSESSEE HAS ACTUALLY SOUGHT FOR THE REASONS RE CORDED FOR REOPENING OF THE ASSESSMENT. ONLY IF THE ASSESSEE H AS SOUGHT FOR THE REASONS RECORDED AND THE ASSESSING OFFICER HAS NOT COMMUNICATED SUCH REASONS IN COURSE OF THE PROCEEDI NGS 6 I.T.A. NO.120/MDS/16 INITIATED U/S 147 OF THE ACT THEN ONLY SUCH PROCEED INGS WILL BE VITIATED AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO AND OTHERS WHICH WAS FOLLOWED BY THE CO-ORDINATE BENCH OF THE TRIBUN AL IN CASE OF SRI V. RADHAKRISHNA VS. DCIT (SUPRA). SO FAR AS THE SECOND GROUND OF CHALLENGE TO THE PROCEEDINGS INITIATED U/ S 147 OF THE ACT IS CONCERNED, AS CAN BE SEEN FROM THE ORDER OF THE DRP, THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT IS AS UNDER:- 'THE ASSESSEE COMPANY RECEIVED ADVANCES FROM CUSTOM ERS, BUT HAD NOT OFFERED ANY PROFIT ELEMENT FROM THOSE ADVAN CES EVEN THOUGH THERE IS AN INCREASE IN WORK-IN-PROGRESS. TH E ASSESSEE COMPANY IS FOLLOWING PROJECT COMPLETION METHOD. SIN CE THE ACCOUNTING STANDARD-2 (REVISED) IS MANDATORY FROM T HE ACCOUNTING PERIOD 2003-0-4. FOR THE ASST. YEAR 2005 -06 TOTAL INCOME OF THE ASSESSEE IS TO BE ASSESSED @8% OF THE WORK IN PROGRESS. SINCE THE ASSESSEE COMPANY HAS NOT DONE S O, THERE IS A REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO T AX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE INCOME-TAX ACT.' 9. A READING OF THE AFORESAID REASONS MAKES IT ABSO LUTELY CLEAR THAT THE ASSESSMENT WAS REOPENED FOR ASSESSING THE ESCAPED INCOME ON ACCOUNT OF INCREASE IN WORK IN PROGRESS W HICH ACCORDING TO THE ASSESSING OFFICER WAS DUE TO ADVAN CES RECEIVED FROM THE CUSTOMERS. HOWEVER, READING OF THE ASSESSM ENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE ACT REVEALS THE FACT THAT THE ISSUE WAS COMPLETELY GIVEN A GO BYE I N THE REASSESSMENT ORDER. THE ASSESSING OFFICER NOT EVEN HAS MADE A WHISPER ABOUT THE INCOME WHICH HE BELIEVED TO HAVE ESCAPED ASSESSMENT AS PER THE REASONS RECORDED BY HIM. IN F ACT, AS IT APPEARS DURING THE REASSESSMENT PROCEEDING THE ASSE SSING OFFICER HAD MADE A REFERENCE TO THE TPO FOR DETERMI NING THE ARM'S LENGTH PRICE AND HAS MADE ADDITIONS AS PER TH E ORDER PASSED BY THE TPO U/S 92CA(5) OF THE ACT MAKING TRA NSFER PRICING ADJUSTMENT. THUS, IT IS VERY MUCH CLEAR THA T THE REASSESSMENT HAS BEEN MADE FOR ASSESSMENT OF INCOME OTHER THAN THE INCOME ESCAPING ASSESSMENT AS PER THE REAS ONS RECORDED FOR FORMATION OF BELIEF WHILE INITIATING P ROCEEDING U/S 147 OF THE ACT. IN OTHER WORDS, THE REASONS RECORDE D FOR REOPENING THE ASSESSMENT HAS NO NEXUS WITH THE INCO ME ULTIMATELY ASSESSED U/S 147 OF THE ACT. THE HON'BLE BOMBAY HIGH COURT IN CASE OF CIT VS. JET AIRWAYS (I) LTD., (331 ITR 236) (SUPRA) WHILE EXAMINING IDENTICAL ISSUE AND AFTER I NTERPRETING EXPLANATION-3 TO SECTION 147 OF THE ACT HELD AS UND ER:- 7 I.T.A. NO.120/MDS/16 'INTERPRETING THE PROVISION AS IT STANDS AND WITHOU T ADDING OR DEDUCTING FROM THE WORDS USED BY PARLIAMENT, IT IS CLEAR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDER SEC TION 147 AND FOLLOWING THE ISSUANCE OF A NOTICE UNDER SECTION 14 8, THE ASSESSING OFFICER HAS POWER TO ASSESS OR REASSESS T HE INCOME WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSME NT, AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. THE WORDS' AND ALSO' CANNOT BE IGNORED. THE INTERPRETATION WHICH THE COU RT PLACES ON THE PROVISION SHOULD NOT RESULT IN DILUTING THE EFF ECT OF THESE WORDS OR RENDERING ANY PART OF THE LANGUAGE USED BY PARLIAMENT OTIOSE. PARLIAMENT HAVING USED THE WORDS' ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT', THE WORDS 'AND ALSO' CANNO T BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRARY, THE C ORRECT 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 LEGISLAT URE DID NOT REST CONTENT BY MERELY USING THE WORD 'AND'. THE WO RDS' AND' AS WELL AS 'ALSO' HAVE BEEN USED TOGETHER AND IN CONJU NCTION. 10. THE SHORTER OXFORD DICTIONARY DEFINES THE EXPRE SSION' ALSO' TO MEAN FURTHER, IN ADDITION BESIDES, TOO. THE WORD HAS BEEN TREATED AS BEING RELATIVE AND CONJUNCTIVE. EVIDENTL Y THEREFORE, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS 'AND AL SO' IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REAS ON TO BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDE R SECTION 148(2) MUST ASSESS OR REASSESS: (I) SUCH INCOME; AN D ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. THE WO RDS '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 ASSE SSMENT. HENCE, THE LANGUAGE WHICH HAS BEEN USED BY PARLIAME NT IS INDICATIVE OF THE POSITION THAT THE ASSESSMENT OR R EASSESSMENT MUST BE IN RESPECT OF THE INCOME IN RESPECT OF WHIC H HE HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSE SSMENT AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF THE PROCEEDINGS A S HAVING ESCAPED ASSESSMENT. IF THE INCOME, THE ESCAPEMENT O F WHICH WAS THE BASIS OF THE FORMATION OF THE REASON TO BEL IEVE IS NOT ASSESSED OR REASSESSED, IT WOULD NOT BE OPEN TO THE ASSESSING OFFICER TO INDEPENDENTLY ASSESS ONLY THAT INCOME WH ICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THE SECTION AS HAVING ESCAPED ASSESSMENT. IF UPON T HE ISSUANCE 8 I.T.A. NO.120/MDS/16 OF A NOTICE UNDER SECTION 148(2), THE ASSESSING OFF ICER ACCEPTS THE OBJECTIONS OF THE ASSESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT WO ULD NOT BE OPEN TO HIM TO ASSESS INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. PARLIAMENT WHEN IT ENACTED THE PROVI SIONS OF SECTION 147 WITH EFFECT FROM APRIL 1, 1989 CLEARLY STIPULATED THAT THE ASSESSING OFFICER HAS TO ASSESS TO REASSESS THE INCOME WHICH HE HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH CAME TO HIS NO TICE 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 ASSESSMENT OF R EASSESSMENT 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 ASSE SSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOT ICE 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 OV ERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN T HE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONS TRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATO RY. 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 DU RING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUIN G A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTION OF TH E ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FO RMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDE NTLY 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. 9 I.T.A. NO.120/MDS/16 11. 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 SECTION 14 7 AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WIT H THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE AS SESSEE THAT SECTION 147 AS IT STANDS POSTULATES THAT UPON THE F ORMATION OF A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THE ASSESSING O FFICER MAY ASSESS OR REASSESS SUCH INCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO HIS NOTICE SUBSEQU ENTLY DURING THE PROCEEDINGS AS HAVING ESCAPED ASSESSMENT. THE W ORDS 'AND ALSO' ARC USED IN A CUMULATIVE AND CONJUNCTIVE SENS E. TO READ THESE WORDS AS BEING IN THE ALTERNATIVE WOULD BE TO REWRITE THE LANGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPP ORTED BY THE BACKGROUND WHICH LED TO THE INSERTION TO EXPLAN ATION 3 TO SECTION 147. PARLIAMENT MUST BE REGARDED AS BEING A WARE OF THE INTERPRETATION THAT WAS PLACED ON THE WORDS' AND AL SO' BY THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH [2008] 306 I TR 343. PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DEC ISION. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITU DE ITS LEGISLATIVE POWERS TO DO SO, THE PROVISIONS OF SECT ION 147 AS THEY STOOD AFTER THE AMENDMENT OF APRIL 1, 1989, CONTINU E TO HOLD THE FIELD. ' 12. THE HON'BLE DELHI HIGH COURT ALSO FOLLOWED THE AFORESAID RATIO IN CASE OF RANBAXY LABORATORIES LTD. VS. CIT (336 I TR 136) (DELHI) WHEREIN IT WAS HELD AS UNDER:- '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 236 (BOM). W E MAY ALSO NOTE THAT THE READING OF SECTION 147 IS 'INCOME ESC APING ASSESSMENT' AND THAT OF SECTION 148 'ISSUE NOTICE W HERE INCOME ESCAPED ASSESSMENT'. SECTIONS 148 IS SUPPLEMENTARY AND COMPLIMENTARY TO SECTION 147. SUB-SECTION (2) OF SE CTION 148 MANDATES REASONS FOR ISSUANCE OF NOTICE BY THE ASSE SSING OFFICER AND SUB-SECTION (1) THEREOF MANDATES SERVICE OF NOT ICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEEDS TO A SSESS, REASSESS OR RECOMPUTE THE ESCAPED INCOME. SECTION 1 47 MANDATES RECORDING OF REASONS TO BELIEVE BY THE ASS ESSING OFFICER THAT THE INCOME CHARGEABLE TO TAX HAS ESCAP ED 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 PROCEED INGS THE ASSESSING OFFICER COMES TO CONCLUSION THAT SOME ITE MS HAVE 10 I.T.A. NO.120/MDS/16 ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WOULD BE COMPETE NT TO MAKE ASSESSMENT OF THOSE ITEMS. HOWEVER, THE LEGISLATURE COULD NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO THE ASSESSING OFFICER THAT ON ASSUMING ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQUIRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INCOME NOT CONNECTED OR RELATED WITH THE R EASONS TO BELIEVE, ON THE BASIS OF WHICH HE ASSUMED JURISDICT ION. FOR EVERY NEW ISSUE COMING BEFORE THE ASSESSING OFFICER DURIN G THE COURSE OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESC APED INCOME, AND WHICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER SECTION 148. ' 13. THE SAME VIEW HAS ALSO BEEN EXPRESSED BY THE HO N'BLE CHHATTISGARH HIGH COURT IN CASE OF ACIT VS. MAJOR D EEPAK MEHTA (344 ITR 641) AND IN AN UNREPORTED JUDGMENT OF HON' BLE GUJARAT HIGH COURT IN CASE OF CIT VS. MOHMED JUNED DADANI ( SUPRA) . THEREFORE CONSIDERED IN THE LIGHT OF THE RATIO LAID DOWN AS AFORESAID, IT CAN BE SEEN FROM THE FACTS ON RECORD THAT THE ESCAPED INCOME AS PER THE REASONS RECORDED ON THE B ASIS OF WHICH REOPENING OF THE ASSESSMENT WAS MADE HAS NOT AT ALL BEEN CONSIDERED IN THE FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 147 OF THE ACT WHEREAS OTHER INCOMES WERE CONSIDERED FOR ASSESSMENT WHICH DO NOT HAVE ANY NEXUS WITH THE REASONS RECORDED BY THE ASSESSING OF FICER WHILE INITIATING PROCEEDINGS U/S 147 OF THE ACT. IN OTHER WORDS, THE ASSESSING OFFICER HAS NOT ASSESSED OR REASSESSED TH E INCOME WHICH ESCAPED ASSESSMENT AS PER THE REASONS RECORDE D AND WHICH WAS THE BASIS FOR FORMATION OF BELIEF BUT HAS ASSESSED OTHER INCOME WHICH CAME TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF ASSESSMENT PROCEEDING. THEREFORE, HE COUL D NOT HAVE INDEPENDENTLY ASSESSED SUCH INCOME WITHOUT ASSESSIN G THE ESCAPED INCOME ON THE BASIS OF WHICH PROCEEDINGS U/ S 147 WERE INITIATED. IN AFORESAID VIEW OF THE MATTER, WE HOLD THAT THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTIO N 147 OF THE ACT IS INVALID IN LAW BECAUSE OF THE FACT THAT THE INCOME OTHER THAN THE INCOME WHICH FORMED THE BASIS FOR REOPENIN G WAS CONSIDERED FOR ASSESSMENT. THERE CANNOT BE ANY DISP UTE WITH THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CAS E OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA). HOWE VER THAT DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRES ENT CASE AS THE HON'BLE SUPREME COURT DID NOT CONSIDER THE ISSUE WH ETHER THE ASSESSING OFFICER CAN ASSESS OR REASSESS ANY INCOME INDEPENDENT OF OR IN EXCLUSION TO THE INCOME WHICH FORMED THE B ASIS FOR 11 I.T.A. NO.120/MDS/16 INITIATION OF PROCEEDING U/S 147 OF THE ACT. ACCORD INGLY, THE ASSESSMENT ORDER PASSED HAS TO BE DECLARED LEGALLY UNSUSTAINABLE. WE THEREFORE ANNUL THE ASSESSMENT OR DER DATED 5-10-2012 PASSED U/S 143(3) READ WITH SECTION 147 O F THE ACT. 8. FURTHER , THERE IS AN ORDER FROM COCHIN BENCH, C ONSISTING OF THE SAME MEMBERS IN THE CASE OF PADINJAREKARA AGENC IES PVT. LTD. IN ITA NO.375/COCH/2014 DATED 17.10.2014, WHEREIN I T WAS HELD AS FOLLOWS: 13. NOW THE CONTENTION OF THE ASSESSEE IS THAT WHE N THE REASSESSMENT PROCEEDINGS ARE INITIATED, THE AO NEED TO LIMIT HIMSELF TO THE GROUND ON WHICH THE ASSESSMENT WAS REOPENED AND HE CANNOT TRAVEL BEYOND THE REASONS RECORDED. FOR THIS, HE RELIED ON VARIOUS JUDGMENTS. AS PER PROVISIONS OF SEC. 147, ONCE THE ASSESSMENT IS REOPENED, FOR BRINGING TO TA X ANY INCOME THAT HAS ESCAPED ASSESSMENT, IN TERMS OF SEC. 148 TO 153, THEN THE AO HAS TO ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT. THE PURPOSE OF THIS PROVISION IS THAT IF IN THE PRO CESS OF REASSESSSMENT INITIATED UNDER SECTION 147 TO BRI NG TO TAX ANY ITEM OF ESCAPED INCOME IT COMES TO THE NOTICE OF THE AO THAT ANY OTHER INCOME HAS ALSO ESCAPED ASSESSMENT, THEN THE ASSESSING OFFICER HAS TO BRING TO TAX SUCH INCOME ALSO. THE PROCEDURE FOR INCOME THAT HAS ESCAPED ASSESSMENT UNDER SECTION 147 IS CONTAINED IN SECTION 148 WHEREUNDER SUB- SECTION (2) MAKES IT MANDATORY FOR THE ASSESSING OFFICER TO RECORD REASONS BEFORE PROCEEDING TO ISSU E NOTICE. HOWEVER, ONCE ASSESSMENT IS REOPENED AFTER RECORDING REASONS, THE ASSESSING OFFICER HAS TO COMPLETE THE INCOME ESCAPING ASSESSMENT BY FOLLOWING THE PROVISIONS OF THE ACT AS IF THE RETUR N FURNISHED AGAINST NOTICE U/S. 148 AS ONE FILED U/S. 139 OF THE ACT. THIS OBVIOUSLY MEANS THAT SO FAR AS 12 I.T.A. NO.120/MDS/16 PROCEDURE TO BE FOLLOWED IS CONCERNED, THERE IS NO DIFFERENCE BETWEEN INCOME ESCAPING ASSESSMENT AND REGULAR ASSESSMENT BECAUSE THE PROVISIONS GENERALLY PROVIDE FOR ISSUE OF NOTICE, HEARING OF THE ASSESSE E AND TAKING OF EVIDENCE, ETC., WHICH ARE THE SAME FO R REGULAR ASSESSMENT AND INCOME ESCAPING ASSESSMENT. THEREFORE, IN THE COURSE OF INCOME ESCAPING ASSESSMENT, IF IT COMES TO THE NOTICE OF T HE ASSESSING OFFICER THAT ANY OTHER ITEM OR ITEMS OF INCOME OTHER THAN THE ITEM OF ESCAPED INCOME FOR TH E ASSESSMENT OF WHICH, ASSESSMENT ORIGINALLY COMPLETED WAS REOPENED, ALSO HAVE ESCAPED FROM ORIGINAL ASSESSMENT, HE IS BOUND TO ASSESS SUCH ITE M OR ITEMS OF INCOME ALSO IN THE COURSE OF REASSESSME NT U/S. 147. IN VIEW OF THE SPECIFIC PROVISION PROVIDI NG FOR ASSESSMENT OF OTHER ITEMS OF INCOME THAT HAVE ESCAPED ASSESSMENT, AND THAT COMES TO THE NOTICE OF THE ASSESSING OFFICER IN THE COURSE OF INCOME ESCAPING ASSESSMENT, THE REASSESSMENTS MADE ARE VALID. BEING SO, IN OUR OPINION, THERE IS NO INFIRM ITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. MORE SO, THI S ISSUE IS FULLY COVERED BY THE JURISDICTIONAL HIGH C OURT, CITED SUPRA. ACCORDINGLY, THIS GROUND IS DISMISSED. 9. FURTHER, CO-ORDINATE BENCH OF THE TRIBUNAL, CHEN NAI, IN THE CASE OF M/S. SERVALL ENGINEERING WORKS P. LTD. V. D CIT IN ITA NO.176/MDS/2016 DATED 27.6.2016, ON THE SAME ISSUE HELD AS UNDER : 8. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN TH IS CASE, THE MAIN CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS T HAT THE ASSESSEE HAS CONSIDERED THE STAMP DUTY VALUATION REFERRED IN SEC TION 50C OF THE ACT FOR THE PURPOSE OF LONG TERM CAPITAL GAINS AND FURNISHE D THE DETAILS AS FOLLOWS: 13 I.T.A. NO.120/MDS/16 CONSIDERATION RECEIVED AND ACCRUING AS PER SECT ION 50C OF THE ACT: 1 ST PROPERTY 2 ND PROPERTY GUIDELINE VALUE FIXED BY THE STAMP DUTY AUTHORITIES .51,16,095 1,05,86,192 LESS EXPENSES IN CONNECTION WITH TRANSFER INCURRED BY THE ASSESSEE STAMP DUTY AND REGISTRATION CHARGES 4,56,011 9,43,319 46,60,084 96,43,319 LESS: INDEXED COST OF ACQUISITION 8,86,495 79,51,009 LONG TERM CAPITAL GAINS 37,73,589 16,91,864 AFTER GOING THROUGH THE ABOVE COMPUTATION OF LONG T ERM CAPITAL GAINS, THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS OF REGIST RATION EXPENSES INCURRED BY THE ASSESSEE. THE ASSESSEE WAS NOT ABLE TO PRODUCE THE DETAIL CALLED FOR LIKE BANK ACCOUNT FROM WHICH THE AMOUNTS FROM WHERE EXPENDED. SINCE THE ASSESSEE WAS NOT ABLE TO SUBSTA NTIATE ITS CLAIM OF EXPENDITURE INCURRED, IT WAS NOT DESERVED BY THE AS SESSING OFFICER TO CONFRONT BY THE LD. CIT(A) UNDER SECTION 48(I) OF T HE ACT. SECTION 48: ANY EXPENDITURE INCURRED WHOLLY AND EXC LUSIVELY IN CONNECTION WITH SUCH TRANSFER THAT TO BE ALLOWED AS DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSEE. 9. IN THE PRESENT CASE, THE ASSESSEE WAS NOT ABLE TO SHOW AS TO HOW THE STAMP DUTY REGISTRATION EXPENSES WERE INCURRED BY THE ASSESSEE IN CONNECTION WITH TRANSFER OF CAPITAL ASSETS, BEING I T CANNOT BE ALLOWED. FURTHER, THE ASSESSEE MAINLY MADE A PLEA THAT THE A SSESSMENT WAS REOPENED FOR THE PURPOSE OF CONSIDERING THE COMPUTA TION OF CAPITAL GAINS BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT I. E., ADOPTION OF STAMP DUTY VALUATION TO FIX THE VALUE OF THE ASSETS TRANS FERRED. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, SINCE THE GROUND FOR WHICH REOPENING WAS NOT SURVIVED, THE REASSESSMENT IS BAD IN LAW. WE AR E NOT IN A POSITION TO AGREE WITH THE PREPOSITION OF THE LD. AR. THE ASSES SMENT WAS REOPENED VALIDLY AND THE SAME WAS NOT CHALLENGED BEFORE THE ASSESSING OFFICER. THIS IS SO BECAUSE THE PRIMA FACIE, THE VALUE OF CA PITAL ASSETS DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME DOES NOT TA LLY WITH THE VALUE ADOPTED FOR REGISTRATION PURPOSE IN TERMS OF SECTIO N 50C OF THE ACT. THERE IS NO NECESSITY OF CONCLUSIVE PROOF OF ESCAPEMENT O F INCOME AT THE TIME OF REOPENING OF ASSESSMENT. THUS, THE ASSESSING OFF ICER HAS, PRIMA 14 I.T.A. NO.120/MDS/16 FACIE, REASON TO BELIEVE THAT THE INCOME IS ESCAPED FROM ASSESSMENT. HENCE, THE ASSESSING OFFICER IS EMPOWERED TO MAKE A DDITION ON THE GROUND ON WHICH REASSESSMENT NOTICES MIGHT NOT HAVE BEEN ISSUED AS HELD BY THE HONBLE KARNATAKA HIGH COURT IN THE CAS E OF N. GOVINDARAJU V. ITO 377 ITR 243, WHEREIN IT WAS HELD AS UNDER: SECTION 148 OF THE INCOME-TAX ACT, 1961, REQUIRES THE ASSESSING OFFICER TO ISSUE NOTICE TO THE ASSESSEE WHERE THE I NCOME HAS ESCAPED ASSESSMENT. SUB-SECTION (2), WHICH WAS INSE RTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989, WITH EFFECT FROM APRIL 1, 1989, REQUIRES THE ASSESSING OFFICER TO RECORD HIS REASONS BEFORE ISSUANCE OF ANY SUCH NOTICE UNDER SUB-SECTION (1) O F SECTION 148. THE ORTHODOX FUNCTION OF AN EXPLANATION IS TO EXPLA IN THE MEANING AND EFFECT OF THE MAIN PROVISION. IT IS DIFFERENT I N NATURE FROM A PROVISO, AS THE LATTER EXCEPTS, EXCLUDES OR RESTRIC TS, WHILE THE FORMER EXPLAINS OR CLARIFIES AND DOES NOT RESTRICT THE OPERATION OF THE MAIN PROVISION. AN EXPLANATION IS ALSO DIFFEREN T FROM RULES FRAMED UNDER AN ACT. RULES ARE FOR EFFECTIVE IMPLEM ENTATION OF THE ACT WHEREAS AN EXPLANATION ONLY EXPLAINS THE PR OVISIONS OF THE SECTION. RULES CANNOT GO BEYOND OR AGAINST THE PROVISIONS OF THE ACT AS THEY ARE FRAMED UNDER THE ACT AND IF THE RE IS ANY CONTRADICTION, THE ACT WILL PREVAIL OVER THE RULES. THIS IS NOT THE POSITION VIS-A-VIS THE SECTION AND ITS EXPLANATION. THE LATTER, BY ITS VERY NAME, IS INTENDED TO EXPLAIN THE PROVISIONS OF THE SECTION, HENCE, THERE CAN BE NO CONTRADICTION. A SECTION HAS TO BE UNDERSTOOD AND READ HAND IN HAND WITH THE EXPLANATI ON, WHICH IS ONLY TO SUPPORT THE MAIN PROVISION, LIKE AN EXAMPLE DOES NOT EXPLAIN ANY SITUATION. THE INSERTION OF EXPLANATION 3 TO SECTION 147 DOES NOT IN ANY MANNER OVERRIDE THE MAIN SECTION AND HAS BEEN ADDED WITH NO OTHER PURPOSE THAN TO EXPLAIN OR CLARIFY THE MAIN S ECTION SO AS TO ALSO BRING IN ANY OTHER INCOME (OF THE SECOND PAR T OF SECTION 147) WITHIN THE AMBIT OF TAX, WHICH MAY HAVE ESCAPE D ASSESSMENT, AND COMES TO THE NOTICE OF THE ASSESSIN G OFFICER SUBSEQUENTLY, DURING THE COURSE OF THE PROCEEDINGS. CIRCULAR NO. 5 OF 2010 ISSUED BY THE CENTRAL BOARD OF DIRECT TAX ES ALSO MAKES THIS POSITION CLEAR. THERE IS NO CONFLICT BET WEEN THE MAIN SECTION 147 AND ITS EXPLANATION 3. THIS EXPLANATION HAS BEEN INSERTED ONLY TO CLARIFY THE MAIN SECTION AND NOT C URTAIL ITS SCOPE. THE INSERTION OF EXPLANATION 3 IS THUS CLARIFICATOR Y AND IS FOR THE BENEFIT OF THE REVENUE AND NOT THE ASSESSEE. AFTER THE INSERTION OF EXPLANATION 3 TO SECTION 147 IT IS CLEAR THAT TH E USE OF THE PHRASE AND ALSO BETWEEN THE FIRST AND THE SECOND PARTS OF THE SECTION IS NOT CONJUNCTIVE AND ASSESSMENT OF ANY O THER INCOME' 15 I.T.A. NO.120/MDS/16 (OF THE SECOND PART) CAN BE MADE INDEPENDENT OF THE FIRST PART (RELATING TO 'SUCH INCOME' FOR WHICH REASONS ARE GI VEN IN NOTICE UNDER SECTION 148), NOTWITHSTANDING THAT THE REASON S FOR SUCH ISSUE (ANY OTHER INCOME') HAVE NOT BEEN GIVEN IN T HE REASONS RECORDED UNDER SECTION 148(2). THE ISSUANCE OF NOTICE IS JUSTIFIABLE. IF THE ASSES SEE CHOOSES NOT TO CHALLENGE THE NOTICE OR IF IT IS CHALLENGED AN D FOUND TO BE VALID, THEN IN EITHER CASE, SUCH NOTICE IS TO BE TR EATED AS VALID AND FINAL. SINCE THE VALIDITY OF THE NOTICE ISSUED UNDE R SECTION 148(2) CAN BE CHALLENGED OR IS SUBJECT TO JUDICIAL SCRUTIN Y, THE ASSESSMENT OR REASSESSMENT OF ANY OTHER INCOME' IN THE CASE OF A VALIDLY ISSUED NOTICE CANNOT BE SAID TO BE A CASE OF FISHING AND ROVING ENQUIRY. HENCE, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON TH IS ISSUE AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 9.1 WHILE DECIDING THE ABOVE ISSUE, THE BENCH CONSI DERED THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF N. GOVINDARAJU V. ITO (377 ITR 243). 9.2 IT IS TO BE NOTED THAT CO-ORDINATE BENCH OF THE TRIBUNAL, COCHIN IN THE CASE OF PADINJAREKARA AGENCIES PVT. L TD. CITED SUPRA CONSIDERED THE JUDGMENT OF THE KERALA HIGH COURT (F ULL BENCH) IN THE CASE OF CIT V. BEST WOOD INDUSTRIES & SAW MILLS (331 ITR 63), WHICH IS THE FULL BENCH JUDGMENT, HELD THAT IF IN T HE COURSE OF REASSESSMENT, IT COMES TO THE NOTICE OF THE AO THAT ANY ITEM OR ITEMS OTHER THAN ITEMS OF ESCAPED INCOME, FOR WHICH ORIGINALLY ASSESSMENT WAS RE-OPENED, HAVE ALSO ESCAPED ASSESSM ENT, IS 16 I.T.A. NO.120/MDS/16 BOUND TO ASSESS SUCH ITEM OR ITEMS OF SUCH ITEM OR ITEMS OF INCOME IN THE COURSE OF REASSESSMENT. 10. FURTHER, THE FULL BENCH OF KERALA HIGH COURT AS WELL AS KARNATAKA HIGH COURT IN THE CASE OF N. GOVINDARAJU, CITED SUPRA IS HAVING A BINDING EFFECT OVER OTHER JUDGMENTS CITED HEREIN SUPRA. IN OUR HUMBLE OPINION, THE TRIBUNAL CANNOT IGNORE THE LAW DECLARED BY THE HIGHER FORUM AND CANNOT FOLLOW THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA ). TAKING INTO CONSIDERATION THE PROVISIONS OF ARTICLES 215, 226, 227 OF THE CONSTITUTION OF INDIA, IT WOULD BE ANOMALOUS TO SUG GEST THAT THE TRIBUNAL BEING STATUTORY BODY CANNOT IGNORE LAW DEC LARED BY THE FULL BENCH OF THE KERALA HIGH COURT AND START PROCEEDING IN VIOLATION OF IT. IN OUR OPINION, TO FOLLOW THE RATIO LAID DOWN BY THE HIGHER FORUM IS APPROPRIATE RATHER THAN DIVERT FROM THAT VIEW. SUCH OBEDIENCE WOULD ALSO BE CONDUCIVE TO THE SMOOTH FUNCTIONING O R OTHERWISE, THERE WOULD BE CONFUSION IN THE ADMINISTRATION OF L AW AND RESPECT FOR LAW WOULD IRRETRIEVABLY SUFFER. IN VIEW OF THIS, I N OUR OPINION, WE HAVE TO CONSIDER THE JUDGMENTS OF THE KARNATAKA HIG H COURT AS WELL AS KERALA HIGH COURT, CITED SUPRA. ACCORDINGLY, TH E JUDGMENT OF THE 17 I.T.A. NO.120/MDS/16 SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS (88 ITR 192) CANNOT BE APPLIED TO TAKE A DIFFERENT VIEW IN FAVOU R OF THE ASSESSEE. 11. THE KARNATAKA HIGH COURT IN THE CASE OF N. GOVI NDRAJU CONSIDERED THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD.(SUPRA) AND IT WAS OBSERVED THA T THE AO IS EMPOWERED TO MAKE ADDITIONS EVEN ON GROUND ON WHICH REASSESSMENT NOTICE NOT EVEN ISSUED, THEREFORE, NOT ICE U/S.148(2) IS FOUND TO BE VALID THEN, ADDITION CAN BE MADE ON ALL GROUNDS OR ISSUES WHICH MAY COME TO THE NOTICE OF THE AO. SUB SEQUENTLY, DURING THE COURSE OF PROCEEDINGS U/S.147, EVEN THOU GH REASON WHY NOTICE FOR SUCH INCOME WHICH MAY HAVE ESCAPED ASS ESSMENT, MAY NOT SURVIVE. IT IS NEEDLESS TO SAY THAT WHEN D IFFERENT HIGH COURTS EXPRESSED DIFFERENT OPINIONS, ON A POINT OF LAW, NORMALLY, THE BENEFIT OF DOUBT UNDER THE TAXATION LAW WOULD GO TO THE ASSESSEE. IT IS ALSO EQUALLY SETTLED PRINCIPLES OF LAW THAT THE JUDGMENT WHICH DISCUSSES THE POINT IN ISSUE ELABORATELY AND GIVES AN ELABORATE REASONING HAS TO BE PREFERRED WHEN COMPARED TO THE JUDGMENT WHICH HAS NO REASONING AND DISCUSSION. ADMITTEDLY, IN THE CASE OF N. GOVINDRAJU (KAR.) HIGH COURT DISCUSSED THE ISSUE ELABORATELY AND SPECIFIC REASONING IS ALSO WAS RECORDED WHY THE JUD GMENT OF 18 I.T.A. NO.120/MDS/16 BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LT D.(SUPRA) AND OTHER JUDGMENTS CANNOT BE APPLIED. THEREFORE, WE A RE OF THE OPINION THAT JUDGMENT OF KARNATAKA HIGH COURT IN TH E CASE OF N. GOVINDRAJU (SUPRA) AND THE KERALA HIGH COURT FUL L BENCH TO BE APPLIED RATHER THAN OTHER JUDGMENTS CITED IN THE AB OVE ORDER. 12. IN VIEW OF THE ABOVE DISCUSSION, IN OUR OPINION THE LOWER AUTHORITIES WERE JUSTIFIED IN MAKING ADDITIONS TOWA RDS DISALLOWANCE U/S 40A(3) OF THE ACT THOUGH IT WAS NOT A REASON FO R REOPENING THE ASSESSMENT AND NO ADDITION WAS MADE ON THE REASONS FOR WHICH ASSESSMENT WAS REOPENED. 13. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED ON 10 TH NOVEMBER, 2016 AT CHENNAI. SD/- SD/- ( %. & ) ( ' ( ) %! ) (G. PAVAN KUMAR) (CHANDRA POOJARI) : ;< /JUDICIAL MEMBER ' ;