Interglobal Steels Pvt. Ltd., New Delhi V. ITO WARD - 1(2), New Delhi

ITA 148/DEL/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6454 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROCKTIM SAIKIA
• Keywords: Reopening of assessment; Depreciation; Income from undisclosed sources; Principle of natural justice; Accommodation entries; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 143(1); 201; 48; 13; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL M EMBER ITA NO. 148/DEL/2020 [A.Y 2011-12] M/S INTERGLOBAL STEELS PVT LTD VS. THE INCOME TAX OFFICER Y-4, A-C, LOHA MANDI WARD 1( 2) NARAINA, NEW DELHI NEW DELHI PAN: AAACS 0304 A [APPELLANT] [RESPONDENT] DATE OF HEARING : 08.09.2021 DATE OF PRONOUNCEMENT : 08.09.2021 ASSESSEE BY : SHRI ASHWANI KUMAR, C A REVENUE BY : SHRI ROCKTIM SAIKIA, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E COMMISSIONER OF INCOME TAX [APPEALS] - 44, NEW DELH I DATED 14.11.2019 PERTAINING TO ASSESSMENT YEAR 2011-12. 2 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THAT THE ORDER DATED 14.11.2019 PASSED U/S 250( 6) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -44 NE W DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LEARNED INCOME TAX OFFI CER, WARD - 12(3), NEW DELHI IN RESORTING REASSESSMENT PROCEEDI NGS U/S 148 OF THE ACT. 2. THAT THE ORDER DATED 14.11.2019 PASSED U/S 250( 6) OF THE ACT BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) -44, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN A S MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LEARNED I NCOME TAX OFFICER, WARD - 12(3), NEW DELHI IN ADDING BACK A S UM OF RS. 7,90,50,000/- RECEIVED BY THE APPELLANT COMPANY FRO M M/S ABHINANDAN TRAFIN PVT LTD AS UNSECURED LOAN BY HOLD ING THAT THE APPELLANT COMPANY HAS FAILED TO PROVE THE GENUINENE SS, IDENTITY AND CREDIT WORTHINESS OF THE TRANSACTION BY INVOKIN G THE PROVISIONS OF SECTION 68 OF THE ACT 3. THAT THE ORDER DATED 14.11.2019 PASSED U/S 250(6 ) OF THE ACT BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPE ALS) -44, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE AND CONTRARY TO THE ESTABLISHED AND DULY ACCEPTED PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE SAME HAS BEEN PASSED WITHOUT ISSUING AN Y NOTICE TO THE APPELLANT COMPANY OR PROVIDING IT AN OPPORTUNITY OF PRESENTING ITS CASE IN THE MATTER. 3 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTA NCE OF THE LD. COUNSEL, WE HAVE CONSIDERED THE DOCUMENTARY EVIDENC ES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN LIGHT OF RULE 1 8(6) OF ITAT RULES. 4. THE REASONS FOR ISSUING OF NOTICE U/S 148 OF THE ACT READ AS UNDER: THE ASSESSEE COMPLY FILED ITS ITR ON 16.09.2011 FO R A.Y. 2011-12 DECLARING INCOME OF RS. 14,95,990/-. THE CASE WAS P ROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 AT RS. 14,95,990 /-. THE COMPANY WAS INCORPORATED ON 06/07/1981. THE DIRECTO RS OF THE COMPANY ARE MS. ANJU GUPTA, SH. ASHOK GUPTA AND MS. RINA RAI. DETAILS OF INFORMATION & MATERIAL RECEI VED: 2, AS PER THE INFORMATION BEARING F.NO: ITO (INV.)/U- 1/KOL/ENQUIRY/ DIVYA DRISHTI/36798/2017-18/7089 DAT ED 23.02.2018 RECEIVED IN THIS OFFICE FROM O/O THE JD1 T (INV.), UNIT- 1, NEW DELHI, IT IS GATHERED THAT DURING THE F.Y. 2 010-11 RELEVANT TO THE A.Y. 2011-12, THE ABOVE MENTIONED ASSESSEE HAS TAKEN ACCOMMODATION ENTRY(S) AMOUNTING TO RS. 40,00,000/- FROM M/S DIVYA DRISHTI GROUP WHO ARE IN -THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO VARIOUS BENENFICIARIES THR OUGH CHEQUES/DD/RTGS/NEFT IN LIEU OF CASH THROUGH* VARIO US PAPER AND DUMMY COMPANIES FLOATED AND CONTROLLED BY THEM. 4 IN COURSE OF VERIFICATION, BANK STATEMENTS OF NUMBE R OF ACCOUNTS HAVE BEEN OBTAINED. BANK ACCOUNT STATEMENTS OF MANY OTHER COMPANIES WERE VERIFIED AS MENTIONED IN THE DISSEMI NATION NOTE: - I) DIVYA DRISHTI MERCHANTS PVT. LTD. (ACCOUNT NO. 000605010065, ICICI, RN MUKHERJEC ROAD BRANCH), II) DIVYA DRISHTI TRADERS PVT LTD. (ACCOUNT NO. 000 605010082, 1C1C1, RN MUKHERJEE ROAD BRANCH) & III) KANISHK REALESTATE PVT. LTD. (ACCOUNT NO. 0372 05002323, ICICI, SARAI BOAR ROAD BRANCH). 2.1 AS PER DEPARTMENTAL DATABASE OF SHELL COMPANIES, DI VYA DRISHTI MERCHANTS PVT. LTD. AND DIVYA DRISHLI TRADE RS PVT. LTD. ARE SHELL COMPANIES OF ENTRY' OPERATOR SRI ANUJ AGARWAL . ON PERUSAL, IT IS, OBSERVED THAT THERE ARE RTGS CREDITS AND TRANSF ERS FROM DIFFERENT A/CS IN THE BANK ACCOUNTS OF DIVYA DRISHT I MERCHANTS PVT. LTD. AND DIVYA DRISHTI TRADERS PVT. LTD. AND SIMULTANEOUSLY THE SAID AMOUNT TRANSFERRED TO THE A/C OF' VARIOUS OTHER ACCOUNTS OF BENEFICIARIES AND INTERMEDIARIES AND IN TURN THE SAME FUNDS WERE TRANSFERRED TO VARIOUS OTHER BENEFICIARIES AS GIVEN IN THE CASH LAYERS OF FUND TRANSFERS. ONE OF SUCH BENEFICI ARY IS THE ASSESSEE COMPANY M/S INTER GLOBAL STEELS PVT. LTD. WHO HAS TAKEN ACCOMMODATION ENTRY AMOUNTING TO RS.40 LAKH FROM TH E SAID NON EXISTENT PAPER COMPANIES WHO ACTUALLY ARC NOT DOING ANY REAL BUSINESS AND ARE ONLY PAPER COMPANIES. 5 ANALYSIS OF INFORMATION COLLECTED/RECEIVED: 3. FROM THE ABOVE, IT CAN BE INFERRED THAT THE OUT OF BENEFICIARY COMPANIES TOOK ENTRIES FROM THESE SHELL COMPANIES WHICH DO NOT HAVE ANY REAL BUSINESS AND WAS OPERATE D ONLY TO BRING THEIR UNACCOUNTED MONEY IN THE BOOKS. IN THIS PROCE SS THESE BENEFICIARY COMPANIES GRADUALLY BROUGHT THEIR UNACC OUNTED CASH BACK IN THE BOOKS WITHOUT PAYING ANY LAX. AS PER THE INFORMATION RECEIVED FROM INVESTIGATION WING, IT IS NOTICED THAT THE ABOVE MENTIONED ASSESSEE HAS ROUTE D ITS UNACCOUNTED INCOME TO THE TUNE OF RS. 40,00,000/- A ND, TOOK BOGUS ACCOUNTS ENTRY/ENTRIES FOR NON-EXISTENT TRANSACTION S FROM M/S DIVYA DRISHTI GROUP WHO ARE IN THE BUSINESS OF PROV IDING ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES THRO UGH CHEQUES/DD/RTGS/NEFT IN LIEU OF CASH, THROUGH VARIO US PAPER AND DUMMY COMPANIES FLOATED AND CONTROLLED BY THEM. THE BENEFIT OF ACCOMMODATION ENTRY HAS BEEN TAKEN BY THE ASSESSEE TO BRING THE UNACCOUNTED MONEY BACK TO ITS BUSINESS WITHOUT PAYI NG ANY TAX ON THE SAME. ENQUIRIES MA DE BY THE AQ AN D FINDI N GS SUBSEQUENT TO INF OR MATI O N RECEI V ED: 4. . ON RECEIPT OF INFORMATION FROM INVESTIGATION WING, RETURN OF INCOME WAS EXTRACTED FROM THE ITD MODULE. THE IN FORMATION RECEIVED FROM INVESTIGATION WING HAS BEEN VERIFIED FROM THE 6 ASSESSMENT RECORDS WITH REFERENCE TO INFORMATION AN D RETURN FILED BY THE ASSESSEE. IT IS NOTICED THAT THE AUTHORIZED CAPITAL OF THE ASSESSEE IS RS 5 CRORE AND ISSUED SUBSCRIBED AND PA ID UP CAPITAL IS RS.3,73,14,500/-. SECURITY PREMIUM ACCOUNT IS RS. 1 0,65,37,500/-, AND CREDITORS AS ON 31.03.2011 AT RS. 11,67,10,724/ -. INVESTMENT IN EQUITY SHARES IS RS. 12,38,2 1,000/-. THE TURNOVER OF THE BUSINESS IS RS.20,49,85,870/ .AND OTHER INCOME IS RS. 1 1,02 ,000/AFTER DEBITING VARIOUS EXPENSES, THE NET INCOME. SHOWN AT RS. 14,95,790/-. BASIS OF REASON TO BELIEVE ALONGWITH QUANTUM OF INC OME ESCAPED: TAKING INTO ACCOUNT ABOVE NOTED FACTS AND INFORMAT ION, I HAVE REASON TO BELIEVE THAT INCOME OF RS. 40,00,000/- HA S ESCAPED ASSESSMENT FOR A.Y. 201 1 12 IN THE CASE OF M/S INT ER CDOBAL STEELS PVT. LTD WITHIN THE MEANING OF SECTION 147 O F THE ACT. THE CASE OF THE ASSESSEE IS REQUIRED TO BE RE-OPENED U/ S 147 OF I.T. ACT. ANALYSIS OF LEGAL PROVISIONS OF SECTION 147/151: 4. PRIOR TO 1989 SECTION 147 PROVIDED FOR TWO GROUNDS TO REOPEN CONCLUDED ASSESSMENT: (I) ON THE BASIS OF INFORMATION RECEIVED BY THE AO ASS ESSMENT COULD BE REOPENED. THIS HAD TO BE WITHIN FOUR YEARS . (II) WHERE FACTS MATERIAL FOR ASSESSMENT ARE NOT DISCLO SED IN THE COURSE OF ASSESSMENT, WHETHER WITHIN OR BEYOND FOUR YEARS. 7 6.1 SUPERVENING THESE TWO REQUIREMENTS IN THE ALTER NATIVE, THE INITIAL CONDITION IS THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOME. THE FIRST REQUIREMENT REGARDING INFORMATION IS NOW DROPPED BY 1989 AMENDMENT AND THEREFORE FOR REOPENING OF ASSESSMENT WITHIN A PERIOD OF 4 YEARS IN CASES WHERE AN ORIGINAL ASSE SSMENT WAS MADE U/S 143(3), FURTHER REQUIREMENT IS THE NON-DIS CLOSURE OF MATERIAL FACTS NECESSARY FOR ASSESSMENT BY THE A SSESSEE. HOWEVER, IN CASES WHERE NO SCRUTINY ASSESSMENT HAS BEEN MADE EVEN BEYOND PERIOD OF 4 YEARS THE ONLY REQUIRE MENT IS REASON TO BELIEVE. 6.2 IN THIS CASE, A RETURN OF INCOME WAS FILED FOR THE YEAR UNDER CONSIDERATION BUT NO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS MADE ACCORDINGLY, IN THIS CASE, THE ONL Y REQUIREMENT TO INITIATE PROCEEDINGS U/S 147 IS REAS ON TO BELIEVE AS RECORDED ABOVE. 6.3 IT IS PERTINENT TO MENTION HERE THAT IN THIS CA SE THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION BUT NO ASSESSMENT AS STIPULATED U/S 2 (40) OF THE ACT WAS MADE AND THE RETURN OF INCOME WAS ONLY PROCESSED (NOT ASSESSED) U/S 143(1) OF THE ACT. IN VIEW OF THE ABOVE, PROVISIONS OF CLAUSE (B) OF EXPLANATION 2 TO SECTION 147 ARE APPLICABLE TO FACTS OF THIS CASE AND THE AS SESSMENT YEAR UNDER CONSIDERATION IS DEEMED TO BE A CASE WHE RE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 8 6.4 IN THIS CASE, FOUR YEARS BUT NOT MORE THAN SIX YEARS HAVE ELAPSED FROM THE END OF THE ASSESSMENT YEAR UN DER CONSIDERATION AND INCOME CHARGEABLE TO TAX WHICH HA S ESCAPED ASSESSMENT IS MORE THAN RS ONE LAKH, NECESS ARY SANCTION A. ISSUE NOTICE U/S 148 OF THE ACT IS BEIN G OBTAINED SEPARATELY FROM THE PR. CIT DELHI-4, AS PER AMENDED PROVISIONS OF SECTION 151 OF THE ACT W.E.F. 01.06.2 015 (NARENDRA KUMAR) INCOME TAX OFFICER WARD- 12(3), NEW DELHI 5. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE MADE IT CLEAR THAT IT HAS NOT RECEIVED RS. 40 LAKHS FROM DIVYA DRISHTI GROUP AND POINTED OUT THAT THE CREDIT ENTRY OF RS. 40 LAKHS REPRESENTS THE AMO UNT RECEIVED FROM SISTER CONCERN ABHINANDAN TRAFIN PVT LTD. PERUSAL OF THE AFORESAID ORDER STATES THAT THE ASSESSING OFFICER HAS MADE TH E ADDITION OF RS. 7.90 CRORES AS UNSECURED LOANS U/S 68 OF THE ACT WH ICH IS BASED UPON THE COPY OF LEDGER ACCOUNT OF M/S ABHINANDAN TRAFIN PVT LTD. IT CAN BE SEEN THAT THE COMPUTATION OF ASSESSED INCOME IS TOT ALLY DEVOID OF ANY ADDITION WHICH WAS BASIS FOR THE ASSESSING OFFICER TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT I.E. RS. 40 LAKHS. 9 6. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER HAS D RAWN SUPPORT FROM EXPLANATION 3 TO SECTION 147 OF THE ACT WHICH WAS INSERTED BY THE FINANCE [NO. 2] ACT, 2009 W.R.E. 01.04.1989 AND THE SAME READS AS UNDER: FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDE R THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSE SS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSME NT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB-SECTION (2) OF SECTION 148. 7. THIS INSERTION OF EXPLANATION 3 TO SECTION 147 O F THE ACT HAS BEEN EXAMINED AND INTERPRETED BY THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. JET AIRWAYS [I] LTD 331 ITR 236. T HE RELEVANT PART OF THE JUDGMENT IS EXTRACTED AS UNDER: 5. THE CONDITION PRECEDENT TO THE EXERCISE OF THE JURI SDICTION UNDER SECTION 147 IS THE FORMATION OF A REASON TO B ELIEVE BY THE ASSESSING OFFICER THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UPON THE FORMATION OR A REASON TO BELIE VE, THE ASSESSING OFFICER, BEFORE MAKING THE ASSESSMENT, RE ASSESSMENT OR RECOMPUTATION UNDER SECTION 147 HAS TO SERVE ON THE ASSESSEE A 10 NOTICE REQUIRING HIM TO FURNISH A RETURN OF HIS INC OME. UPON THE FORMATION OF THE REASON TO BELIEVE THAT INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT, THE ASSESSING OFFICER IS EM POWERED TO 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 PRO CEEDINGS UNDER SECTION 147. 6. THE EFFECT OF EXPLANATION 3 WHICH WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009 IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED UNDER SECTION 148 CONTAINING THE REASONS FOR REOPENING THE ASSESSMENT DOES NOT CONTAIN A REFERENCE TO A PARTIC ULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSMENT, T HE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPEC T OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS. THE REASONS FOR THE INSERTION OF EXPLANATION 3 ARE TO BE FOUND IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE (NO. 2)BILL OF 2009. THE MEMORANDUM TREATS THE AMENDMENT TO BE CLARIFICATORY AND CONTAINS THE FOLLOWING EXPLANATION : 'SOME COURTS HAVE HELD THAT THE ASSESSING OFFICER H AS TO RESTRICT THE REASSESSMENT PROCEEDINGS ONLY TO ISSUES IN RESP ECT OF WHICH THE REASONS HAVE BEEN RECORDED FOR REOPENING THE AS SESSMENT. HE IS NOT EMPOWERED TO TOUCH UPON ANY OTHER ISSUE FOR WHICH NO REASONS HAVE BEEN RECORDED. THE ABOVE INTERPRETATIO N IS CONTRARY TO THE LEGISLATIVE INTENT. 11 WITH A VIEW TO FURTHER CLARIFYING THE LEGISLATIVE I NTENT, IT IS PROPOSED TO INSERT AN EXPLANATION IN SECTION147 TO PROVIDE THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASON FOR SUCH ISSUE HAS NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 148.' 7. IN ORDER TO APPRECIATE THE REASONS FOR THE AMENDMEN T INSERTING EXPLANATION 3, IT WOULD BE NECESSARY TO ADVERT TO SOME OF THE JUDGMENTS OF THE HIGH COURTS, PRIOR TO THE AMENDMEN T. THE PUNJAB AND HARYANA HIGH COURT, IN ITS DECISION, IN VIPAN KHANNA V. ASSTT. CIT [2002] 255 ITR 2201DEALT WITH THE QUESTION AS TO WHETHER, AFTER INITIATING PROCEEDINGS UNDER SECTION 147 ON THE GROUND THAT THE PETITIONER HAD CLAIMED DEPRECIATION AT A HIGHER RATE, THE ASSESSING OFFICER WOULD BE JUSTIFIED IN L AUNCHING AN INQUIRY INTO ISSUES WHICH WERE NOT CONNECTED WITH T HE CLAIM OF DEPRECIATION. THIS QUESTION WAS ANSWERED IN THE NEG ATIVE. A DIVISION BENCH OF THE KERALA HIGH COURT HELD IN TRAVANCORE CEMENTS LTD. V. CIT [2008] 305 ITR 1701 ,THAT UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148(2), WHEN PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER ON ISSUES IN RESPECT OF WH ICH HE HAD FORMED A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IT WAS NOT OPEN TO THE ASSESSING OFFICER TO CARRY OUT AN ASSESSMENT, OR REASSESSMENT IN RESPECT OF OTHER ISSUES WHICH WE RE TOTALLY UNCONNECTED WITH THE PROCEEDINGS THAT WERE ALREADY INITIATED AND 12 WHICH CAME TO HIS KNOWLEDGE DURING THE COURSE OF TH E PROCEEDINGS. THE DIVISION BENCH HELD THAT IN RESPECT OF AN ISSUE WHICH IS TOTALLY UNCONNECTED TO THE BASIS ON WHICH THE ASSESSING OFF ICER FORMED A REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT AN D ISSUED A NOTICE UNDER SECTION 148, IT WAS OPEN TO HIM TO ISS UE A FRESH NOTICE BY FOLLOWING SUB-SECTION (2) OF SECTION 148 WITH RE GARD TO THE ESCAPED INCOME WHICH CAME TO HIS KNOWLEDGE DURING T HE COURSE OF THE PROCEEDINGS. THE KERALA HIGH COURT HELD AS FOLL OWS : '. . .THE ASSESSING OFFICER GETS JURISDICTION UNDER SECTION 148 TO ASSESS OR REASSESS THE INCOME WHICH HAS ESCAPED ASS ESSMENT ONLY AFTER SUB-SECTION (2) OF SECTION 148 IS COMPLIED WI TH. THE QUESTION IS WHETHER SUB-SECTION (2) OF SECTION 148 HAS TO BE COMPLIED WITH IF ANY OTHER INCOME CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT, OR WHICH COMES TO HIS KNOWLEDGE SUBSEQUENTLY IN THE CO URSE OF THE PROCEEDINGS. IN OTHER WORDS, WHEN PROCEEDINGS ARE A LREADY ON IN RESPECT OF ONE ITEM IN RESPECT OF THE INCOME FOR WH ICH HE HAD ALREADY RECORDED REASONS IS IT NECESSARY THAT HE SH OULD RECORD REASONS FOR ASSESSING OR REASSESSING ANY OF THE ITE MS WHICH ARE TOTALLY UNCONNECTED WITH THE PROCEEDINGS ALREADY IN ITIATED. SUPPOSE UNDER TWO HEADS INCOME HAS ESCAPED ASSESSMENT AND T HOSE TWO HEADS ARE INTER-LINKED AND CONNECTED, THE PROCEEDIN GS INITIATED OR NOTICE ALREADY ISSUED UNDER SUB-SECTION (2) OF SECT ION 148 WOULD BE SUFFICIENT IF THE ESCAPED INCOME ON THE SECOND HEAD COMES TO THE KNOWLEDGE OF THE OFFICER IN THE COURSE OF THE PROCE EDINGS. BUT IF BOTH THE ITEMS ARE UNCONNECTED AND TOTALLY ALIEN TH EN THE ASSESSING AUTHORITY HAS TO FOLLOW SUB-SECTION (2)OF SECTION 1 48 WITH REGARD 13 TO THE ESCAPED INCOME WHICH COMES TO HIS KNOWLEDGE DURING THE COURSE OF THE PROCEEDINGS.' HENCE, THE VIEW OF THE PUNJAB AND HARYANA HIGH COUR T AND THE KERALA HIGH COURT WAS THAT, ONCE THE ASSESSING OFFI CER HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT AND PROCEEDS TO ISSUE A NOTICE UNDER SECTION 148, I T IS NOT OPEN TO HIM TO ASSESS OR, AS THE CASE MAY BE, REASSESS THE INCOME UNDER AN INDEPENDENT OR UNCONNECTED ISSUE, WHICH WAS NOT THE BASIS OF THE NOTICE FOR REOPENING THE ASSESSMENT. 8. PARLIAMENT STEPPED IN TO CORRECT WHAT IT REGARDED A S AN INCORRECT INTERPRETATION OF THE PROVISIONS OF SECTI ON147. THE MEMORANDUM EXPLAIN-ING THE PROVISIONS OF FINANCE (N O. 2) BILL OF 2009 STATES IN THIS BACKGROUND THAT SOME COURTS HAD HELD THAT THE ASSESSING OFFICER HAS TO RESTRICT THE REASSESSMENT PROCEEDINGS ONLY TO ISSUES IN RESPECT OF WHICH REASONS HAVE BEE N RECORDED FOR REOPENING THE ASSESSMENT AND THAT IT WAS NOT OPEN T O HIM TO TOUCH UPON ANY OTHER ISSUE FOR WHICH NO REASONS HAVE BEEN RECORDED. THIS INTERPRETATION WAS REGARDED BY PARLIAMENT AS BEING CONTRARY TO LEGISLATIVE INTENT. HENCE, EXPLANATION 3 CAME TO BE INSERTED TO PROVIDE THAT THE ASSESSING OFFICER MAY ASSESS OR RE ASSESS INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE S UBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER SECTION 147 THOUGH THE REASONS FOR SUCH ISSUE WERE NOT INCLUDED IN THE REASONS REC ORDED IN THE NOTICE UNDER SECTION 148(2). 14 9. THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER TH E AMENDMENT OF 2009 CAN, THEREFORE, BE SUMMARISED AS FOLLOWS : ( I ) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE T HAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR; ( II ) UPON THE FORMATION OF THAT BELIEF AND BEFORE HE P ROCEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATIO N, THE ASSESSING OFFICER HAS TO SERVE ON THE ASSESSEE A NO TICE UNDERSUB- SECTION (1) OF SECTION 148; ( III ) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEV E, HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION AND ( IV ) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INCLUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSMENT , HE MAY NONETHELESS, ASSESS OR REASSESS THE INCOME IN RESPE CT OF ANY ISSUE WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. 10. XXX 11. THE RIVAL SUBMISSIONS WHICH HAVE BEEN URGED ON BEHA LF OF THE REVENUE AND THE ASSESSEE CAN BE DEALT WITH ,BOTH AS A MATTER OF FIRST PRINCIPLE, INTERPRETING THE SECTION AS IT STA NDS AND ON THE BASIS OF PRECEDENTS ON THE SUBJECT. INTERPRETING TH E PROVISION AS IT STANDS AND WITHOUT ADDING OR DEDUCTING FROM THE WOR DS USED BY PARLIAMENT, IT IS CLEAR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDER SECTION 147 AND FOLLOWING THE ISSUANC E OF A NOTICE UNDER SECTION 148, THE ASSESSING OFFICER HAS THE PO WER TO ASSESS OR REASSESS THE INCOME, WHICH HE HAS REASON TO BELI EVE HAD ESCAPED 15 ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. THE WORDS 'AND ALSO' CANNOT BE IGNORED. THE INTERPRETATION WH ICH THE COURT PLACES ON THE PROVISION SHOULD NOT RESULT IN DILUTI NG THE EFFECT OF THESE WORDS OR RENDERING ANY PART OF THE LANGUAGE U SED BY PARLIAMENT OTIOSE . PARLIAMENT HAVING USED THE WORDS 'ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT', THE WORDS 'AND ALSO' CANNOT BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BE ING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFICANCE THAT PAR LIAMENT HAS NOT USED THE WORD 'OR'. THE LEGISLATURE DID NOT REST CO NTENT BY MERELY USING THE 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. EVIDENTL Y, THEREFORE, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS 'AND AL SO' IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REASON T O BELIEVE UNDER SECTION147 AND THE ISSUANCE OF A NOTICE UNDER SECTI ON 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 SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THE SECTION. THE WORDS 'SUCH INCOME' REFER TO THE I NCOME 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 H AS BEEN USED BY PARLIAMENT IS INDICATIVE OF THE POSITION THAT TH E ASSESSMENT OR 16 REASSESSMENT MUST BE IN RESPECT OF THE INCOME IN RE SPECT OF WHICH HE HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAP ED ASSESSMENT 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 SEASON TO BELIEVE IS NOT ASSESSED OR REASSESSED, IT WOULD NOT BE OPEN TO THE ASSESSIN G OFFICER TO INDEPENDENTLY ASSESS ONLY THAT INCOME WHICH COMES T O HIS NOTICE SUBSEQUENTLY 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 O BJECTIONS OF THE ASSESSEE AND DOES NOT ASSESS OR REASSESS THE IN COME WHICH WAS THE BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HI M TO ASSESS INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. PARLIA MENT WHEN IT ENACTED THE PROVISIONS OF SECTION 147 WITH EFFECT F ROM 1-4-1989 CLEARLY STIPULATED THAT THE ASSESSING OFFICER HAS T O ASSESS OR REASSESS THE INCOME WHICH HE HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH CAME TO HIS NOTICE DURING THE PROCEEDINGS. IN THE A BSENCE OF THE ASSESSMENT OR REASSESSMENT OF THE FORMER, HE CANNOT INDEPENDENTLY ASSESS THE LATTER. 08. IF THE ABOVE JUDGMENT IS APPLIED ON THE FACTS O F THE CASE IN HAND, WE FIND THAT THE ASSESSING OFFICER HAS ACCEPTED THE OBJECTIONS OF THE ASSESSEE, AND HAS NOT ASSESSED OR REASSESSED THE IN COME, WHICH WAS THE BASIS OF THE NOTICE. THEREFORE, IN LIGHT OF TH E JUDGMENT OF THE 17 HON'BLE HIGH COURT OF BOMBAY [SUPRA] IT WOULD NOT B E OPEN TO THE ASSESSING OFFICER TO ASSESS INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. 09. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, IN LIGHT OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF BOMBAY [SUPRA ] WE QUASH THE ASSESSMENT ORDER DATED 28.12.2016 FRAMED U/S 147 R. W.S 143(3) OF THE ACT. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, W E DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE CASE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 148/DEL/2020 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08.09. 2021 IN THE PRESENCE OF BOTH THE RIVAL REPRESENTATIVES. SD/- SD/- [ SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08 TH SEPTEMBER, 2021 VL/ 18 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER