M/s Gilada Finance & Investment Ltd , Bangalore V. Income TAx Officer Ward-1(2), Bangalore

ITA 1534/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2364 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 10-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BALAKRISHNAN
• Assessee Lawyers: SHEETAL BORKAR SMT SOUMYA S
• Keywords: Reopening of assessment; Condonation of delay; Reason to believe
• Section: 14A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1534 /BANG/201 7 ASSESSMENT YEAR :20 06 - 07 M/S. GILADA FINANCE & INVESTMENT LTD., NO. 105, RR TAKT, 37, BHOOPASANDRA MAIN ROAD, SANJAY NAGAR, BANGALORE 560 094. PAN: AAACG5272D VS. THE INCOME TAX OFFICER, WARD 1 (2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. SHEETAL BORKAR& SMT. SOUMYA, ADVOCATES RESPONDENT BY : SHRI BALAKRISHNA .N, ADDL. CIT (DR) DATE OF HEARING : 2 6 .07.2018 DATE OF PRONOUNCEMENT : 31 .08.2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-3, BANGALORE DATED 18.01.2016 FOR ASS ESSMENT YEAR 2006-07. 2. THIS APPEAL WAS FILED BY THE ASSESSEE AFTER A DE LAY OF 477 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY A LONG WITH AN AFFIDAVIT. IN THE SAID APPLICATION, IT HAS BEEN SUBMITTED THAT BY THE TIME THE ORDER OF CIT (A) WAS RECEIVED IN THE OFFICE OF THE ASSESSEE, THE FATHER OF SHRI RAJGOPAL GILADA, DIRECTOR OF THE ASSESSEE COMPANY WAS SERIOUSLY ILL AND HE WAS ADMITTED TO ASHWINI HOSPITAL IN SOLAPUR, MAHARASHTRA SINCE 03.0 1.2016. IT IS FURTHER SUBMITTED IN THE SAID APPLICATION THAT THE SAID DIR ECTOR OF ASSESSEE COMPANY HAD TO GO TO GULBARGA TO PERSONALLY ATTEND THE TREA TMENT OF HIS FATHER AS HE WAS IN A VERY CRITICAL SITUATION AND CLOSE MONITORING W AS ESSENTIAL AND BECAUSE OF THESE REASONS, HE COULD NOT ATTEND TO OFFICE MATTER S. HE FURTHER SUBMITTED THAT THE OFFICE MATTERS WERE ASSIGNED TO A STAFF OF ASSE SSEE COMPANY WHO DID NOT ITA NO. 1534/BANG/2017 PAGE 2 OF 9 INFORM HIM ABOUT THE RECEIPT OF SUCH ORDER OF CIT(A ) AND THEREFORE, HE WAS TOTALLY UNDER DARK ON THE MATTER OF RECEIPT OF SUCH AN ORDER FROM CIT(A) AND IT WENT UNATTENDED IN HIS ABSENCE FROM THE OFFICE FOR LONG TIME AROUND 6 MONTHS. IT IS FURTHER SUBMITTED IN THE SAID APPLICATION THA T AFTER HIS FATHER WAS DISCHARGED FROM THE HOSPITAL, HE FELL SICK BECAUSE OF SEVERE M ENTAL AND PHYSICAL PRESSURE AND HE WAS HAVING BACK PAIN AND SPINAL CORD RELATED DISORDERS AND SUCH SPINAL CORD RELATED DISORDERS BECAME SEVERE AND HE WAS BED -RIDDEN FOR ABOUT 6 TO 7 MONTHS, UNABLE TO MOVE AROUND AND DOCTOR ADVISED HI M TO TAKE COMPETE BED REST AND IN THIS MANNER, HE WAS AWAY FROM THE OFFIC E FOR PERIOD OF ABOUT 15 MONTHS. AFTER COMING BACK ONLY, HE COULD ATTEND TH IS ORDER OF CIT (A) AND HE FILED THE APPEAL BEFORE THE TRIBUNAL. IT IS ALSO S UBMITTED THAT IN VIEW OF THESE FACTS, THE DELAY SHOULD BE CONDONED AND THE APPEAL SHOULD BE ADMITTED. THE LD. AR OF ASSESSEE WHO APPEARED BEFORE ME REITERATE D THE SAME SUBMISSIONS AND SHE PLACED RELIANCE ON A TRIBUNAL ORDER RENDERE D IN THE CASE OF GLEN WILLIAMS VS. ACIT IN ITA NO. 1078/BANG/2014 DATED 0 7.08.2015. SHE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND POINTED OUT THAT IN THAT CASE, THE DELAY WAS OF ABOUT 456 DAYS IN FILING THE APPEAL BE FORE THE TRIBUNAL AND THE SAME WAS CONDONED BY THE TRIBUNAL. SHE FURTHER POI NTED OUT THAT IN PARA 5 OF THIS TRIBUNAL ORDER, RELIANCE HAS BEEN PLACED ON TH E JUDGMENT OF HON'BLE HIGH COURT OF KARNATAKA IN ISRO SATELLITE CENTRE IN ITA NO. 532/2008 AND ALSO ON A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI & ORS. AS REPORTED IN 16 7 ITR 471. SHE POINTED OUT THAT IN THIS CASE, IT WAS HELD BY HONBLE APEX COUR T THAT THERE SHOULD BE A LIBERAL AND PRACTICAL APPROACH IN EXERCISING DISCRE TIONARY POWERS IN CONDONATION OF DELAY. THE LD. DR OF REVENUE SUBMITTED THAT THE DELAY SHOULD NOT BE CONDONED BECAUSE NO EVIDENCE HAS BEEN PLACED ON REC ORD REGARDING THE ILLNESS OF DIRECTOR OF ASSESSEE COMPANY AND HIS FAT HER. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THIS IS THE EXPLANATION OF THE ASSESSEE ABOUT THE DELAY IN FILING OF THE APPEA L THAT THE DIRECTOR OF ASSESSEE COMPANY WHO WAS LOOKING AFTER THE TAX MATT ERS OF ASSESSEE COMPANY HAD TO REMAIN AWAY FROM THE CITY FIRST IN C ONNECTION WITH THE SICKNESS OF HIS FATHER AND THEN BECAUSE OF HIS OWN SICKNESS. IN VIEW OF THESE FACTS AND ITA NO. 1534/BANG/2017 PAGE 3 OF 9 BY RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI & ORS. (SUPRA), I CONDONE THE DELAY AND ADMIT THE APPEAL. 4. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED CIT(A) ERRED IN PASSING THE ORDER IN THE MANNER HE DID. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T CONDITION PRECEDENT FOR REOPENING BEING ABSENT, REOPENING OF ASSESSMENT U/S147 OF THE ACT IS BAD IN LAW. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE EXPLANATION OF THE APPELLANT & OUGHT TO HAVE ALLOWED THE EXEMPTION AS CLAIMED BY THE APPELLANT U/S 10(23 G) OF THE ACT. 4. THE LEARNED CIT (A) FAILED TO APPRECIATE THE FAC T THAT M/S. VIJAYLAXMI HYDRO POWER WAS NEVER WITHDRAWN BY THE C ENTRAL GOVERNMENT WHICH IS THE ONLY STATUTORY AUTHORITY WH ICH HAS THE REQUISITE POWERS FOR GRANTING OR WITHDRAWAL OF EXEM PTION ON SUCH ENTITIES. 5. THE LEARNED CIT(A) ACTED BEYOND HIS JURISDICTION IN WITHDRAWING THE EXEMPTION, WHEREIN HE HAS ABSOLUTELY NO POWERS TO WITHDRAW THE EXEMPTION THAT IS GRANTED BY THE CENTRAL GOVERNMENT . 5. THE LEARNED CIT(A) ERRED IN DISALLOWING THE SUM OF RS.1,41,892/- U/S 14A WITHOUT APPRECIATING THE EXPLANATION OF APP ELLANT. 6. THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING T HE ADDITION OF RS.1,22,832/- U/S 37 WITHOUT APPRECIATING THE EXPLA NATION OF APPELLANT. 7. WITHOUT PREJUDICE, THE ADDITIONS AS MADE BY THE LEARNED ASSESSING OFFICER ARE ARBITRARY, EXCESSIVE, UNREASONABLE AND OUGHT TO BE DELETED IN TOTO. 8. THE LEARNED ASSESSING OFFICER ERRED IN LEVYING I NTEREST UNDER SECTION 2348 AND 234C OF THE ACT. 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 5. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT GROU ND NO. 2 IS REGARDING VALIDITY OF REOPENING OF ASSESSMENT U/S. 147 IS NOT PRESSED AND ACCORDINGLY THIS GROUND IS REJECTED AS NOT PRESSED. ITA NO. 1534/BANG/2017 PAGE 4 OF 9 6. REGARDING GROUND NOS. 3 TO 5 IN RESPECT OF ALLOW ABILITY OF EXEMPTION U/S. 10(23G) OF IT ACT, SHE SUBMITTED THAT ON PAGE NO. 5 7 OF PAPER BOOK IS THE NOTIFICATION DATED 01.03.2001 ISSUED BY CBDT AS PER WHICH M/S. VIJAYLAKSHMI HYDRO POWER PVT. LTD. HAD BEEN APPROVED FOR THE PUR POSE OF SECTION 10(23G) OF IT ACT R.W. RULE 2E OF IT ACT, 1961 FOR ASSESSMENT YEAR 2001-02, 2002-03 AND 2003-04. SHE DRAWN MY ATTENTION TO PAGE NO. 4 OF T HE ORDER OF CIT(A) AND POINTED OUT THAT THE CIT(A) HAS NOTED THE SUBMISSIO N OF THE ASSESSEE THAT WHEN NEW RULE 2E WAS SUBSTITUTED W.E.F. 12.01.2004, THE OLD RULE 2E GOT ERASED AND REPLACED BY THE NEW RULE. IT IS FURTHER NOTED BY CIT(A) THAT IT WAS THE SUBMISSION OF ASSESSEE BEFORE HIM AS ON 12.01.2 004 WHEN THE NEW RULE CAME INTO FORCE, THE ASSESSEES APPROVAL REMAINED V ALID AND SHOULD BE DEEMED TO BE ONE ISSUED UNDER NEW RULE 2E. THEREAF TER SHE DRAWN MY ATTENTION TO PARA 5 OF THE ORDER OF CIT (A) AND POI NTED OUT THAT IN THIS PARA, IT IS NOTED BY CIT (A) THAT AS PER THE NOTIFICATION NUMBE R 51/2001 OF CBDT DATED 01.03.2001, M/S. VIJAYLAKSHMI HYDRO POWER PVT. LTD. WAS APPROVED AS AN ELIGIBLE ENTERPRISE FOR THE PURPOSE OF SECTION 10(2 3G) OF IT ACT. THIS APPROVAL WAS VALID FOR ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04 AND THEREFORE, FOR THE PRESENT YEAR BEING ASSESSMENT YEAR 2006-07, THE INTEREST RECEIVED FROM THIS COMPANY I.E. M/S. VIJAYLAKSHMI HYDRO POWE R PVT. LTD. CANNOT BE APPROVED TO BE EXEMPT U/S. 10(23G) BECAUSE FOR THE PRESENT YEAR, THERE IS NO APPROVAL OF THE CBDT IN RESPECT OF INTEREST FROM TH IS COMPANY. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT RULE 2E OF IT RULES, 1962 WAS AMENDED W.E.F. 12.01.2004 AND IN THE PRESENT CA SE, THE NOTIFICATION OF CBDT APPROVING M/S. VIJAYLAKSHMI HYDRO POWER PVT. L TD. FOR THE PURPOSE OF RULE 2E AND SECTION 10(23G) IS DATED 01.03.2001 AND THEREFORE, THIS NOTIFICATION IS PRIOR TO THE AMENDMENT OF RULE 2E. THIS IS THE CLAIM OF THE ASSESSEE THAT SINCE ON 12.01.2004 WHEN THE RULE 2E WAS AMENDED, THE APPROVAL OF M/S. VIJAYLAKSHMI HYDRO POWER PVT. LTD. U/S. 10(23G) WAS IN FORCE, IT SHOULD BE CONSIDERED AS AN APPROVAL UNDER NEW RU LE. I FIND NO MERIT IN THIS SUBMISSION OF THE LEARNED AR OF THE ASSESSEE BECAUS E THE CBDT NOTIFICATION AVAILABLE ON PAGE NO. 57 OF PAPER BOOK IS DATED 01. 03.2001 AND THEREFORE, THE ITA NO. 1534/BANG/2017 PAGE 5 OF 9 SAID NOTIFICATION IS UNDER OLD RULE 2E WHICH PROVID ED TIME LIMIT OF GRANTING APPROVAL AND SUCH APPROVAL WAS GRANTED FOR THREE AS SESSMENT YEARS 2001-02, 2002-03 AND 2003-04. ASSESSMENT YEAR 2003 04 STA RTS ON 01.04.2003 AND THE RULE APPLICABLE AS ON 01.04.2003 IS APPLICABLE FOR THAT ASSESSMENT YEAR. HENCE IT IS SEEN THAT ON 12.01.2004 WHEN RULE 2E WA S AMENDED, THE EARLIER NOTIFICATION DATED 01.03.2001 HAS COME TO AN END BE CAUSE AS PER THAT NOTIFICATION, THIS COMPANY WAS APPROVED AS ON 01.04 .2003 BEING RELEVANT DATE FOR ASSESSMENT YEAR 2003-04 AND AFTER THAT, THE APP ROVAL OF THAT COMPANY IS NO MORE THERE AND SINCE THERE IS NO APPROVAL OF CBDT U NDER NEW RULE 2E AFTER THE AMENDMENT IN RULE 2E, IN MY CONSIDERED OPINION, EXEMPTION U/S. 10(23G) IS NOT ALLOWABLE IN THE PRESENT YEAR FOR THE INTERE ST INCOME FROM THAT COMPANY M/S. VIJAYLAKSHMI HYDRO POWER PVT. LTD. 8. IN PARA 5.1 OF HIS ORDER, THE CIT(A) HAS NOTED T HAT RELIANCE HAS BEEN PLACED BY ASSESSEE ON TRIBUNAL ORDER RENDERED IN THE CASE OF JAYKAY FINHOLDINGS (INDIA) (P) LTD. VS. ADDL. CIT AS REPORTED IN (2010) 130 TT J 277. THE FACTS OF THAT CASE ARE NOTED BY TRIBUNAL IN THAT CASE AS PER WHIC H IT WAS NOTED THAT WHEN THE APPROVAL UNDER S. 10(23G) OF THE ACT WAS GRANTED BY THE CENTRAL GOVERNMENT, THE NAME OF THE COMPANY WAS SCL AND WHEN THE SHARES WERE SOLD BY THE ASSESSEE DURING THE PREVIOUS YEAR I.E., ON 1ST FEB. , 2005, THE NAME OF THE COMPANY WAS HETL. BECAUSE OF THIS, THE AO CAME TO THE CONCLUSION THAT SCL CEASED TO BE IN EXISTENCE W.E.F. 12TH AUG., 2002 WH EN ITS NAME WAS CHANGED TO HETL AND THEREFORE, THE APPROVAL GRANTED UNDER S . 10(23G) OF THE ACT TO SCL WILL NOT HOLD GOOD FOR CLAIMING EXEMPTION UNDER S. 10(23G) OF THE ACT BECAUSE THE TRANSFER OF SHARES BY THE ASSESSEE RESU LTING IN CAPITAL GAIN WAS THE SHARES OF HETL AND NOT THAT OF SCL. THE OBJECTION OF THE AO WAS THIS THAT APPROVAL UNDER S. 10(23G) OF THE ACT WAS VALID ONLY UP TO ASST. YR. 2004-05 AND THEREFORE, THE SAME WOULD NOT BE VALID FOR THE PREV IOUS YEAR RELEVANT TO ASST. YR. 2005-06, WHEN THE SHARES WERE SOLD. UNDER THESE FA CTS, IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT CHANGE OF NAME OF SCL TO HETL AND LATER ON TO HEMSL AND VEMSL WILL HAVE NO EFFECT ON THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S. 10(23G) OF THE ACT. REGARDING T HE APPLICABILITY OF THE APPROVAL FOR ASSESSMENT YEAR 2005-06, THE TRIBUNAL HAS NOTED IN PARA 13 OF ITA NO. 1534/BANG/2017 PAGE 6 OF 9 TRIBUNAL ORDER THAT THE AO ADMITTED IN THAT CASE TH AT THE QUALIFIED UNDERTAKING HAS COMPLIED WITH THE CONDITIONS LAID DOWN IN R. 6E OF THE RULES AND THAT RENEWAL OF APPROVAL WAS AUTOMATIC. IN THAT CASE, T HE APPROVAL U/S. 10(23G) WAS GRANTED TO M/S. STERLING CELLULAR LTD. BY NOTIF ICATION NO. 353 DATED 27.11.2002 AND IT WAS VALID FOR ASSESSMENT YEARS 20 02-03 TO 2004-05. HENCE IT IS SEEN THAT IT WAS VALID UP TO 01.04.2004 IN TH AT CASE AND RULE 2E WAS AMENDED W.E.F. 12.01.2004. BUT IN THE PRESENT CASE , WE HAVE SEEN THAT THE EARLIER APPROVAL U/S. 10(23G) WAS VALID ONLY UP TO 01.04.2003 RELEVANT FOR ASSESSMENT YEAR 2003-04 AND THE AMENDMENT UNDER RUL E 2E HAS COME AFTERWARDS FROM 12.01.2004. HENCE IN MY CONSIDERED OPINION, THIS TRIBUNAL ORDER IS NOT APPLICABLE IN THE FACTS OF PRESENT CAS E AS DISCUSSED ABOVE. IN MY CONSIDERED OPINION, THIS TRIBUNAL ORDER IS NOT REND ING ANY HELP TO ASSESSEE AND IN VIEW OF THE FACTS DISCUSSED ABOVE, I FIND NO INF IRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE. HENCE I DECLINE TO INTERFERE. ACCORDI NGLY GROUND NOS. 3, 4 AND 5 ARE REJECTED. 9. THE NEXT ISSUE IS REGARDING DISALLOWANCE OF RS. 1,41,892/- U/S. 14A OF IT ACT. THIS ISSUE WAS DECIDED BY CIT(A) AS PER PARAS 7, 7. 1 AND 7.2 WHICH ARE REPRODUCED HEREINBELOW FOR READY REFERENCE. 7. GROUND NO. 5 AND 6 ARE WITH REGARD TO THE DISALL OWANCE OF RS.1,41,892 U/S. 14A OF THE ACT AND DISALLOWANCE OF RS.1,22,832/- U/S.37 OF THE ACT. THE APPELLANT HAS DISPUTED THESE ADDITIONS ON THE GROUND THAT THESE ISSUES WERE NEVER A PART OF THE R EASONS ADDUCED BY THE DEPARTMENT FOR REOPENING OF THE ASSESSMENT UNDE R SECTION 147 OF THE ACT AND HENCE THE ADDITIONS MADE DURING THE REA SSESSMENT PROCEEDINGS ARE BAD IN LAW. 7.1 THE CONTENTION OF THE APPELLANT HAS BEEN EXAMIN ED, HOWEVER, THE SAME IS NOT FOUND TO BE LEGALLY SUSTAINABLE. THE I SSUE WHETHER THE ASSESSING OFFICER CAN BRING TO TAX ANY INCOME WHICH ESCAPED ASSESSMENT AND IS NOT RESTRICTED TO THE ITEMS WHICH RELATE TO THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, HAS BEEN CONSIDERED BY VARIOUS COURTS AND IT HAS BEEN HELD T HAT ONCE THE ASSESSMENT IS REOPENED FOR ANY VALID REASON RECORDE D UNDER SECTION 148(2), THEN THE ENTIRE ASSESSMENT IS OPEN FOR THE ASSESSING OFFICER TO BRING TO TAX ANY ITEM OF ESCAPED INCOME WHICH COMES TO HIS NOTICE IN THE COURSE OF SUCH REASSESSMENT. IN THIS REGARD IT HAS BEEN HELD AS UNDER BY THE HON'BLE KERALA HIGH COURT, IN THE CASE OF CIT, COCHIN VS. BEST WOOD INDUSTRIES & SAW MILLS [2011] 11 TAXM ANN.COM 278 (KER.)(FB): ITA NO. 1534/BANG/2017 PAGE 7 OF 9 IT IS CLEAR FROM SECTION 147 THAT ONCE ASSESSMENT I S REOPENED FOR BRINGING TO TAX ANY INCOME THAT ESCAPED ASSESSMENT IN TERMS OF SECTIONS 148 TO 153, THEN THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT. THE PURPOSE OF THIS P ROVISION IS THAT IF IN THE COURSE OF REASSESSMENT INITIATED UND ER SECTION 147 TO BRING TO TAX ANY ITEM OF ESCAPED INCOME, IT COMES T O THE NOTICE OF THE ASSESSING OFFICER THAT ANY OTHER INCOME ALSO HA S ESCAPED INCOME, THEN THE ASSESSING OFFICER SHOULD BRING TO TAX SUCH INCOME ALSO. THE PROCEDURE FOR INCOME ESCAPING ASSESSMENT UNDER SECTION 147 IS CONTAINED IN SECTION 148 WHEREUNDER SUB-SECT ION (2) MAKES IT MANDATORY FOR THE ASSESSING OFFICER TO RECORD RE ASONS BEFORE PROCEEDING TO ISSUE NOTICE. HOWEVER, THE ASSESSING OFFICER HAS TO COMPLETE THE INCOME ESCAPING ASSESSMENT BY FOLLOWIN G THE PROVISIONS OF THE ACT AS IF THE RETURN FURNISHED AG AINST NOTICE UNDER SECTION 148 IS ONE FILED UNDER SECTION 139. THIS OB VIOUSLY MEANS THAT SO FAR AS PROCEDURE TO BE FOLLOWED IS CONCERNE D, THERE IS NO DIFFERENCE BETWEEN INCOME ESCAPING ASSESSMENT AND R EGULAR ASSESSMENT BECAUSE THE PROVISIONS GENERALLY PROVIDE FOR ISSUE OF NOTICE, HEARING OF THE ASSESSEE AND TAKING OF EVIDE NCE, ETC., WHICH ARE THE SAME FOR REGULAR ASSESSMENT AND INCOME ESCA PING ASSESSMENT. THEREFORE, IN THE COURSE OF INCOME ESCAPING ASSESSMENT, IF IT COMES TO THE NOTICE OF THE ASSESS ING OFFICER THAT ANY OTHER ITEM OR ITEMS OF INCOME OTHER THAN THE IT EM OF ESCAPED INCOME FOR THE ASSESSMENT OF WHICH, ASSESSMENT ORIG INALLY COMPLETED WAS REOPENED, ALSO HAVE ESCAPED FROMORIGI NAL ASSESSMENT, HE IS BOUND TO ASSESS SUCH ITEM OR ITEM S OF INCOME ALSO IN THE COURSE OF REASSESSMENT UNDER SECTION 14 7. IN VIEW OF THE SPECIFIC PROVISION PROVIDING FOR ASSESSMENT OF OTHER ITEMS OF INCOME THAT HAVE ESCAPED ASSESSMENT, AND THAT COME TO THE NOTICE OF THE ASSESSING OFFICER IN THE COURSE OF INCOME ES CAPING ASSESSMENT, THE REASSESSMENTS MADE IN THE INSTANT C ASE WERE VALID AND THE ORDERS OF THE TRIBUNAL TO THE CONTRARY WERE NOT SUSTAINABLE. [PARA 3] THE SUPREME COURT IN ASSTT. CIT V. RAJESH JHAVERI S TOCK BROKERS (P.) LTD. [2007] 291 ITR 500/ 161 TAXMAN 31 6 (SC) HAS HELD THAT AT THE STAGE OF ISSUE OF NOTICE UNDER SEC TION 148 WHAT IS REQUIRED IS ONLY REASON TO BELIEVE BUT NOT THE ESTA BLISHED FACT OF ESCAPEMENT OF INCOME. THE PROPOSITION LAID DOWN BY THE SUPREME COURT CLEARLY GOES TO ESTABLISH THAT THE ASSESSING, OFFICER IS NOT CONFINED TO THE GROUNDS OR REASONS STATED BY HIM TO REOPEN THE ASSESSMENT AND HE CAN MAKE ASSESSMENT AFTER DETAILE D ENQUIRY. SO MUCH SO, ONCE THE ASSESSMENT IS REOPENED FOR ANY VA LID REASON RECORDED UNDER SECTION 148(2), THEN THE ENTIRE ASSE SSMENT IS OPEN FOR THE ASSESSING OFFICER TO BRING TO TAX ANY ITEM OF ESCAPED INCOME WHICH COMES TO HIS NOTICE IN THE COURSE OF S UCH REASSESSMENT THEREFORE, THE ORDERS OF THE TRIBUNAL AND THE FIRST APPELLATE AUTHORITY WERE LIABLE TO BE SET ASIDE. MA TTER WAS TO BE REMANDED TO THE FIRST APPELLATE AUTHORITY TO CONSID ER THE APPEALS ON ITA NO. 1534/BANG/2017 PAGE 8 OF 9 MERITS WITH REGARD TO ADDITIONS MADE IN THE REASSES SMENTS. [PARA 4] 7.2 IN VIEW OF THE ABOVE JUDICIAL VIEW, THE CONTENT ION OF THE APPELLANT THAT THE DISALLOWANCE OF RS.1,41,892 U/S. 14A AND R S.1,22,832/- U/S.37 OF THE ACT ARE BAD IN LAW, IS FOUND TO BE WITHOUT M ERIT AND ARE NOT LEGALLY TENABLE. THE GROUNDS OF APPEAL RAISED IN T HIS REGARD ARE ACCORDINGLY, DISMISSED. 10. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER OF CIT(A), IT IS SEEN THAT THE ONLY OBJECTION OF THE ASSESSEE REGARDING THIS DISAL LOWANCE IS THIS THAT THIS ISSUE WAS NEVER A PART OF THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT U/S. 147 OF IT ACT AND THEREFORE, SUCH D ISALLOWANCE CANNOT BE MADE IN THE REASSESSMENT. ON THIS ASPECT, CIT(A) H AS FOLLOWED THE JUDGEMENT OF HONBLE KERALA HIGH COURT RENDERED IN THE CASE O F CIT VS. BEST WOOD INDUSTRIES & SAW MILLS AS REPORTED IN [2011] 11 TAX MANN.COM 278 (KER.) AND THERE ARE SEVERAL JUDGEMENTS ON THIS ISSUE THAT IF THE REOPENING IS VALID THEN THE DISALLOWANCE CAN BE MADE ON ANY OTHER ISSUE ALSO WH ICH IS NOT PART OF REASONS RECORDED FOR REOPENING. THERE IS NO OTHER OBJECTIO N RAISED BY THE ASSESSEE BEFORE CIT(A) OR BEFORE THE TRIBUNAL REGARDING THE DISALLOWANCE U/S. 14A. HENCE ON THIS ISSUE ALSO, I FIND NO REASON TO INTER FERE IN THE ORDER OF CIT(A) IN RESPECT OF DISALLOWANCE OF RS. 1,41,892/- U/S. 14A AND ADDITION OF RS. 1,22,832/- U/S. 37 OF IT ACT. BOTH THESE GROUNDS A RE REJECTED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. /MS/ ITA NO. 1534/BANG/2017 PAGE 9 OF 9 COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.