Smt. Aisha Begum, Kolkata V. ITO, Ward - 31(1), Kolkata, Kolkata

ITA 1799/KOL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74968 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 20-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Sale consideration of property below Jantri Value; Question of law; Cost of acquisition; Reason to believe; Reassessment proceedings
• Section: 147; 143(3); 50C; 54F

Judgement Text

I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO.: 1799/KOL./ 2010 ASSESSMENT YEAR : 2005-2006 SMT. AISHA BEGUM,.................................. ...........APPELLANT 115/2, COLLIN STREET, 31/2A, MARQUIS STREET, KOLKATA-700 016 [PAN : ADCPA 3116 G] -VS.- INCOME TAX OFFICER,................................ .........................RESPONDENT WARD-31(1), KOLKATA APPEARANCES BY: SHRI S.M. SURANA, A.R., FOR THE ASSESSEE SMT. SUCHETA CHATTOPADHYAY, JCIT, SR. D.R, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 27, 2014 DATE OF PRONOUNCING THE ORDER : JANUARY 29, 2014 O R D E R PER ABRAHAM P. GEROGE : 1. IN THIS APPEAL FILED BY THE ASSESSEE, OUT OF NIN E GROUNDS, ONE ASSAILS THE ASSESSMENT DONE UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). AS PER THIS GROUND, ASSESSING OFF ICER HAVING FOUND THAT THE REASON FOR WHICH ASSESSMENT WAS REOPENED WAS IN CORRECT OUGHT HAVE DROPPED SUCH REASSESSMENT PROCEEDINGS. 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HER RE TURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME OF RS.1,1 1,230/-. IN SUCH RETURN ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 54F OF THE ACT ON LONG-TERM CAPITAL GAINS ARISING OUT OF SALE OF A HO TEL PREMISE. THE RETURN WHICH WAS ORIGINALLY SUBJECTED TO A PROCESSING UNDE R SECTION 143(1) OF THE ACT, WAS REOPENED UNDER SECTION 147 OF THE ACT. NOTICE UNDER SECTION I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 2 148 WAS ISSUED. REASON FOR REOPENING WAS THAT DEDUC TION UNDER SECTION 54F WAS NOT ALLOWABLE TO THE ASSESSEE. THEREAFTER T HE ASSESSMENT WAS COMPLETED RECALCULATING THE LONG-TERM CAPITAL GAINS , BUT, NEVERTHELESS, ASSESSING OFFICER ALLOWED DEDUCTION UNDER SECTION 5 4F OF THE ACT, ON SUCH RE-WORKED CAPITAL GAINS. ASSESSEE MOVED IN APPEAL A GAINST THE REASSESSMENT WHEREIN, IT NOT ONLY CHALLENGED THE ME RITS OF RE-WORKING OF THE LONG-TERM CAPITAL GAINS, WHICH RESULTED IN ENHA NCEMENT OF THE RETURNED INCOME, BUT ALSO CHALLENGED THE VALIDITY O F REOPENING. CHALLENGE TO THE REOPENING WAS DISMISSED BY THE LD. CIT(APPEA LS) WITH THE FOLLOWING OBSERVATIONS :- I AM OF THE OPINION THAT THE AO WAS JUSTIFIED IN I NITIATING THE PROCEEDINGS U/S 147 OF THE ACT ON THE BASIS OF FACTS ON RECORD AND HE WAS ALSO JUSTIFIED IN INVOKING THE PR OVISIONS OF SEC. 50C TO COMPUTE THE INCOME FROM CAPITAL GAIN . THE APPELLANT HAS CONTENDED THAT ONCE THE AO WAS SATISF IED THAT DEDUCTION U/S 54F HAS BEEN CLAIMED ON NEW HOUSE PRO PERTY AND NOT ON INVESTMENT IN LAND, HE SHOULD HAVE DROPP ED THE PROCEEDINGS U/S 147 BECAUSE THE REASON FOR WHICH ASSESSMENT WAS REOPENED DID NOT EXIST ANY MORE. ON CAREFUL CONSIDERATION OF FACTS, I AM NOT INCLINED TO AGREE WITH THE SUBMISSION OF THE APPELLANT. IF DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE AO HAS FOUND THAT THE IN COME COMPUTED UNDER THE HEAD LONG-TERM CAPITAL GAIN HAS NOT BEEN CORRECTLY COMPUTED, HE HAS ALL THE RIGHTS AND DUTY TO COMPUTE THE CORRECT INCOME. IF, ANY OTHER INCOME WH ICH HAS ESCAPED ASSESSMENT, OTHER THAN THE INCOME RECORDED IN THE REASONS TO BELIEVE, THE SAID INCOME HAS TO BE BROUG HT TO THE TAX NET. IN THE CASE OF APPELLANT, THOUGH, THE PROV ISIONS OF SECTION 50C WERE APPLICABLE BUT WHILE COMPUTING THE CAPITAL GAIN, SHE HAS NOT CONSIDERED THE SAID PROVISIONS OF LAW. THUS, IT CANNOT BE SAID THAT IF THE AO WAS SATISFIE D WITH THE CLAIM MADE BY THE APPELLANT U/S. 54F, HE SHOULD HAV E DROPPED THE PROCEEDINGS U/S 147 AND HE SHOULD HAVE NOT INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT/ D URING THE COURSE OF ASSESSMENT PROCEEDINGS, BEFORE THE AO THE APPELLANT DID NOT DISPUTE THE VALUATION MADE BY THE STAMP VALUATION AUTHORITIES AND SHE DID NOT ASK FOR VALUA TION BY THE DVO. THE APPELLANTS CLAIM CANNOT BE ENTERTAINE D AT THIS STAGE. IN VIEW OF ABOVE FACTS, IT IS TO BE HELD THA T AO WAS JUSTIFIED IN INITIATING THE PROCEEDINGS U/S 147 AND INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 3 3. NOW BEFORE US, LD. AR POINTING OUT THE REASONS R ECORDED FOR REOPENING THE ASSESSMENT, PLACED AT PAPER BOOK PAGE NO. 11, SUBMITTED THAT THE REASON GIVEN WAS SECTION 54F DEDUCTION BEI NG INCORRECTLY CLAIMED AND ALLOWED. ASSESSING OFFICER, HOWEVER, AS PER THE LD. AR ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN THE FINAL ASSESSMENT DONE. RELYING ON THE DECISION OF THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V-VS.- SRI RAM SINGH (2008 ) 306 ITR 343 LD. AR SUBMITTED THAT ONCE ASSESSING OFFICER HAD REACHED A CONCLUSION THAT INCOME WHICH HE BELIEVED TO HAVE ESCAPED ASSESSMENT AND HAD BEEN EXPLAINED, HE DID NOT THEREAFTER POSSESS JURISDICTI ON TO SUBJECT TO TAX ANY OTHER INCOME. PER CONTRA, LD. DR SUPPORTED THE ORD ER OF AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. REASONS FOR REOPENING THE ASSE SSMENT, COPY OF WHICH HAS BEEN PLACED AT PAPER BOOK PAGE NO. 11 IS REPROD UCED HEREUNDER:- 2. AS REQUESTED, THE RECORDED REASON(S) FOR REOPEN ING THE CASE HAVE BEEN REPRODUCED BELOW :- FROM THE SUBMITTED DOCUMENTS ALONG WITH THE RETUR N OF INCOME, IT IS EVIDENT THAT, DURING THE PREVIOUS YEA R, THE ASSESSEE SOLD AN IMMOVABLE PROPERTY. THE PROPERTY S OLD AT RS.28,50,000/- AND THE COST OF ACQUISITION WITH IND EXATION WAS CALCULATED AS RS.18.85,714/-. FROM THE CAPITAL GAIN [RS.28,50,000/- - RS.18,85,714/-], THE ASSESSEE CLA IMED RS.9,13,344/- ON ACCOUNT OF EXPENDITURE MADE ON LAN D PURCHASE U/S 54F OF THE ACT. BUT AS PER PROVISION OF SECTION 54F, INVESTMENT MADE IN RESIDENTIAL HOUSE PROPERTY WOULD BE ELIGIBLE FOR SUCH DIMINUTION OF CAPITAL GAIN. 5. IN THE ASSESSMENT COMPLETED UNDER SECTION 147 RE AD WITH SECTION 143(3) OF THE ACT ON 30.11.2009, ASSESSING OFFICER HAS ONCE AGAIN MENTIONED THE DEDUCTION CLAIMED BY THE ASSESSEE UND ER SECTION 54F OF THE ACT, AS THE REASON FOR THE REOPENING. COMPUTATI ON OF LONG-TERM CAPITAL GAINS AS IT APPEARS AT PARA 2.4.1 OF THE ASSESSMENT ORDER READS AS UNDER :- SALE CONSIDERATION RS.76,60,000 I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 4 LESS: INDEXED COST OF ACQUISITION OF THE SAID PROPERTY = 107780 X 480/140.................... RS. 3,69 ,531/- _________________________ LONG TERM CAPITAL GAIN RS.72,90,469/- SUBJECT TO THE ABOVE DISCUSSION, THE TOTAL INCOME O F THE ASSESSEE IS ASSESSED AS UNDER :- INCOME FROM BUSINESS : RS.55,416 INCOME FROM HOUSE PROPERTY : RS. 4,872 INCOME FROM OTHER SOURCES : RS. 107 INCOME FROM LONG TERM CAPITAL GAIN RS.72,90,469 LESS : DEDUCTION U/S 54F 72,90,469 X 906344/7660000 RS. 8,62,620 ______________________RS.64,27,849 ________________________ RS.64,88,244/- LESS : DEDUCTION U/S. 80L : RS. 107/- ___________________________ RS.64,88,137/- __________________________ THUS IT IS CLEAR THAT ASSESSING OFFICER HAD CONSID ERED THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 54F OF THE ACT , AS AN ELIGIBLE ONE. EX-CONSEQUENTI, THE REASON BASED ON WHICH THE REOPE NING WAS RESORTED TO DISAPPEARED. HONBLE RAJASTHAN HIGH COURT IN THE CA SE OF SRI RAM SINGH (SUPRA) HAS CLEARLY HELD THAT ONCE THE INCOME WHICH ASSESSING OFFICER BELIEVED TO HAVE ESCAPED INVESTMENT STOOD EXPLAINED , THERE WAS NO FURTHER JURISDICTION TO CONTINUE WITH THE REASSESSM ENT PROCEEDINGS. THIS VIEW TAKEN BY THE HONBLE RAJASTHAN HIGH COURT HAS BEEN REITERATED BY THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CIT V S.- JET AIRWAYS INDIA LIMITED [331 ITR 236], WHEREIN THEIR LORDSHIPS HAD CONSIDERED THE EFFECT OF EXPLANATION 3 ADDED TO SECTION 147 OF THE ACT BY FINANCE (NO. 2) ACT, 2009. THEIR LORDSHIPS HELD AS UNDER AT PARA 16 TO 2 3 OF THE JUDGMENT:- 16. IN CIT VS. SUN ENGINEERING WORKS (P) LTD. (1992) 10 7 CTR (SC) 209 : (1992) 198 ITR 297 (SC) : (1992) 64 TAXMAN 442 (SC), THE SUPREME COURT DEALT WITH THE FOLLOWING QUESTION OF LAW IN THE COURSE OF ITS JUDGMENT: . 'WHERE AN ITEM UNCONNECTED WITH THE ESCAPEMENT OF I NCOME HAS BEEN CONCLUDED FINALLY AGAINST THE ASSESSEE, HOW FAR IN REASSESSMENT ON AN ESCAPED ITE M OF INCOME IS IT OPEN TO THE ASSESSEE TO SEEK A REVIEW OF THE CONCLUDED ITEM FOR THE PURPOSE OF C OMPUTATION OF THE ESCAPED INCOME 7' I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 5 THE ISSUE WHICH AROSE BEFORE THE SUPREME COURT WAS WHETHER, IN THE COURSE OF A REASSESSMENT ON AN ESCAPED ITEM OF INCOME COULD AN ASSESSEE SEEK A REVIEW IN RESPECT OF AN ITEM WHICH STOOD CONCLUDED IN THE ORIGINAL ORDER OF ASSESSMENT. THE SUPREME COURT DEALT WITH THE PROVISIONS OF S. 147, AS THEY STOOD PRIOR TO THE AMENDMENT ON 1ST AP RIL, 1989. THE SUPREME COURT HELD THAT THE EXPRESSION 'ESCAPED ASSESSMENT' INCLUDES BOTH 'NON- ASSESSMENT' AS WELL AS 'UNDERASSESSMENT' . INCOME IS SAID TO HAVE ESCAPED ASSESSMENT WITHIN TH E MEANING OF THE SECTION WHEN IT HAS NOT BEEN CHARGED IN THE HANDS OF AN ASSESSEE DURING THE RELE VANT ASSESSMENT YEAR. THE EXPRESSION 'ASSESS' REFERS TO A SITUATION WHERE THE ASSESSMENT OF THE A SSESSEE FOR A PARTICULAR YEAR IS, FOR THE FIRST TIME, MADE BY RESORTING TO THE PROVISIONS OF S. 147 . THE EXPRESSION 'REASSESS' REFERS TO A SITUATION WHERE AN ASSESSMENT HAS ALREADY BEEN MADE BUT THE A O HAS REASON TO BELIEVE THAT THERE IS UNDERASSESSMENT ON ACCOUNT OF THE EXISTENCE OF ANY OF THE GROUNDS CONTEMPLATED BY EXPLN. 1 TO S . 147. THE SUPREME COURT ADVERTED TO THE JUDGMENT IN V. JAGANMOHAN RAO VS. CIT (1970) 75 ITR 373 (SC), WHICH HELD THAT ONCE AN ASSESSMENT IS VAL IDLY REOPENED, THE PREVIOUS UNDERASSESSMENT IS SET ASIDE AND THE ITO HAS THE JURISDICTION AND D UTY TO LEVY TAX ON THE ENTIRE INCOME THAT HAD ESCAPED ASSESSMENT DURING THE PREVIOUS YEAR. THE CO URT HELD THAT THE OBJECT OF S. 147 ENURES TO THE BENEFIT OF THE REVENUE AND IT IS NOT OPEN TO TH E ASSESSEE TO CONVERT THE REASSESSMENT PROCEEDINGS AS AN APPEAL OR REVISION AND THEREBY SE EK RELIEF IN RESPECT OF ITEMS WHICH WERE REJECTED EARLIER OR IN RESPECT OF ITEMS NOT CLAIMED DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. 17. THE JUDGMENT IN V. JAGANMOHAN RAO VS. CIT (SUPRA) D EALT WITH THE LANGUAGE OF SS. 22(2) AND 34 OF THE ACT OF 1922 WHILE THE JUDGMENT IN SUN ENG G. WORKS (P) LTD. (SUPRA) INTERPRETS THE PROVISIONS OF S. 147 AS THEY STOOD PRIOR TO THE AME NDMENT ON 1ST APRIL, 1989. 18. THE EFFECT OF THE AMENDED PROVISIONS CAME TO BE CON SIDERED IN TWO DISTINCT LINES OF PRECEDENT ON THE SUBJECT . THE FIRST LINE OF AUTHORITY, TO WHICH A REFERENCE H AS ALREADY BEEN MADE EARLIER, ADOPTED THE PRINCIPLE THAT WHERE THE AO HAS FORMED A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND HAS ISSUED A NOTICE UNDER S. 148 ON CERTAIN SPECIFIC ISSUES, IT WAS NOT OPEN TO HIM DURING THE COURSE OF THE PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT TO ASSESS OR REASSESS ANY OTHER INCOME, WHICH MAY HAVE ESCAPED ASSESSMENT BUT WHICH DID NOT FORM THE SUBJECT-MATTER OF THE NOTICE UNDER S. 148. THIS VIEW WAS ADOPTED IN T HE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT IN VIPAN KHANNA (SUPRA) AND IN THE JUDGMENT O F THE KERALA HIGH COURT IN TRAVANCORE CEMENTS LTD. (SUPRA), THIS LINE OF AUTHORITY, WOULD NOW CEASE TO REFLECT THE CORRECT POSITION IN L AW, BY VIRTUE OF THE AMENDMENT WHICH HAS BEEN BROUGHT I N BY THE INSERTION OF EXPLN. 3 TO S. 147 BY FINANCE (NO.2) ACT OF 2009. THE EFFECT OF THE EXPLA NATION IS THAT ONCE AN AO HAS FORMED A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT AND HAS PROCEEDED TO ISSUE A NOTICE UNDER S. 148, IT IS OPEN TO HIM TO ASSESS OR REASSESS INCOME IN RESPECT OF ANY OTHER ISSUE THOUGH THE REASONS FOR SUCH ISSUE HAD NOT BEEN INCL UDED IN THE REASONS RECORDED UNDER S . 148(2) . 19. THE SECOND LINE OF PRECEDENT IS REFLECTED IN A JUDG MENT OF THE RAJASTHAN HIGH COURT IN CIT VS . SHRI RAM SINGH (2008) 217 CTR (RAJ) 345 : (2008) 30 6 ITR 343 (RAJ). THE RAJASTHAN HIGH COURT CONSTRUED THE WORDS USED BY PARLIAMENT IN S. 147 PA RTICULARLY THE WORDS THAT THE AO 'MAY ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS' UNDER S. 147. THE RAJASTHAN HIGH COURT HELD AS FOLLOWS: ' ... IT IS ONLY WHEN, IN PROCEEDINGS UNDER S. 147 THE AO, ASSESSES OR REASSESSES ANY INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT FOR ANY ASSESS MENT YEAR, WITH RESPECT TO WHICH HE HAD 'REASON TO BELIEVE' TO BE SO, THEN ONLY, IN ADDITION, HE CAN ALSO PUT TO TAX, THE OTHER INCOME, CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT, AN D WHICH HAS COME TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF PROCEEDINGS UNDER S. 147. I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 6 TO CLARIFY IT FURTHER, OR TO PUT IT IN OTHER WORDS, IN OUR OPINION, IF IN THE COURSE OF PROCEEDINGS UN DER S. 147, THE AO WERE TO COME TO THE CONCLUSION, THAT ANY INCOME CHARGEABLE TO TAX, WHICH, ACCORDING TO HIS 'REASON TO BELIEVE', HAD ESCAPED A SSESSMENT FOR ANY ASSESSMENT YEAR, DID NOT ESCAPE ASSESSMENT, THEN, THE MERE FACT THAT THE AO ENTERTAINED A REASON TO BELIEVE, ALBEIT EVEN A GENUINE REASON TO BELIEVE, WOULD NOT CONTINUE TO VE ST HIM WITH THE JURISDICTION, TO SUBJECT TO TAX, ANY OTHER INCOME, CHARGEABLE TO TAX, WHICH THE AO M AY FIND TO HAVE ESCAPED ASSESSMENT, AND WHICH MAY COME TO HIS NOTICE SUBSEQUENTLY, IN THE C OURSE OF PROCEEDINGS UNDER S. 147. ' 20. PARLIAMENT, WHEN IT ENACTED THE EXPLN. (3) TO S. 14 7 BY THE FINANCE (NO.2) ACT, 2009 CLEARLY HAD BEFORE IT BOTH THE LINES OF PRECEDENT ON THE SU BJECT. THE PRECEDENT DEALT WITH TWO SEPARATE QUESTIONS. WHEN IT EFFECTED THE AMENDMENT BY BRINGI NG IN EXPLN. 3 TO S. 147, PARLIAMENT STEPPED I N TO CORRECT WHAT IT REGARDED AS AN INTERPRETATIONAL ERROR IN THE VIEW WHICH WAS TAKEN BY CERTAIN COURTS THAT THE AO HAS TO RESTRICT THE ASSESSMENT O R REASSESSMENT PROCEEDINGS ONLY TO THE ISSUES IN RESPECT OF WHICH REASONS WERE RECORDED FOR REOPE NING THE ASSESSMENT. THE CORRECTIVE EXERCISE EMBARKED UPON BY 'PARLIAMENT IN THE FORM OF EXPLN. 3 CONSEQUENTLY PROVIDES THAT THE AO MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE WHICH COMES TO HIS NOTICE SUBSEQUENT L Y IN THE COURSE OF THE PROCEEDINGS THOUGH THE REASONS FO R SUCH ISSUE WERE NOT INCLUDED IN THE NOTICE UNDER S. 148(2). THE DECISIONS OF THE KERALA HIGH C OURT IN TRAVANCORE CEMENTS LTD. (SUPRA) AND OF THE PUNJAB & HARYANA HIGH COURT IN VIPAN KHANNA (SU PRA) WOULD, THEREFORE, NO LONGER HOLD THE FIELD . HOWEVER, INSOFAR AS THE SECOND LINE OF AUTHORITY IS CONCERNED, WHICH IS REFLECTED IN THE JUDGMENT OF THE RAJASTHAN HIGH COURT IN SHRI RAM SI NGH (SUPRA), EXPLN . 3 AS INSERTED BY PARLIAMENT WOULD NOT TAKE AWAY THE BASIS OF THAT DE CISION. THE VIEW WHICH WAS TAKEN BY THE RAJASTHAN HIGH COURT WAS ALSO TAKEN IN ANOTHER JUDG MENT OF THE PUNJAB & HARYANA HIGH COU R T IN CIT VS . ATLAS CYCLE INDUSTRIES (1989) 180 ITR 319 (P&H) : ( 1989) 46 TAXMAN 315 (P&H ) . THE DECISION IN ATLAS CYCLE INDUSTRIES (SUPRA) HELD THA T THE AO DID NOT HAVE JURISDICTION TO PROCEED WITH THE REASSESSMENT, ONCE HE FOUND THAT THE TWO GROUND S MENTIONED IN THE NOTICE UNDER S . 148 WERE INCORRECT OR NON-EXISTENT. THE DECISIONS OF THE PUN JAB & HARYANA HIGH COURT IN ATLAS CYCL E INDUSTRIES (SUPRA) AND OF THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH (SUPRA) WOULD NOT BE AFFECTED BY THE AMENDMENT BROUGHT IN BY THE INSERTI ON OF EXPLN. 3 TO S. 147. 21 . EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR REASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER S. 148 SETTING OUT THE REASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HELD THAT WHEN THE ASS ESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERT AIN ISSUE, THE AO COULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH C AME TO HIS NOTICE DURING THE PROCEED I NGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD A FTER THE INSERTION OF EXPLN. 3 BY THE FINANCE ACT (NO.2) OF 2009. HOWEVER, EXPLN. 3 DOES NOT AND CANN OT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF S. 14 7. 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 NUGATORY. SEE . 147 HAS THIS EFFECT THAT THE AO HAS TO ASSESS OR RE ASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND I F 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 PROCEE DINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER S . 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED AS SESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER S. 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 22. WE HAVE APPROACHED THE ISSUE OF INTERPRETATION THAT HAS ARISEN FOR DECISION IN THESE APPEALS, BOTH AS A MATTER OF FIRST PRINCIPLE, BASED ON THE L ANGUAGE USED IN S. 147(1) AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WITH THE SUBMISS IONS WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT S. 147(1) AS IT STANDS POSTULATES THA T UPON THE FORMATION OF A REASON TO BELIEVE THAT I N COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A NY ASSESSMENT YEAR, THE AO MAY ASSESS OR I.T.A. NO.: 1799/KOL./20 10 ASSESSMENT YEAR : 2005-200 6 PAGE 1 TO 7 7 REASSESS SUCH INCOME 'AND ALSO' ANY OTHER INCOME CH ARGEABLE TO TAX WHICH COMES TO HIS NOTICE S UBSEQUENTLY DURING THE PROCEEDINGS AS HAVING ESCAPE D ASSESSMENT. THE WORDS 'AND ALSO ' ARE USED IN A CUMULATIVE AND CONJUNCTIVE SENSE. TO READ THESE WORDS AS BEING IN THE ALTERNATIVE WOULD BE TO REWRITE THE LANGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPPORTED BY THE BACKGROUND WHICH LED TO THE INSERTION OF EXPLN. 3 TO S. 147. P ARLIAMENT MUST BE REGARDED AS BEING AWARE OF THE INTERPRETATION THAT WAS PLACED ON THE WORDS 'AND AL SO' BY THE RAJASTHAN HIGH COURT IN SHR I RAM SINGH (SUPRA) . PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DEC ISION. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITUDE OF ITS L EGISLATIVE POWERS TO DO SO, THE PROVISIONS OF S . 147(1) AS THEY STOOD AFTER THE AMENDMENT OF 1ST APR IL, 1989 CONTINUE TO HOLD THE FIELD. 23. IN THAT VIEW OF THE MATTER AND FOR THE REASONS THAT WE HAVE INDICATED, WE DO NOT REGARD THE DECISION OF THE TRIBUNAL IN THE PRESENT CASE AS BEI NG IN ERROR. THE QUESTION OF LAW SHALL, ACCORD I NGLY, S TAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS, ACCORD I NGLY, DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. WE ARE, THEREFORE, OF THE OPINION THAT THE ASSESSEE S CLAIM UNDER SECTION 54F OF THE ACT HAVING BEEN FOUND TO BE JUSTIFIED, T HE REASON FOR WHICH THE ASSESSMENT WAS REOPENED DID NOT SURVIVE ANY MORE. T HE REASSESSMENT THEREFORE DID NOT HAVE ANY LEGS TO STAND. SUCH REAS SESSMENT STANDS QUASHED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF JANUARY, 2014. SD/- SD/- GEORGE MATHAN ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 29 TH DAY OF JANUARY, 2014 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(APPEALS) (4) CIT (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.