S.Praveen Kumar, CHENNAI V. ITO Ward 1 (Tiruvallur), Kancheepuram

ITA 1905/CHNY/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9964 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRINIRANJANI
• Keywords: Reopening of assessment; Depreciation; Principle of natural justice; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.1905/CHNY/2018 / ASSESSMENT YEAR : 2011-2012. SHRI. S. PRAVEEN KUMAR, NO.33/3, GROUND FLOOR, VEERAPPAN STREET, SOWCARPET, CHENNAI 600 001. VS. THE INCOME TAX OFFICER, WARD I, (TIRUVALLUR), KANCHEEPURAM. [PAN AAIPP 9343H] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MS. S. SRINIRANJANI, ADVOCATE /RESPONDENT BY : MR. CLEMENT RAMESH KUMAR, ADDL. CIT. /DATE OF HEARING : 10-12-2018 ! /DATE OF PRONOUNCEMENT : 11-12-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ASSESSEE IN THIS APPEAL, WHICH IS DIRECTED AGAIN ST AN ORDER DATED 27.04.2018 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, IS AGGRIEVED THAT RE-ASSESSMENT WAS DONE O N THE ITEMS OF INCOME WHICH WAS NOT MENTIONED IN THE NOTICE ISSUED U/S.148 OF THE ITA NO.1905/2018 :- 2 -: INCOME TAX ACT, 1961 (IN SHORT THE ACT). FURTHE R, GRIEVANCE OF THE ASSESSEE IS THAT ADDITION WAS MADE FOR CLOSING STOCK UNDERVALUATION IGNORING THE METHOD OF VALUATION OF STOCK, ACCEPTED IN THE EARLIER YEARS. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE A JEWELLER HAD FILED HIS RETURN FOR THE IMPUGNED AS SESSMENT YEAR DISCLOSING INCOME OF F8,81,160/-. AS PER THE LD. A UTHORISED REPRESENTATIVE, THE ASSESSMENT WAS COMPLETED U/S.14 3(3) OF THE ACT ON 27.03.2014 WHEREIN AN ADDITION OF F1,50,000/- WA S MADE FOR IMPROPER MAINTENANCE OF STOCK REGISTER. FURTHER, TO THIS, AS PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE RECEIVED A NOTI CE DATED 01.06.2015 U/S.148 OF THE ACT SEEKING A REOPENING O F THE ASSESSMENT. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, TH E ASSESSEE THEREUPON REQUESTED THE LD. ASSESSING OFFICER TO PR OVIDE WITH THE REASONS FOR RESORTING TO A REOPENING. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT IN THE REASONS SUPPLIED TO THE ASSESSEE, IT WAS MENTIONED THAT ASSESSEE HAD CREDITED F6,62,620/- A S LONG TERM CAPITAL GAINS IN HIS CAPITAL ACCOUNT BUT HAD NOT AD MITTED SUCH SUM WHILE COMPUTING HIS TAXES. HOWEVER, AS PER THE LD. AUTHORISED REPRESENTATIVE, DURING THE RE-ASSESSMENT PROCEEDING S, EXPLANATION GIVEN BY THE ASSESSEE ON THE LONG TERM CAPITAL GAIN S THROUGH SALE OF ITA NO.1905/2018 :- 3 -: SHARES, WHICH WAS EXEMPT AND CREDITED IN THE CAPIT AL ACCOUNT WAS PROVIDED BY THE ASSESSEE AND THE LD. ASSESSING OFF ICER HAD ACCEPTED SUCH CLAIM OF THE ASSESSEE AFTER EXAMINING THE EVID ENCE. HOWEVER, AS PER THE LD. AUTHORISED REPRESENTATIVE, LD. ASSESSIN G OFFICER DESPITE FINDING THE EXPLANATION GIVEN BY THE ASSESSEE TO B E SATISFACTORY, PROCEEDED TO DO A REASSESSMENT ON A DIFFERENT FOOT ING. ACCORDING TO HIM, LD. ASSESSING OFFICER MADE AN ADDITION FOR CLO SING STOCK DIFFERENCE OF F49,13,436/- COMPUTED BY APPLYING FIRST IN FIRST OUT (FIFO) METHOD, WHEREAS ASSESSEE HAD VALUED STOCK ON AVERAGE COST M ETHOD. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE, ASS ESSEES APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT MEET WITH ANY SUCCESS. CONTENTION OF THE LD. AUTHORISED REPR ESENTATIVE WAS THAT ONCE THE ISSUE ON WHICH REOPENING WAS RESORTED TO, WAS NO LONGER FOUND TO BE VALID, THEN A REASSESSMENT COULD NOT BE MADE ON ITEMS OF INCOME WHICH WERE NOT RELATED THERETO. RELIANCE WA S PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF MARTECH PERIPHERALS PVT. LTD. VS. DCIT, (2017) 394 ITR 0733 . 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT REOPENING DONE WAS VALID SINCE INCOME HAD ESCAPED A SSESSMENT ON ACCOUNT OF NON VERIFICATION OF THE CLAIMS OF THE A SSESSEE, IN THE ORIGINAL ROUND OF ASSESSMENT. ACCORDING TO HIM, AS SESSEE DID NOT ITA NO.1905/2018 :- 4 -: FOLLOW A PROPER METHOD OF VALUATION OF STOCK AND HE NCE LD. ASSESSING OFFICER WAS JUSTIFIED IN APPLYING FIFO METHOD AND VALUING THE STOCK. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. THE REASON WHY T HE ASSESSMENT WHICH WAS COMPLETED U/S.143(3) OF THE ACT WAS REOPE NED IS GIVEN AT PARA 3 OF THE ASSESSMENT ORDER. THIS IS REPRODUCED HEREUNDER:- IN THE CASE, AN ASSESSMENT ORDER U/S.143(3) OF TH E I.T. ACT, 1961 FOR A.Y. 2011-12 WAS PASSED ON 27.03.2014 BY M AKING AN ADDITION OF F1,50,000/- AND RAISING DEMAND OF F6 5,431/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD FURNISHED DETAILED CALLED FOR. IT CAN BE SEEN FROM THE BALANCE SHEET THAT THE ASSESSEE HAS CREDITED A SUM OF F6,62,620/- IN HIS CAPITAL AS LONG TERM CAPITAL GAI N. HOWEVER, THE ASSESSEE HAS NOT ADMITTED THE SAME IN COMPUTING THE TAXABLE INCOME FOR THE ABOVE YEAR. T HIS WAS NOT CONSIDERED AT THE TIME OF PASSING ASST. ORDER. THUS, THE ABOVE AMOUNT OF F6,62,620/- ESCAPED ASSESSMENT FOR THE ABOVE ASSESSMENT YEAR. THE ADDITION MADE IN THE IMPUGNED REASSESSMENT COMP LETED ON 28.12.2016 APPEARS AT PARA 7 OF THE SAID ORDER, WHI CH IS REPRODUCED HEREUNDER:- 7. IN THE INSTANT CASE AND IN CONSIDERATION OF AB OVE FACTS AND FINDINGS AS DISCUSSED ABOVE, I HAVE NO OPTION BUT P ROCEED TO ADOPT FIFO METHOD IN VALUING THE CLOSING STOCK AS O N 31.03.2011 AS UNDER:- ITA NO.1905/2018 :- 5 -: OPENING STOCK (OLD ITEMS) : 3,685.450 ADD: PURCHASE (NEW ITEMS) : 29,612.026 -------------- TOTAL : 33,297.476 SALES : 29,488.407 ---------------- BALANCE (CLOSING STOCK) : 3,809.069 ---------------- APPARENTLY, THE BALANCE STOCK I.E., CLOSING STOCK A S ON 31.03.2011 IS NEW ITEMS AND COST PRICE SHOULD BE ADOPTED AT F1 ,978 PER GRAM. THUS, THE CLOSING STOCK VALUE AS ON 31.03.201 1 COMES TO F75,34,338/- AS AGAINST THE ASSESSEES CLAIM OF CLO SING STOCK VALUE OF F26,20,902/-. THERE IS NO SHORT ADMISSION OF CLOSING STOCK VALUE FOR AN AMOUNT OF F49,13,436/- AND THE S AME IS BROUGHT TO TAX ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK VALUE. ACCORDINGLY, THIS IS ADDED TO THE INCOME ASSESSED U /S.143(3). WITH REGARD TO THE REASON FOR WHICH REASSESSMENT WA S RESORTED TO, LD. ASSESSING OFFICER HAS SPECIFICALLY NOTED AT PAR A 5 OF HIS ORDER, THAT ASSESSEE HAD EXPLAINED THE LONG TERM CAPITAL GAINS WITH NECESSARY EVIDENCES. THERE WAS NO ADDITION WHATSOEVER MADE FOR THE REASON CITED IN THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. IN OUR OPINION, ONCE THE ALLEGED ESCAPED OF INCOME, IS FOU ND NOT TO BE ANY ESCAPEMENT AT ALL, THEN AN ADDITION MADE FOR ITEM S OTHER THAN ON WHICH THE REOPENING WAS ATTEMPTED WOULD NOT STAND. THIS IS THE LAW LAID DOWN BY HONBLE HIGH COURT IN THE CASE OF MARTECH PERIPHERALS PVT. LTD. (SUPRA). WHAT WAS HELD IN PARAS 14 TO 26 OF THE JUDGMENT IS REPRODUCED HEREUNDER:- ITA NO.1905/2018 :- 6 -: 14. HAVING HEARD THE LEARNED COUNSEL FOR THE PART IES AND PERUSED THE RECORDS, ACCORDING TO ME, IN SO FAR AS THE FIRST SUBMISSION OF THE PETITIONER IS CONCERNED, IT HAS B EEN CONCEDED BY THE COUNSEL FOR THE RESPONDENTS- REVENU E THAT OBJECTIONS FILED BY THE PETITIONER-ASSESSEE TO THE NOTICE ISSUED BY RESPONDENT NO. 2, FOR REOPENING OF THE ASSESSMENT, HAVE NOT BEEN DISPOSED OF. 14.1. THE MANDATE OF LAW REQUIRING THE REVENUE TO DISPOSE OF THE OBJECTIONS IS CLEARLY SET OUT IN THE SUPREME COURT'S JUDGMENT RENDERED IN : GKN DRIVESHAFTS (INDIA) LTD. V. ITO [2003] 259 ITR 19 (SC). 14.2. FOR THE SAKE OF CONVENIENCE, THE RELEVANT EXTRACT IS SET OUT HERE INAFTER (PAGE 20) : 'WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHE N A NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIP T OF REASONS, THE NOTICE IS ENTITLED TO FILE OBJECTIO NS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOU ND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, THE ASSESSING OFFIC ER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASS ING A SPEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVESAID FIVE ASSESSMENT YEARS.' 14.3. THUS, HAVING REGARD TO THE OBSERVATIONS MADE BY THE SUPREME COURT, IT IS CLEAR THAT THE IMPUGNED ASSESSMENT ORDER CANNOT BE SUSTAINED, AS THE OBJECTIONS HAVE NOT BEEN DISPOSED OF. 15. THEREFORE, HAD THE COUNSEL FOR THE PETITIONER-A SSESSEE NOT ADVANCED THE SECOND SUBMISSION, WHICH I WOULD D EAL WITH HEREAFTER, I MAY HAVE BEEN INCLINED TO SET ASI DE THE ASSESSMENT ORDER ON THAT LIMITED GROUND ALONE. SINC E, THE SECOND SUBMISSION HAS BEEN MADE, WHICH IS SUBSTANTI VE IN NATURE, I WOULD LIKE TO DEAL WITH THE SAME. 16. IN SO FAR AS THE CONTENTION OF THE PETITIONER-A SSESSEE IS CONCERNED, THAT THE IMPUGNED ORDER DOES NOT SEEK TO ITA NO.1905/2018 :- 7 -: REASSESS ITS INCOME QUA THE ISSUE, WHICH FORMED THE BASIS FOR REOPENING THE ASSESSMENT THE RESPONDENTS/ REVENUE SOUGHT TO RELY UPON EXPLANATION 3 INTRODUCE D IN FINANCE (NO. 2) ACT, 2009, ALBEIT, WITH RETROSPECTI VE EFFECT, I.E., APRIL 1, 1989. BESIDES THE EXPLANATIO N, RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE PUN JAB AND HARYANA HIGH COURT IN THE MATTER OF : MAJINDER SINGH KANG V. CIT [2012] 344 ITR 358 (P&H) ; [2012] 25 TAXMANN.COM 124 (P&H). 17. IN ORDER TO DEAL WITH THIS SUBMISSION, IT MAY B E RELEVANT TO REFER TO THE RELEVANT PROVISIONS OF SEC TION 147 OF THE ACT. '147. INCOME ESCAPING ASSESSMENT.IF THE ASSESSING OFFICER, HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, 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 PROCEE D INGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR T HE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR : PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRS T PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TA X, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR : ITA NO.1905/2018 :- 8 -: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT-MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGE ABLE TO TAX AND HAS ESCAPED ASSESSMENT. . . . EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPEC T OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAV E NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB - SECTION (2) OF SECTION 148.'. (EMPHASIS IS MINE) 18. A PERUSAL OF THE AFORESAID EXTRACT OF SECTION 1 47 OF THE ACT WOULD SHOW THAT, IF, THE REVENUE MAKES AN ATTEMPT TO REOPEN THE ASSESSMENT, WITHIN A PERIOD O F FOUR (4) YEARS FROM THE DATE, WHEN, THE RELEVANT ASSESSM ENT YEAR ENDS, THEN, ALL THAT THE ASSESSING OFFICER HAS TO SHOW IS THAT, HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE CONCERNED ASSESSMENT YEAR AND WHILE DOING SO, HE IS ALSO EMPOWERED TO ASSESS ANY OTHER INCOME, WHICH HAS ESCAPED ASSESSMENT AND, WHICH COMES TO HIS NOTICE, SUBSEQUENTLY, ALBEIT, DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS. 18.1. IT IS ONLY IF THE ORIGINAL ASSESSMENT IS MADE UNDER SECTION 143(3) OR UNDER SECTION 147 AND AN ATTEMPT TO REOPEN THE ASSESSMENT IS MADE AFTER THE EXPIRY OF THE FOUR (4) YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THAT THE FIRST PROVISO TO SECTION 147 OF THE ACT KICKS IN, WHICH MANDATES THA T NO REASSESSMENT PROCEEDINGS CAN BE INITIATED UNLESS THE ESCAPEMENT OF INCOME IS OCCASIONED BY EITHER TH E REASON OF FAILURE ON THE PART OF THE ASSESSEE TO FI LE A RETURN UNDER SECTION 139 OR, IN RESPONSE TO NOTICE ISSUED UNDER SECTION 142(1) OR SECTION 148 OR, ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR CARRYING OUT THE ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. 18.2. SINCE, IN THE INSTANT CASE, THE ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(1) OF THE ITA NO.1905/2018 :- 9 -: ACT AND THE NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING OF ASSESSMENT WAS ISSUED WELL WITHIN THE PERIOD OF FOUR (4) YEARS, THE RESPONDENTS-REVENUE WAS NOT REQUIRED TO SATISFY THE CONDITIONS CONTAINE D IN THE FIRST PROVISO. 18.3. HAVING SAID SO, THE ASSESSING OFFICER EVEN IN SUCH CIRCUMSTANCE HAS TO HAVE A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, WHICH NECESSARILY IS REQUIRED TO BE BASED ON THE INFORMATION THAT THE ASSESSING OFFICER WOULD HAVE RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT, AND NOT BASED ON A MERE CHANGE OF VIEW, AS THAT WOULD BE CONFERRING AN ARBITRARY POWE R OF REVIEW ON THE ASSESSING OFFICER, WHICH IS NOT CONTEMPLATED UNDER THE ACT. 18.4. TO BE NOTED, THE POWER VESTED IN THE ASSESSIN G OFFICER UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT IS A POWER OF REASSESSMENT AND NOT A POWER OF REVIEW. 18.5. IT IS FOR THIS REASON, THAT AN AMENDMENT WAS MADE VIA THE AMENDING ACT OF 1989, WHEREBY, THE EXPRESSION 'HAS REASON TO BELIEVE', WAS REINTRODUCE D IN SECTION 147 OF THE ACT, AFTER IT HAD BEEN SUBSTITUTED BY THE EXPRESSION 'FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION . . . '. THIS AMENDMENT WAS BROUGHT ABOUT, AS, ACCORDING TO THE REVENUE, IT WANTED TO ALLAY THE APPREHENSIONS O F THE ASSESSEES THAT REOPENING OF ASSESSMENT COULD BE MADE ON A MERE CHANGE OF OPINION. (SEE CIT V. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1 (DELHI) [FB] ; [2002] 99 DLT 221). 18.6. THUS, IN OTHER WORDS, REASSESSMENT CAN ONLY TAKE PLACE, IF THERE IS TANGIBLE MATERIAL AVAILABLE IN THE HANDS OF THE ASSESSING OFFICER IN THE FORM OF INFORMATION, WHICH WAS NOT AVAILABLE TO HIM AT AN EARLIER POINT IN TIME. 19. IN THE INSTANT CASE, THE REASONS SUPPLIED BY RESPONDENT NO. 2 VIDE COMMUNICATION DATED JULY 25, 2012 SHOWED THAT THE NOTICE UNDER SECTION 148 OF THE ACT TO REOPEN THE ASSESSMENT WAS ISSUED ON ACCOUNT OF REDUCTION IN THE INVESTMENTS MADE IN MUTUAL FUNDS ( FROM RS. 2,52,00,000, FOR THE YEAR ENDING MARCH 31, 2007 TO ITA NO.1905/2018 :- 10 -: RS. 2,26,21,274, FOR THE YEAR ENDING MARCH 31, 2008 ), WHICH HAD NOT BEEN SHOWN/OFFERED TO TAX IN THE FORM OF GAIN OR LOSS, ON ACCOUNT OF THE SALE OF INVESTMENTS MADE IN MUTUAL FUNDS. THIS INFORMATION, PERHAPS, WAS AVA ILABLE ON RECORD, AS THE ASSESSEE, IN HIS OBJECTIONS DATED AUGUST 30, 2012, ADVERTED TO THE FACT THAT THE REDUCTION I N INVESTMENT WAS BROUGHT ABOUT CONSEQUENT TO REDEMPTI ON BEING MADE AT PAR. RESPONDENT NO. 2 HAVING, PERHAPS REALISED THE FUTILITY OF GOING DOWN THIS PATH AND, HAVING, DURING THE COURSE OF REASSESSMENT PROCEEDINGS, DISCOVERED THIS ASPECT OF THE MATTER, CHOSE TO TAX THE FORFEITED SHARE APPLICATION MONEY, ON THE GROUND TH AT, IT WAS A RECEIPT, WHICH WAS TAXABLE IN THE HANDS OF TH E PETITIONER-ASSESSEE UNDER THE PROVISIONS OF SECTION 28(IV) OF THE ACT. 20. THE PETITIONER-ASSESSEE, HOWEVER, CHALLENGES TH IS ACTION OF THE RESPONDENTS-REVENUE, ON THE GROUND TH AT IT WAS NOT PERMISSIBLE FOR THE RESPONDENTS-REVENUE TO TAX THE FORFEITED SHARE APPLICATION MONEY, BY TAKING RE COURSE TO PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT, UNLESS IT ASSESSES TO TAX THAT INCOME WITH REF ERENCE TO WHICH THE ASSESSING OFFICER HAD FORMED REASON TO BELIEVE (WITHIN THE MEANING OF SECTION 147), THAT I T HAD ESCAPED ASSESSMENT. 21. TO MY MIND, A CAREFUL READING OF SECTION 147 OF THE ACT WOULD SHOW THAT IT EMPOWERS AN ASSESSING OFFICE R TO REOPEN THE ASSESSMENT, IF, HE HAS REASON TO BELIEVE , THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE RELEVANT YEAR, 'AND ALSO BRING TO TAX', ANY OTH ER INCOME, WHICH MAY ATTRACT ASSESSMENT, THOUGH, IT IS BROUGHT TO HIS NOTICE, SUBSEQUENTLY, ALBEIT, IN THE COURSE OF THE REASSESSMENT PROCEEDINGS. 21.1. TO PUT IT PLAINLY, THE PURPORTED INCOME DISCOVERED SUBSEQUENTLY DURING THE COURSE OF REASSESSMENT PROCEEDINGS, CAN BE BROUGHT TO TAX, ONLY, IF THE ESCAPED INCOME, WHICH CAUSED, IN THE F IRST INSTANCE, THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, IS ASSESSED TO TAX. 22. EXPLANATION 3, TO MY MIND, SUPPORTS THIS APPROA CH, WHICH EMERGES UPON A PLAIN READING OF THE SAID PROV ISION, ALONG WITH THE MAIN PART OF SECTION 147 OF THE ACT. THE EMPHASIS IN THIS BEHALF IS ON THE EXPRESSION 'AND A LSO BRING TO TAX' APPEARING IN THE MAIN PART OF SECTION 147 IN ITA NO.1905/2018 :- 11 -: RELATION TO THE RIGHT OF THE REVENUE TO ASSESS TAXA BLE INCOME DISCOVERED DURING REASSESSMENT PROCEEDINGS. IN MY VIEW, EXPLANATION 3, CLEARLY, EXPOUNDS THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT AND SUCH OTHER ISSUE, THAT COMES TO HIS NOTICE SUBSEQUE NTLY, ALBEIT, IN THE COURSE OF PROCEEDINGS HELD UNDER SEC TION 147 OF THE ACT. IN OTHER WORDS, IF, NOTICE FOR REOP ENING OF THE ASSESSMENT WAS ISSUED ON ONE ASPECT, AND IN THE COURSE OF REASSESSMENT PROCEEDINGS ANOTHER ASPECT W AS DISCOVERED, THE REASSESSMENT ORDER WOULD BE VALID, ONLY IF, THE ASPECT, WHICH LED TO THE REOPENING OF ASSES SMENT, CONTINUES TO FORM PART OF THE REASSESSED INCOME. 23. THIS VIEW, AS HAS BEEN CORRECTLY SUBMITTED BY T HE LEARNED COUNSEL FOR THE PETITIONER-ASSESSEE, HAS FO UND RESONANCE WITH AT LEAST THREE (3) HIGH COURTS, I.E. , THE BOMBAY HIGH COURT, THE GUJARAT HIGH COURT AND THE D ELHI HIGH COURT IN THE FOLLOWING CASES : (I) CIT V. JET AIRWAYS (I) LTD. [2011] 331 ITR 236 (BOM) ; (II) CIT V. MOHMED JUNED DADANI [2013] 355 ITR 172 (GUJ) ; MANU/ GJ/0061/2013 ; AND (III) ORIENTAL BANK OF COMMERCE V. ADDL. CIT MANU/DE/1935/2014. 23.1. THE ONLY HIGH COURT, WHICH HAS TAKEN A CONTRA RY VIEW, AS IT WERE, IS THE PUNJAB AND HARYANA HIGH CO URT IN THE MATTER OF : MAJINDER SINGH KANG V. CIT [2012 ] 344 ITR 358 (P&H) ; [2012] 25 TAXMANN.COM 124 (P&H). 23.2. IN MY OPINION, WITH RESPECT, THE COURT, IN RENDERING THE JUDGMENT IN MAJINDER SINGH KANG'S CASE, IGNORED THE FACT THAT THE PROVISIONS OF EXPLANATION 3 HAD TO BE READ IN CONJUNCTION WITH TH E MAIN PROVISION, AND THAT, THE SAID EXPLANATION CANN OT OVERRIDE THE MAIN PROVISION. 23.3. THIS ASPECT OF THE MATTER HAS ALSO BEEN BROUG HT TO FORE BY THE BOMBAY HIGH COURT IN : CIT V. JET AIRWAYS (I) LTD. [2011] 331 ITR 236 (BOM). ITA NO.1905/2018 :- 12 -: 23.4. THE RELEVANT OBSERVATIONS MADE IN THIS BEHALF ARE EXTRACTED HEREAFTER (PAGE 247) : 'HOWEVER, EXPLANATION 3 DOES NOT AND CANNOT OVERRID E THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONT ENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER TH E SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS 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 DURING TH E COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUIN G A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTIO N OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPE D ASSESSMENT, 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 SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE.' (EMPHASIS IS MINE) 24. THIS TAKES ME TO THE LAST SUBMISSION MADE ON BE HALF OF THE RESPONDENTS- REVENUE, WHICH IS THAT, THERE I S AN ALTERNATIVE REMEDY AVAILABLE TO THE PETITIONER AND, THEREFORE, THE INSTANT WRIT PETITION SHOULD NOT BE ENTERTAINED. 25. TO MY MIND, IT IS NOW FAR TOO WELL SETTLED THAT IN RELEGATING A PARTY TO AN ALTERNATIVE REMEDY, THE CO URT EMPLOYS SELF-RESTRAINT. THIS, HOWEVER, DOES NOT EXC LUDE THE POWER OF THE COURT TO ENTERTAIN A WRIT PETITION , ESPECIALLY, WHEN, THE CHALLENGE IS RAISED, INTER AL IA, ON THE GROUND OF ABSENCE OF JURISDICTION AND/OR BREACH OF THE PRINCIPLES OF NATURAL JUSTICE. 26. IN THIS CASE, THAT THE IMPUGNED ORDER IS ASSAIL ED ON THE GROUND THAT THE CONCERNED AUTHORITY LACKED JURISDICTION IN THE MATTER. THE FACT THAT THIS CHAR GE IS ESTABLISHED IS EVIDENT, UPON A BARE PERUSAL OF THE RECORD OF THE CASE. THE FOREGOING DISCUSSION QUA THE MERIT S OF THE CASE WOULD SHOW THAT THE IMPUGNED ORDER WAS PAS SED BY CONCERNED AUTHORITY, EVEN THOUGH, THE NECESSARY ITA NO.1905/2018 :- 13 -: JURISDICTIONAL FACTS WERE ABSENT AND WITHOUT DEALIN G WITH THE OBJECTIONS FILED BY THE ASSESSEE QUA THE NOTICE ISSUED TO IT FOR REOPENING THE ASSESSMENT. 26.1. ACCORDINGLY, THE OBJECTION ADVANCED BY THE REVENUE, IN THIS BEHALF, WOULD HAVE TO BE REJECTED . ACCORDINGLY, WE ARE OF THE OPINION THAT REASSESSMEN T DONE FOR THE IMPUGNED ASSESSMENT YEAR CANNOT STAND THE TEST OF T HE LAW. SUCH REASSESSMENT IS SET ASIDE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED ON TUESDAY, THE 11TH DAY OF DECE MBER, 2018, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 11 TH DECEMBER, 2018. KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF