Anil C. Mhaske, Pune V. Addl.Commissioner of Income-tax, Range - 3, Pune

ITA 2587/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1179 (ITAT-PUNE)
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Reopening of assessment; Bogus purchase; Depreciation; Principle of natural justice; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2587 /P U N/201 7 / ASSESSMENT YEAR : 20 09 - 10 SHRI ANIL C. MHASKE, 650 - B, PRATIK APARTMENT, DECCAN GYMKHANA, PUNE 411004 PAN : ABIPM1477C ....... / APPELLANT / V/S. ADDL. COMMISSIONER OF INCOME TAX, RANGE 3, PUNE / RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 14 - 06 - 2018 / DATE OF PRONOUNCEMENT : 10 - 0 9 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , PUNE DATED 0 1 - 08 - 2017 FOR THE ASSESSMENT YEAR 2009 - 10. 2 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS ENGAGED IN TRADING OF COMPUTERS, LAPTOPS AND RELATED ACCESSO RIES. INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS INDULGED IN PURCHASES FROM HAWALA DEALERS. ON THE BASIS OF INFORMATION RECEIVED THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 WAS REOPENED. ACCORDINGLY, NOTI CE U/S. 148 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 10 - 03 - 2014. IN REASSESSMENT PROCEEDINGS ADDITION OF RS.2,49,50,649/ - WAS MADE ON ACCOUNT OF BOGUS PURCHASES MADE FROM VIDHI & VRUSHTI TRADE PVT. LTD. AGGRIEVED BY THE ASSESSMENT ORDER DATED 09 - 03 - 2015 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING THE ADDITION ON MERITS AS WELL AS THE VALIDITY OF REASSESSMENT PROCEEDI NGS . THE COMMISSIONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL OF ASSESSEE IN TOTO. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AND HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN NOT QUASHING THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 147 ON THE GROUND THAT THERE HAS NOT BEEN ANY NEW OR FRESH TANGIBLE MATERIAL POSSESSED BY THE ASSESSING OFFICER TO JUSTIFY RE OPENING OF THE ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN SUSTAINING THE VALIDITY OF THE REASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WHICH IS SOLELY BASED ON THE INFORMATION RECEIVED FROM SALES TAX DEPA RTMENT WITHOUT APPLICATION OF INDEPENDENT MIND BY THE AO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF PURCHASES MADE FROM M/S VIDHI AND VRUSHTI TRADE PVT. LTD. AMOUNTING TO RS.2,49,50,649 / - TREATING THE SAME AS NON - GENUINE. 3 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DISTINGUISHING THE DECISION OF JURISDICTIONAL HIGH COURT IN NIKUNJ EXIMP ENTERPRISES PVT. LTD. DATED 17.12.2012 BY ASSIGNING IRRELEVANT REASONS. THE ABOVE GROUND OF APPEAL MAY KINDLY BE ALLOWED TO BE ALTERED, AMENDED OR MODIFIED ETC IN THE INTEREST OF NATURAL JUSTICE. 3. SHRI S.N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 30 - 09 - 2009 DECLARING TOTAL INCOME OF RS.2,13,78,630/ - . THE ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 26 - 12 - 2011 AFTER DUE VERI FICATION OF SALES AND PURCHASES. THE ENTIRE TRANSACTIONS ARE SUPPORTED BY TAX AUDIT REPORT. A QUESTIONNAIRE WAS ISSUED DURING SCRUTINY ASSESSMENT PROCEEDINGS WHEREIN SPECIFIC QUESTION RELATED TO SALE S AND PURCHASES WERE ASKED. THE ASSESSEE GAVE THE DETA ILS AS SOUGHT BY THE ASSESSING OFFICER VIDE COMMUNICATION DATED 05 - 08 - 2011 AND THEREAFTER THE ASSESSMENT WAS COMPLETED. NOW, IN REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS RAISED DOUBT OVER THE PURCHASES MADE BY THE ASSESSEE. AFTER HAVING EXAMINED IN DETAIL THE SALES AND PURCHASES DURING SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. IT IS A WELL SETTLED LAW THAT REASSESSMENT CANNOT BE REOPENED ON CHANGE OF OPINION. THER E IS NO FRESH TANGIBLE MATERIAL WITH THE ASSESSING OFFICER TO INVOKE THE PROVISIONS OF SECTION 148 R.W.S. 147 OF THE ACT. 3.1 THE LD. AR SUBMITTED THAT REASSESSMENT PROCEEDINGS ARE ALSO LIABLE TO BE SET ASIDE ON THE GROUND THAT NO ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER FOR WHICH REOPENING HAS BEEN INITIATED. THE LD. AR REFERRED TO THE REASONS RECORDED FOR REOPENING U/S. 147 AT PAGES 7 AND 8 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT A PERUSAL OF REASONS WOULD 4 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 SHOW THAT THE REOPENING HAS BEEN INITIATED ON ACCOUNT OF PURCHASES MADE BY THE ASSESSEE FROM HAWALA OPERATORS M/S. SAINATH ENTERPRISES. THE ASSESSEE HAD NEVER MADE ANY PURCHASES FROM M/S. SAINATH ENTERPRISES EITHER IN THE PAST OR IN THE SUBSEQUENT ASSESSMENT YEARS. EVEN IN THE ASSESSME NT YEAR UNDER APPEAL THE ASSESSEE HAD NEVER MADE ANY PURCHASES FROM THE SAID CONCERN. A PERUSAL OF ASSESSMENT ORDER PASSED U/S. 143 R.W.S. 147 WOULD SHOW THAT THE ADDITIONS HAVE BEEN MADE BY ASSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM VID HI & VRUSHTI TRADE PVT. LTD. THE NAME OF THE SAID FIRM DOES NOT FIGURE IN THE REASONS RECORDED FOR REOPENING. NO ADDITION HAS BEEN MADE BY ASSESSING OFFICER IN RESPECT OF M/S. SAINATH ENTERPRISES THOUGH ITS NAME HAS BEEN MENTIONED IN THE ASSESSMENT ORDER ALLEGING THAT THE ASSESSEE HAD MADE PURCHASES TO THE TUNE OF RS.2,77,680/ - FROM THE SAID FIRM. THE LD. AR CONTENDED THAT WHERE NO ADDITION IS MADE FOR WHICH REOPENING IS INITIATED AND ADDITION IS MADE ON SOME OTHER COUNT, SUCH ASSESSMENT PROCEEDINGS ARE BAD IN LAW. TO SUPPORT HIS CONTENTIONS, THE LD. AR PLACED RELIANCE ON THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. JET AIRWAYS (I) LTD. REPORTED AS 331 ITR 236 (BOM). 3.2 ON MERITS OF ADDITION THE LD. AR SUBMITTED THAT THE ASSESSEE HAD MADE PURCHASES FROM M/S. VIDHI & VRUSHTI TRADE PVT. LTD. IN REASSESSMENT PROCEEDINGS THE ASSESSEE HAD GIVEN DETAILS OF STOCK STATEMENT SHOWING RECEIPT, ISSUE OF GOODS, PURCHASE INVOICE AND BANK STATEMENT INDICATING PAYMENT S MADE. THE ASSESSEE HAD AL SO FURNISHED CONFIRMATIONS FROM M/S. VIDHI & VRUSHTI TRADE PVT. LTD. HOWEVER, THE ASSESSING OFFICER BRUSHED ASIDE ALL THE DOCUMENTS FURNISHED BY THE ASSESSEE TO SUPPORT ITS CONTENTIONS AND MADE THE ADDITION. THE LD. AR FINALLY SUBMITTED THAT ADDITION ON ACCOUNT OF BOGUS PURCHASES FROM M/S. 5 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 VIDHI & VRUSHTI TRADE PVT. LTD. WAS ALSO MADE IN ASSESSMENT YEAR 2010 - 11. THE MATTER TRAVELLED UP TO THE TRIBUNAL IN APPEAL BY THE ASSESSEE IN ITA NO. 268/PUN/2016 . THE TRIBUNAL VIDE ORDER DATED 24 - 01 - 2018 RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCHASES OVER AND ABOVE THE GP ALREADY DECLARED BY THE ASSESSEE. THE LD. AR FURNISHED A COPY OF THE ORDER OF TRIBUNAL IN ITA NO. 268/PUN/2016 (SUPRA). 4. ON THE OTHER HAND SHRI AJAY MODI REPRESENTING THE DEPARTMENT V EHEMENTLY DEFENDED THE IMPUGNED ORDER AND REOPENING OF THE ASSESSMENT. THE LD. DR SUBMITTED THAT THE REOPENING OF ASSESSMENT HAS BEEN DONE WITHIN A PERIOD OF 4 YEARS. THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER DURING SCRUTINY ASSESSMENT PROCEEDING S IS VERY GENERIC AND THE REPLY GIVEN BY THE ASSESSEE TO THE QUESTIONNAIRE DOES NOT GIVE FULL DETAILS OF SALES AND PURCHASES. THERE IS NO SPECIFIC QUERY BY THE ASSESSING OFFICER REGARDING THE PURCHASES MADE FROM HAWALA DEALERS. A PERUSAL OF THE ASSESSMEN T ORDER WOULD SHOW THAT THE SAME IS VERY SKETCHY AND NO OPINION HAS BEEN FORMED BY THE ASSESSING OFFICER. IT IS A CASE OF NO INQUIRY BY THE ASSESSING OFFICER HENCE , THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 148 R.W.S. 147 OF THE ACT. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RECEIVED FRESH INCRIMINATING MATERIAL FROM THE SALES TAX DEPARTMENT THUS, THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT DURING IMPUGNED ASSESSMENT YEAR IN THE CASE OF ASSESSEE. 4.1 AS REGARDS THE DEFICIENCY POINTED BY THE LD. AR IN THE REASONS RECORDED FOR REOPENING, THE LD. DR SUBMITTED THAT THE REASONS FOR REOPENING HAVE BEEN PROPERLY RECORDED. THE REOPENING HAS BEEN INITIATED ON ACCOUNT OF BO GUS PURCHASES MADE BY THE ASSESSEE AND THE ADDITION 6 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 DURING REASSESSMENT PROCEEDINGS HAVE BEEN MADE FOR THE SAME REASONS. MENTIONING OF DIFFERENT NAMES OF PARTIES IN THE REASONS AND THE ASSESSMENT ORDER WOULD NOT MAKE THE REASSESSMENT PROCEEDINGS INVALID. AS REGARDS THE MERITS OF ADDITION, THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE LEGAL ISSUE OF VALIDITY OF PROCEEDINGS U/S. 148 R.W.S. 147 AS WELL AS MERITS OF THE ADDITION. 6. THE LD. AR OF ASSESSEE HAS POINTED THAT THE ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES MADE BY ASSESSEE FROM M/S. VIDHI & VRUSHTI TRADE PVT. LTD. IN REASSESSMENT PROCEEDINGS. WHEREAS, IN REASONS RECORDED FOR REOPENING THE ASSESSING OFFICER HAS SPECIFIED THE NAMES OF SUSPICIOUS DEALER S AS M/S. SAINATH E NTERPRISES AND M/S. MARK COMPUTERS . IN REASSESSMENT PROCEEDINGS NO ADDITION HAS BEEN MADE IN RESPECT OF THE ABOVE SAID DEALERS THOUGH THE NAME OF M/S. SAINATH ENTERPRISES IS MENTIONED IN THE ASSESSMENT ORDER. THE ADDITION WAS MADE IN RESPECT OF ALLEGED B OGUS PURCHASES BY THE ASSESSEE FROM M/S. VIDHI & VRUSHTI TRADE PVT. LTD. ONLY. 7. THE REASONS RECORDED FOR REOPENING REFLECT THE ASSESSING OFFICERS REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, IN REASSESSMENT PRO CEEDINGS IF NO ADDITION IS MADE IN RESPECT OF THE REASONS RECORDED THE PRIMA - FACIE BELIEVE OF THE ASSESSING OFFICER FOR REOPENING IS VITIATED. UNDER SUCH CIRCUMSTANCES ADDITION MADE ON ANY 7 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 OTHER COUNT WOULD ALSO NOT SUSTAIN. IT IS NOT OPEN TO THE ASSESSI NG OFFICER TO MAKE ADDITION INDEPENDENTLY OF AN ITEM WHICH DOES NOT FIGURE IN THE REASONS RECORDED FOR REOPENING. 8. A PERUSAL OF PROVISIONS OF SECTION 147 WOULD SHOW THAT IN REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THE ASSESSMENT IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CH ARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF REASSESSMENT PROCEEDINGS. HERE IT WOULD BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 147 . THE SAME ARE REPRODUCED HERE - IN - BELOW FOR READY REFERENCE : 147. 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 PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSME NT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : THE WORDS AND ALSO ANY OTHER INCOME SIGNIFIES THAT APART FROM THE INCOME WHICH HAS ESCAPED ASSESSMENT FOR WHICH THE ASSESSING OFFIC ER HAS REASONS TO BELIEVE THE ASSESSING OFFICER CAN MAKE ADDITION OF ANY OTHER INCOME WHICH DURING THE COURSE OF REASSESSMENT PROCEEDINGS COMES TO HIS NOTICE. THE ASSESSING OFFICER CANNOT MAKE ADDITION OF THE INCOME IN REASSESSMENT PROCEEDINGS ON WHICH HE HAS NOT FORMED HIS REASON TO BELIEVE TO REOPEN THE ASSESSMENT IF NO ADDITION IS MADE IN RESPECT OF INCOME FOR WHICH REASONS FOR REOPENING HAS BEEN RECORDED. 9. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. JET AIRWAYS (I) L TD. (SUPRA) IN AN UNAMBIGUOUS MANNER HAS 8 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 EXPLAINED THE SIGNIFICANCE OF WORDS AND ALSO IN SECTION 147 OF THE ACT. THE RE LEVANT EXTRACT TO THE JUDGMENT READS AS UNDER : 14. THE RIVAL SUBMISSIONS WHICH HAVE BEEN URGED ON BEHALF OF THE REVENUE AND THE ASSESSEE CAN BE DEALT WITH, BOTH AS A MATTER OF FIRST PRINCIPLE, INTERPRETING THE SECTION AS IT STANDS AND ON THE BASIS OF PRECEDENTS ON THE SUBJECT. INTERPRETING THE PROVISION A S IT STANDS AND WITHOUT ADDING OR DEDUCTING FROM THE WORDS USED BY PARLIAMENT, IT IS CLEAR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDER S. 147 AND FOLLOWING THE ISSUANCE OF A NOTICE UNDER S. 148, THE AO HAS THE POWER TO ASSESS OR REASSESS THE INCOM E, WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. THE WORDS 'AND ALSO' CANNOT BE IGNORED. THE INTERPRETATION WHICH THE COURT PLACES ON THE PROVISION SHOULD NOT RESULT IN DILUTING THE EFFECT 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' CANNOT BE READ AS BEING IN TH E ALTERNATIVE. ON THE CONTRARY, THE CORRECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMULATIVE. IT IS OF SOME SIGNIFICANCE THAT PARLIAMENT HAS NOT USED THE WORD 'OR'. THE LEGISLATURE DID NOT REST CONTENT BY MERELY USING THE W ORD 'AND'. THE WORDS 'AND', AS WELL AS 'ALSO' HAVE BEEN USED TOGETHER AND IN CONJUNCTION. 15. THE SHORTER OXFORD DICTIONARY DEFINES THE EXPRESSION 'ALSO' TO MEAN 'FURTHER, IN ADDITION, BESIDES, TOO'. THE WORD HAS BEEN TREATED AS BEING RELATIVE AND CONJUNCT IVE. EVIDENTLY, THEREFORE, WHAT PARLIAMENT INTENDS BY USE OF THE WORDS 'AND ALSO' IS THAT THE AO, UPON THE FORMATION OF A REASON TO BELIEVE UNDER S. 147 AND THE ISSUANCE OF A NOTICE UNDER S. 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 PROCEEDINGS UNDER THE SECTION. THE WORDS 'SUCH INCOME' REFER TO THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND I N RESPECT OF WHICH THE AO HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT. HENCE, THE LANGUAGE WHICH HAS BEEN USED BY PARLIAMENT IS INDICATIVE OF THE POSITION THAT THE ASSESSMENT OR REASSESSMENT MUST BE IN RESPECT OF THE INCOME IN RESPECT OF WHICH HE HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF THE PROCEEDINGS AS HAVING ESCAPED ASSESSMENT. IF THE INCOME, THE ESCAPEMENT OF WHICH WAS THE BASIS OF THE FORMATION OF THE REASON TO BELIEVE IS NOT ASSESSED OR REASSESSED, IT WOULD NOT BE OPEN TO THE AO TO INDEPENDENTLY ASSESS ONLY THAT INCOME WHICH COMES TO' HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION AS HAV ING ESCAPED ASSESSMENT. IF UPON THE ISSUANCE OF A NOTICE UNDER S. 148(2), THE AO ACCEPTS THE OBJECTIONS OF THE ASSESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HIM TO ASSESS INCOME UNDER SOME OT HER ISSUE INDEPENDENTLY. PARLIAMENT WHEN IT ENACTED THE PROVISIONS OF S. 147 W.E.F. 1ST APRIL, 1989 CLEARLY STIPULATED THAT THE AO HAS TO ASSESS OR REASSESS THE INCOME WHICH HE HAD REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEAB LE TO TAX WHICH CAME TO HIS NOTICE DURING THE PROCEEDINGS. IN THE ABSENCE OF THE ASSESSMENT OR REASSESSMENT OF THE FORMER, HE CANNOT INDEPENDENTLY ASSESS THE LATTER. 9 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 THE HONBLE HIGH COURT AFTER EXPLAINING THE WORDS USED IN SECTION 147 FINALLY CONCLUDED AS UNDER : 23. 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 LANGUAGE USED IN S. 147(1) AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WITH THE SUB MISSIONS WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT S. 147(1) AS IT STANDS POSTULATES THAT UPON THE FORMATION OF A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THE AO MAY ASSESS OR REASSESS SUCH I NCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE PROCEEDINGS AS HAVING ESCAPED ASSESSMENT. THE WORDS 'AND ALSO' ARE USED IN A CUMULATIVE AND CONJUNCTIVE SENSE. TO READ THESE WORDS AS BEING IN THE ALTERNA TIVE 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. PARLIAMENT MUST BE REGARDED AS BEING AWARE OF THE INTERPRETATION THAT WAS PLACED ON THE WORDS 'AND ALS O' BY THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH (SUPRA). PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DECISION. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITUDE OF ITS LEGISLATIVE POWERS TO DO SO, THE PROVISIONS OF S. 147(1) AS THEY STOOD AFTER THE AMENDMENT OF 1ST APRIL, 1989 CONTINUE TO HOLD THE FIELD. 10. NOW, COMING TO THE FACTS OF THE PRESENT CASE, AS HAS BEEN POINTED EARLIER THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS CATEGORICALLY MENTIONED THE NAME OF TWO HAWALA DEALER S I.E. M/S. SAINATH ENTERPRISES AND M/S. MARK COMPUTERS . IN REASSESSMENT PROCEEDINGS NO ADDITION HAS BEEN MADE IN RESPECT OF THE SAID HAWALA DEALERS. THIS ITSELF SHOWS THAT THE ASSESSING OFFICERS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WAS BASED ON WRONG FACTS. THUS, IN THE LIGHT OF DECISION RENDERED IN THE CASE OF JET AIRWAYS (SUPRA) THE ADDITION MADE IN RESPECT OF THE THIRD SUSPICIOUS DEALER I.E. M/S. VIDHI & VRUSHTI TRADE PVT. LTD. WHOSE NAME DOES NOT FIGURE IN THE REASONS RECORDED FOR R EOPENING WOULD NOT SUSTAIN. THUS, WE ARE OF CONSIDERED VIEW THAT THE REASSESSMENT PROCEEDINGS IN THE INSTANT CASE ARE BAD IN LAW AS NO ADDITION HAS BEEN MADE FOR WHICH REASONS WERE RECORDED FOR REOPENING. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED ON LEGAL GROUND ALONE . 10 ITA NO . 2587/PUN/2017, A.Y. 2009 - 10 11. SINCE, WE HAVE HELD REOPENING OF ASSESSMENT U/S. 147 AS BAD IN LAW , THE OTHER GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE ADDITION ON MERITS HAVE BECOME ACADEMIC AND THUS, WE WOULD NOT TAKE UP THE SAME FOR ADJUDICATION. 12. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 10 TH DAY OF SEPTEMBER, 2018 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 10 TH SEPTEMBER, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2 , PUNE 4. / THE PR. CIT - 2 , PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE