Fateh Chand Charitable Trust, Muzaffarnagar V. Addl. CIT, Meerut

ITA 289/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2950 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL KR SHARMA
• Keywords: Depreciation; Charitable institution; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 80G; 12A; 147; 148

Judgement Text

PAGE 1 OF 27 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 289/DEL/2012 A.Y. : 2005-06 FATEH CHAND CHARITABLE TRUST, VS. ADDL. CIT, RANGE- 2 115 KM MILE STONE, MUZZAFARNAGAR DELHI DEHRADUN HIGHWAY, MUZAFFARNGAR (PAN:AAATF1445N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPATH, ADV. DEPARTMENT BY : SH. ANIL KR. SHARMA, SR. DR O R D E R PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 20.9.2011 OF THE LD. CIT(A), MUZAFFARNGAR RELEVANT TO ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN NOT TREATING PROCEEDINGS U/S. 148 AS FRESH PROCEEDINGS CALLING FOR FRESH CLAIMS OF THE ASSESSEE WITH THE PAGE 2 OF 27 VIEW TO COMPUTE CORRECT INCOME. BY DOING SO HE HAS GONE AGAINST THE INTENT OF ITO VS. KL SHRI HARI 250 ITR 193 (SC). 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF BROUGHT FORWARD AND SET OFF OF LOSS HOLDING THE SAME TO BE A CASE OF DOUBLE DEDUCTION, ALTHOUGH, THE ASSESSEE HAS NOT CLAIMED DEPRECIATION AT ALL. HENCE THE ENTIRE DISCUSSION AND FINDINGS ON PAGE 8, PARA 3.2 OF HIS ORDER ARE RENDERED PREJUDICIAL AND AGAINST THE ACTUAL FACTS OF THE CASE. 3. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF BROUGHT FORWARD AND SET OFF OF LOSS EMANATING FROM EXCESS APPLICATION OF FUNDS. 2. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2005 DECLARING NIL INCOME, WHICH WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT AC T) ON 24.01.2005. THEREAFTER, THE NOTICE U/S. 148 OF THE ACT WAS ISSUED ON 4.2.2008 AND COMPLIANCE THERETO THE ASSESSEE FILED ITS RETURN OF PAGE 3 OF 27 INCOME ON 7.3.2008 CLAIMING THEREIN THE LOSS OF RS. 52,52,299/- TO BE CARRIED FORWARD TO AY 2006-07. AFTER EXAMINING THE RET URN FILED BY THE ASSESSEE, AO IS OF THE VIEW THAT ASSESSEE HAS FAILE D TO FILE LOSS RETURNS, IT CANNOT TAKE REFUGE OF REOPENED ASSESSMENT TO CLAIM LOSS. IT IS NOT PERMISSIBLE U/S. 139(3) TO CLAIM LOSS IF THE RETURN IF FILED LATE. IN THIS CASE, ASSESSEE HAS FILED THE ORIGINAL RETURN SH OWING NIL INCOME. LATER A NOTICE U/S. 148 OF THE ACT WAS ISSUED ASSESSEE HAS UTILIZED NOTICE U/S. 148 AS AN EXCUSE TO CLAIM LOSS OF RS. 52 ,52,299/-. THE AO COMPLETED THE ASSESSMENT U/S. 143(3)/148 OF THE ACT O N 02.06.2008 ON NIL INCOME. AGAINST THE SAME, THE ASSESSEE APPEAL ED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 13.10.20 08 DIRECTED THE AO TO VERIFY AND ALLOW LOSS CARRY FORWARD. AGAINST THE ORDER OF THE CIT(A), THE DEPARTMENT WENT IN APPEAL BEFORE THE ITA T WHO VIDE ITS ORDER DATED 17.11.2009 SET A ASIDE THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW A FTER EXAMINING THE CASE LAWS, CITED BY THE ASSESSEE. THEREAFTER, THE AO ISSUED THE NOTICE U/S. 142(1) OF THE ACT DATED 7.10.2010 TO TH E ASSESSEE AND IN RESPONSE THERETO THE A.R. OF THE ASSESSEE ATTENDED T HE PROCEEDINGS FROM TIME TO TIME AND FILED WRITTEN SUBMISSION DATED 22.11.2010 STATING THEREIN THAT IN CASE OF EXCESS EXPENDITURE HAS BEEN PAGE 4 OF 27 INCURRED ON CHARITY, OVER AND ABOVE THE INCOME FOR THAT IT HAS TO BE RECOGNIZED IN TERMS OF THE CARRYING IT FORWARD AND THEN APPLYING IT IN THE NEXT YEAR BY SETTING IT OFF AGAINST THE INCOME W HICH IS GENERATED IN THE CURRENT YEAR AND PLACED THE RELIANCE OF VARIOUS CASE LAWS. HOWEVER, THE AO VIDE HIS ORDER DATED 16.12.2010 HAS OB SERVED THAT THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTI NGUISHED ON FACTS AND ASSESSEE FAILED TO JUSTIFY THE EXCESS EXPENSES OR EXCESS APPLICATION OF INCOME CAN MERIT ALLOWANCE OF LOSS TO THE ASSESSEE AND THEREFORE, THE EXCESS APPLICATION CANNOT BE ALLOWED TO THE ASSESSEE TO CARRIED FORWARD, BY RELYING UPON THE DECISION OF THE IT AT, DELHI BENCH IN THE CASE OF PUSHPAWATI SINGHANIA RESEARCH INSTIT UTE FOR LIVER, RENAL & DIGESTIVE DISEASES VS. DY. DIT (2009) 29 SO T 316 (DEL). ACCORDINGLY, THE AO OBSERVED THAT ASSESSEE IS NOT ENT ITLED TO CARRY FORWARD THE AMOUNT OF EXPENDITURE OVER THE INCOME, TO THE NEXT YEAR, THEREFORE, THE CLAIM OF LOSS AND ITS CARRY FORWARD IS UNACCEPTABLE AND ACCORDINGLY, THE ASSESSMENT WAS COMPLETED ON THE NIL INCOME VIDE ASSESSMENT ORDER DATED 16.12.2010 PASSED U/S. 254/143( 3) OF THE I.T. ACT, 1961. PAGE 5 OF 27 3. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 16.12.201 0, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WH O VIDE HIS IMPUGNED ORDER DATED 20.9.2011 HAS DISMISSED THE APPE AL OF THE ASSESSEE BY CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 4. AGAINST THE ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE FALLS UNDER THE JURISDICTION OF HO NBLE ALLAHABAD HIGH COURT AND THE AO AS WELL AS THE CIT(A) WERE BOU ND TO FOLLOW THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT ON THIS I SSUE. HE CLAIMED THAT THE ISSUE IS COVERED IN FAVOUR OF THE A SSESSEE BY THE FOLLOWING DECISIONS: I) ACIT, RANGE-I, MEERUT VS. CITY EDUCATION SOCIAL WELFARE SOCIETY ORDER OF DELHI B BENCH DATED 26.8.2011 IN IT A NO. 5627/DEL/2010; AND II) ACIT VS. M/S SUBRATHI KKB CHARITABLE TRUST DELHI G BENCH ORDER DATED 115.2012 IN ITA NO. 1553/DEL/2011 FOR AY 2006-07. PAGE 6 OF 27 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ITAT, DELHI BENCH IN THE CASE OF ITO VS. M/S SANATHAN DHARAM SHIKSHA SAMITI, HISAR PASSED IN ITA NO. 3266 TO 3269/DEL/2011 (AYRS. 2005-06 TO 2008-09) WHEREIN THE TRI BUNAL HAS ALLOWED ALL THE FOUR APPEALS OF THE DEPARTMENT BY RESP ECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. SUN ENGINEERING P LTD. (1992) 198 ITR 297 AND REQUESTED TO RESPECTFULLY FOLLOW THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE ACCORDINGLY. 7. WE HAVE HEARD BOTH THE PARTIES. ON A CAREFUL CONSID ERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE IN DISPUTE IS SQUAREL Y COVERED BY THE ITAT, DELHI BENCH DECISION IN THE CASE OF ITO VS. M /S SANATHAN DHARAM SHIKSHA SAMITI, HISAR PASSED IN ITA NO. 3266 TO 3269/DEL/2011 (AYRS. 2005-06 TO 2008-09) WHEREIN THE TRI BUNAL HAS ALLOWED ALL THE FOUR APPEALS OF THE DEPARTMENT BY RESP ECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. SUN ENGINEERING P LTD. (1992) 198 ITR 297. FOR THE PAGE 7 OF 27 SAKE OF CONVENIENCE, WE ARE REPRODUCING THE RELEVANT F INDING OF THE TRIBUNAL VIDE PARA NO. 9 TO 9.4 AS UNDER:- 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE TRUST IS RUNNING SCHOOLS AT HANSI AND CLAIMED EXEMPTION U/S 1 0(23C)(IIIAD) OF THE ACT. ON REJECTION OF THEIR APPLICATION FOR EXEMPTION ULS 1O(23C)(VI) OF THE ACT FOR THE AYS 2005- 06 TO 2008-09, THE ASSESSEE APPROACHED HON'BLE PUNJAB & HARYANA HIGH COURT BY WAY OF WRIT. HON'BLE HIGH COURT VIDE THEIR ORDER DATED 29.01.2010 IN CWP NO.8258 QUASHED THE ORDER DATED 23.03.2009 OF THE CCIT, DECLINING TO ALLOW EXEMPTION ULS 10(23C) OF THE ACT. THE LD. AR EXPLAINED BEFORE US THAT THE EFFECT TO THE AFORESAID ORDER OF THE HON'BLE HIGH COURT IS YET TO BE GIVEN BY THE CONCERNED AUTHORITIES. HOWEVER, THE ISSUE OF EXEMPTION ULS PAGE 8 OF 27 1O(23C)(IIIAD) OF THE ACT IS NOT BEFORE US NOR THE LD. AR ON BEHALF OF THE ASSESSEE PLACED BEFORE US COPY OF THE AFORESAID ORDER OF THE CCIT OR OF THE HON'BLE HIGH COURT. IN ANY CASE, THE ASSESSEE MAY SEEK APPROPRIATE RELIEF FROM THE CONCERNED AUTHORITIES IN ACCORDANCE WITH LAW. MEANWHILE, SINCE THE APPLICANT TRUST WAS REGISTERED ULS 12A OF THE ACT, THEY MADE AN ALTERNATIVE CLAIM BEFORE THE AO FOR EXEMPTION ULS 11 & 12 OF THE ACT IN THE RETURNS FILED U/S 148 OF THE ACT FOR THE AYS 2005-06 TO 2007-08 AND CONSEQUENTLY SOUGHT THAT THE LOSS OR EXCESSIVE APPLICATION OF INCOME BE DETERMINED AND CARRIED FORWARD FOR SET OFF IN SUBSEQUENT YEARS, THE PROVISIONS OF THE ACT REGARDING CARRY FORWARD AND SET OFF OF BUSINESS LOSSES, BEING NOT APPLICABLE IN THE CASE OF ASSESSEE, CLAIMING EXEMPTION ULS 11 & 12 OF THE ACT. WE ARE NOT DISPUTING THE PAGE 9 OF 27 PROPOSITION THAT A TRUST CAN BE ALLOWED TO CARRY FORWARD DEFICIT OF CURRENT YEAR AND SEEK SET OFF OF THE SAME AGAINST INCOME OF SUBSEQUENT YEARS AND SUCH AN ADJUSTMENT OF DEFICIT OF CURRENT YEAR AGAINST INCOME OF SUBSEQUENT YEAR WOULD AMOUNT TO APPLICATION OF INCOME OF TRUST FOR CHARITABLE PURPOSES IN SUBSEQUENT YEAR WITHIN MEANING OF SECTION 11(L)(A)OF THE ACT, AS HELD IN RAGHUVANSHI CHARITABLE TRUST & ORS(SUPRA). BUT IN THE INSTANT CASE BEFORE US , CAN SUCH DETERMINATION OF LOSS OR EXCESS APPLICATION OF INCOME OR ITS CARRY FORWARD AND SET OFF IS POSSIBLE IN PROCEEDINGS ULS 148 OF THE ACT, NEEDS TO BE EXAMINED, ESPECIALLY WHEN IN THE ORIGINAL RETURNS FILED BY THE ASSESSEE, NO SUCH CLAIM WAS EVER MADE. IN NUTSHELL, THE ONLY ISSUE FOR OUR CONSIDERATION IS AS TO WHETHER CLAIM OF THE ASSESSEE FOR DETERMINATION, CARRY FORWARD AND SET OFF OF PAGE 10 OF 27 EXCESSIVE APPLICATION OF INCOME IN THE RETURNS FILED IN RESPONSE TO NOTICE ULS 148 OF THE ACT FOR THE A YS 2005-06 TO 2007- 08, CAN BE ALLOWED IN THE ASSESSMENT FOR THE A YS 2005-06 TO 2008-09. ADMITTEDLY, IN THE ORIGINAL RETURNS FILED BY THE ASSESSEE FOR THE A YS 2005-06 TO 2007-08, NO SUCH CLAIM WAS EVER MADE. IT IS WELL SETTLED THAT PROCEEDINGS ULS 148 OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE AND NOT FOR CLAIMING RELIEF BY THE ASSESSEE, WHICH RELIEF WAS NEVER CLAIMED IN THE ORIGINAL RETURNS FOR THE AY 2005-06 & 2006-07. INDISPUTABLY, THE ASSESSMENTS IN THE PRESENT CASE FOR THE AYS 2005-06 TO 2007- 08 WERE MADE BY THE AO IN THE PROCEEDINGS UNDER SECTION 147 OF THE ACT INITIATED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE ISSUE OF VALIDITY OF PROCEEDINGS ULS 147 OF THE ACT WAS NEVER PAGE 11 OF 27 RAISED BY THE ASSESSEE EITHER BEFORE THE AOI ID. CIT(A) OR EVEN BEFORE US. THE QUESTION THAT ARISES FOR CONSIDERATION IS WHETHER IN SUCH PROCEEDINGS, INITIATED FOR THE PURPOSE OF ASSESSMENT OF ESCAPED INCOME, THE ASSESSEE IS ENTITLED TO CLAIM DETERMINATION OF LOSS OR EXCESSIVE APPLICATION OF INCOME IN THE A YS 2005-06 & 2006-07 TO ENABLE IT TO CARRY FORWARD THE SAME TO BE SET OFF AGAINST THE INCOME OF SUBSEQUENT YEARS 2007-08 & 2008-09 TO THE DETRIMENT OF THE REVENUE. THE AO MADE THE ASSESSMENT IN PROCEEDINGS UNDER SECTION 147 OF THE ACT INITIATED WITH A VIEW TO ASSESSING INCOME WHICH HAD ESCAPED ASSESSMENT AND HAVING NOT FOUND ANY ESCAPED INCOME, ACCEPTED THE RETURNED INCOME IN THE A YS 2005-06 & 2006-07. HE, HOWEVER, DID NOT ACCEPT THE CLAIM FOR DETERMINATION OF EXCESSIVE PAGE 12 OF 27 APPLICATION OF INCOME IN THESE TWO ASSESSMENT YEARS, THE ASSESSMENT HAVING BEEN MADE IN PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT FOR ASSESSING THE ESCAPED INCOME NOR ACCEPTED THE CLAIM OF CARRY FORWARD OF THE SAME AND SET OFF OF THE SAID EXCESSIVE APPLICATION IN THE AYS 2007-08 & 2008-09. HOWEVER, THE LD, CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE, IGNORING THE FACT ASSESSMENTS FOR THE A YS 2005-06 TO 2007-08 WERE COMPLETED ULS 143(3) READ WITH SEC. 147 OF THE ACT. THE REAL CONTROVERSY, THEREFORE, IS ABOUT THE SCOPE AND AMBIT OF THE POWER OF THE INCOME-TAX OFFICER IN PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT FOR ASSESSMENT OF INCOME, WHICH HAS ESCAPED ASSESSMENT. 9.1. SECTION 147 OF THE ACT EMPOWERS THE AO TO ASSESS INCOME WHICH ESCAPED PAGE 13 OF 27 ASSESSMENT IN THE RELEVANT ASSESSMENT YEAR. IT IS APPLICABLE ONLY TO A CASE WHERE THE AO HAS REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE POWER UNDER THIS SECTION CAN ALSO BE EXERCISED IN CASES WHERE EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMPUTED. IN THE INSTANT CASE, RE-ASSESSMENT PROCEEDINGS WERE INITIATED BY THE AO FOR THE A YS 2005-06 TO 2007- 08 BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT BECAUSE HE WAS SATISFIED THAT THE INCOME OF THE ASSESSEE FOR THESE YEARS HAD ESCAPED ASSESSMENT. THE ASSESSEE NEVER DISPUTED THE REASONS RECODED BY THE AO OR VALIDITY OF THE PROCEEDINGS INITIATED ULS 147 OF THE ACT BEFORE ANY OF THE LOWER AUTHORITIES OR EVEN BEFORE US. IN SUCH A CASE, IF AT ANY STAGE OF THE PROCEEDINGS, THE AO FINDS THAT INCOME CHARGEABLE TO TAX HAS NOT ESCAPED ASSESSMENT, HE IS FREE NOT PAGE 14 OF 27 TO TAKE FURTHER ACTION PURSUANT TO THE NOTICE UNDER SECTION 148 OF THE ACT AND DROP THE PROCEEDINGS. HE IS NOT BOUND TO CONCLUDE THE PROCEEDINGS AND MAKE ASSESSMENT TO THE DETRIMENT OF THE REVENUE. IF, PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE SUBMITS A LOSS RETURN, AND THE AO IS SATISFIED THAT THE INCOME OF THE ASSESSEE DURING THE RELEVANT YEAR WAS REALLY NEGATIVE AS CLAIMED BY THE ASSESSEE IN HIS RETURN, HE IS ENTITLED TO CLOSE THE PROCEEDINGS. HE CANNOT COMPLETE THE ASSESSMENT TO DETERMINE THE LOSS OR EXCESSIVE APPLICATION OF INCOME THEREBY GIVING THE ASSESSEE A RIGHT TO CLAIM SET OFF OF THE LOSS IN SUBSEQUENT YEARS TO THE DETRIMENT OF THE REVENUE. SUCH AN ACT WILL BE CONTRARY TO THE OBJECT, SCOPE AND AMBIT OF SECTION 147 OF THE ACT. PROCEEDINGS UNDER SECTION 147 BEING FOR THE BENEFIT OF PAGE 15 OF 27 THE REVENUE AND NOT THE ASSESSEE, THE ASSESSEE CANNOT BE PERMITTED TO TAKE ADVANTAGE OF THE REASSESSMENT PROCEEDINGS AND SEEK RELIEF WHICH, IN THE ABSENCE OF THE PROCEEDINGS FOR ASSESSMENT OF ESCAPED INCOME, HE COULD NOT HAVE CLAIMED. INCOME FOR THE PURPOSE OF ASSESSMENT UNDER SECTION 147 OF THE ACT CANNOT BE A NEGATIVE FIGURE. SIMILARLY, IN CASE OF REASSESSMENT OF INCOME ALREADY ASSESSED, THE INCOME NOT BE REDUCED BEYOND THE INCOME ORIGINALLY ASSESSED NOR THE LOSS ORIGINALLY DETERMINED CAN BE RE-DETERMINED AT A HIGHER FIGURE. 9.2. THE OBJECT, SCOPE AND AMBIT OF SECTION 147 OF THE ACT IS NOW WELL SETTLED BY THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V SUN ENGINEERING WORKS P. LTD, [1992] 198 ITR 297. THE HON'BLE SUPREME COURT ALSO CONSIDERED THE PAGE 16 OF 27 OBSERVATION IN THEIR EARLIER DECISION IN V. JAGMOHAN RAO'S CASE CANNOT BE READ TO IMPLY AS LAYING DOWN THAT IN THE REASSESSMENT PROCEEDINGS VALIDLY INITIATED, THE ASSESSEE CAN SEEK REOPENING OF THE WHOLE ASSESSMENT AND CLAIM CREDIT IN RESPECT OF ITEMS FINALLY CONCLUDED IN THE ORIGINAL ASSESSMENT. THE ASSESSEE CANNOT CLAIM RE-COMPUTATION OF THE INCOME OR REDOING OF AN ASSESSMENT AND BE ALLOWED A CLAIM WHICH HE EITHER FAILED TO MAKE OR WHICH WAS OTHERWISE REJECTED AT THE TIME OF ORIGINAL ASSESSMENT WHICH HAS SINCE ACQUIRED FINALITY. THE SUPREME COURT, THEREFORE, HELD AS UNDER; 'AS A RESULT OF THE AFORESAID DISCUSSION, WE FIND THAT, IN PROCEEDINGS UNDER SECTION 147 OF THE ACT, THE INCOME-TAX OFFICER MAY BRING TO CHARGE ITEMS OF INCOME WHICH HAD ESCAPED ASSESSMENT OTHER THAN OR IN PAGE 17 OF 27 ADDITION TO THAT ITEM OR ITEMS WHICH HAVE LED TO THE ISSUANCE OF THE NOTICE UNDER SECTION 148 AND WHERE REASSESSMENT IS MADE UNDER SECTION 147 IN RESPECT OF INCOME WHICH HAS ESCAPED TAX, THE INCOME-TAX OFFICER'S JURISDICTION IS CONFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDERASSESSED AND DOES NOT EXTEND TO REVISING, REOPENING OR RECONSIDERING THE WHOLE ASSESSMENT OR PERMITTING THE ASSESSEE TO REAGITATE QUESTIONS WHICH HAD BEEN DECIDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDERASSESSMENT WHICH IS SET ASIDE AND NOT THE ENTIRE ASSESSMENT WHEN REASSESSMENT PROCEEDINGS ARE INITIATED. THE INCOME-TAX OFFICER CANNOT MAKE AN ORDER OF REASSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEEDINGS UNDER SECTION 147. PAGE 18 OF 27 AN ASSESSEE CANNOT RESIST VALIDLY INITIATED REASSESSMENT PROCEEDINGS UNDER THIS SECTION MERELY BY SHOWING THAT OTHER INCOME WHICH HAD BEEN ASSESSED ORIGINALLY WAS AT TOO HIGH A FIGURE EXCEPT IN CASES UNDER SECTION 152(2): THE WORDS' SUCH INCOME' IN SECTION 147 CLEARLY REFER TO THE INCOME WHICH IS CHARGEABLE TO TAX BUT HAS' ESCAPED ASSESSMENT' AND THE INCOME-TAX OFFICER'S JURISDICTION UNDER THE SECTION IS CONFINED ONLY TO SUCH INCOME WHICH HAS ESCAPED ASSESSMENT. IT DOES NOT EXTEND TO RECONSIDERING GENERALLY THE CONCLUDED EARLIER ASSESSMENT. CLAIMS WHICH HAVE BEEN DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDING CANNOT BE PERMITTED TO BE REAGITATED ON THE ASSESSMENT BEING REOPENED FOR BRINGING TO TAX CERTAIN INCOME WHICH HAD ESCAPED 'ASSESSMENT BECAUSE THE CONTROVERSY ON REASSESSMENT IS CONFINED TO MATTERS WHICH ARE RELEVANT PAGE 19 OF 27 ONLY IN RESPECT OF THE INCOME WHICH HAD NOT BEEN BROUGHT TO TAX DURING THE COURSE OF THE ORIGINAL ASSESSMENT. A MATTER NOT AGITATED IN THE CONCLUDED ORIGINAL ASSESSMENT PROCEEDINGS ALSO CANNOT BE PERMITTED TO BE AGITATED IN THE REASSESSMENT PROCEEDINGS UNLESS RELATABLE TO THE ITEM SOUGHT TO BE TAXED AS 'ESCAPED INCOME'. INDEED, IN THE REASSESSMENT PROCEEDINGS FOR BRINGING TO TAX ITEMS WHICH HAD ESCAPED ASSESSMENT, IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TAXABILITY OF THE ITEMS AT ALL. KEEPING IN VIEW THE OBJECT AND PURPOSE OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WHICH ARE FOR THE BENEFIT OF THE REVENUE AND NOT AN ASSESSEE, AN ASSESSEE CANNOT BE PERMITTED TO CONVERT THE REASSESSMENT PROCEEDINGS AS HIS APPEAL OR PAGE 20 OF 27 REVISION, IN DISGUISE, AND SEEK RELIEF IN RESPECT OF ITEMS EARLIER REJECTED OR CLAIM RELIEF IN RESPECT OF ITEMS NOT CLAIMED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, UNLESS RELATABLE TO ESCAPED INCOME', AND REAGITATE THE CONCLUDED MATTERS. EVEN IN CASES WHERE THE CLAIMS OF THE ASSESSEE DURING THE COURSE OF REASSESSMENT PROCEEDINGS RELATING TO THE ESCAPED ASSESSMENT ARE ACCEPTED, STILL THE ALLOWANCE OF SUCH CLAIMS HAS TO BE LIMITED TO THE EXTENT TO WHICH THEY REDUCE THE INCOME TO THAT ORIGINALLY ASSESSED. THE INCOME FOR PURPOSES OF REASSESSMENT' CANNOT BE REDUCED BEYOND THE INCOME ORIGINALLY ASSESSED. IT WOULD BE SEEN THAT WHEREAS IN THE CASE OF ANGLO-FRENCH TEXTILE CO. LTD'S CASE [1953] 23 ITR 82 (SC), THE QUESTION AS TO THE RIGHTS OF AN ASSESSEE TO CLAIM PAGE 21 OF 27 'REDOING', 'REVISING' OR 'RECOMPUTING' THE ENTIRE INCOME DURING THE REASSESSMENT PROCEEDINGS WAS LEFT OPEN, THAT QUESTION DID NOT COME UP FOR CONSIDERATION IN THE CASE OF H. R. SRI RAMULU [1977] 39 STC 177 (SC) OR H. M. ESUFALI'S CASE [1973] 90 ITR 271 (SC) OR EVEN IN V. JAGANMOHAN RAO'S CASE [1970] 75 ITR 373 (SC). SOME OF THE HIGH COURTS, THEREFORE, FELL IN ERROR IN READING THOSE JUDGMENTS, DIVORCED FROM THE CONTEXT IN WHICH THE PRECISE QUESTIONS CAME UP FOR CONSIDERATION IN THOSE CASES, AND TO HOLD THAT THE ASSESSEE COULD' REAGITATE ' THE CONCLUDED ISSUES AND CLAIM RELIEF IN RESPECT OF ITEMS FINALLY CONCLUDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, DURING THE REASSESSMENT PROCEEDINGS, UNCONNECTED WITH THE ESCAPEMENT OF INCOME. WE CANNOT, THEREFORE, APPROVE THE BROAD PROPOSITION LAID DOWN IN THAT REGARD IN DEPUTY COMMISSIONER OF COMMERCIAL PAGE 22 OF 27 TAXES V. INDIAN REFRIGERATION INDUSTRIES P. LTD.[1980] 46 STC 264 (MAD), CIT V. RAMSEVAK PAUL [1977] 110 ITR 527 (CAL), CIT V. ASSAM OIL CO. LTD. [1982] 133 ITR 204 (CAL), CIT V. STANDARD MOTOR PRODUCTS OF INDIA LTD. [1983]142 ITR 877 (MAD), CIT V. RANGNATH BANGUR [1984] 149 ITR 487 (RAJ), STATE BANK OF HYDERABAD V. CIT [1988] 171 ITR 232 (AP) AND CIT V. INDIAN RARE EARTH LTD. [1990] 181 ITR 22 (BORN) [FB]. KEEPING IN VIEW THE ABOVE PRINCIPLES, WE MAY NOW TURN OUR ATTENTION TO THE QUESTION FORMULATED BY THE HIGH COURT AS NOTICED IN THE EARLIER PART OF THE JUDGMENT. THE TRIBUNAL RIGHTLY FOUND THAT THE LOSS WHICH THE ASSESSEE WANTED TO BE SET OFF AGAINST THE ESCAPED INCOME' COULD NOT BE ALLOWED TO BE SO SET OFF BECAUSE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, NO ' SET PAGE 23 OF 27 OFF' WAS CLAIMED OR PERMITTED AND THE ORIGINAL ASSESSMENT HAD ACQUIRED FINALITY WHEN THE APPEAL AGAINST THE ORDER OF ASSESSMENT FAILED BEFORE THE APPELLATE ASSISTANT COMMISSIONER AND THE ASSESSEE TOOK NO FURTHER STEPS TO AGITATE THE ISSUE. THE TRIBUNAL WAS ALSO RIGHT IN CONCLUDING THAT THE ITEMS WHICH THE ASSESSEE WANTED TO BE TAKEN INTO ACCOUNT IN THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE UNCONNECTED WITH THE ESCAPEMENT OF INCOME. THE HIGH COURT CLEARLY FELL IN ERROR IN HOLDING OTHERWISE. SINCE THE ORIGINAL ASSESSMENT HAD BEEN CONCLUDED FINALLY AGAINST THE ASSESSEE, IT WAS NOT PERMISSIBLE FOR THE ASSESSEE IN THE REASSESSMENT PROCEEDINGS TO SEEK A REVIEW/REVISION OF THE CONCLUDED ASSESSMENT FOR THE PURPOSE OF COMPUTATION OF THE ESCAPED INCOME. THE PAGE 24 OF 27 HIGH COURT CLEARLY FELL IN ERROR IN PERMITTING THE ASSESSEE TO REAGITATE, IN THE REASSESSMENT PROCEEDINGS UNDER SECTION 147(A) OF THE ACT, THE FINALLY CONCLUDED ASSESSMENT PROCEEDINGS AND TO GRANT TO HIM RELIEF IN RESPECT OF ITEMS NOT ONLY EARLIER REJECTED, BUT ALSO UNCONNECTED WITH THE ESCAPEMENT OF INCOME BY ASSUMING AS IF THE ORIGINAL ASSESSMENT HAD NOT BEEN CONCLUDED OR WAS STILL OPEN. THEREFORE, OUR ANSWER TO THE QUESTION FORMULATED BY THE HIGH COURT AND NOTICED IN THE EARLIER PART OF THIS JUDGMENT IS THAT, IN THE REASSESSMENT PROCEEDINGS, IT IS NOT OPEN TO AN ASSESSEE TO SEEK A REVIEW OF THE CONCLUDED ITEM, UNCONNECTED WITH THE ESCAPEMENT OF INCOME, FOR THE PURPOSE OF COMPUTATION OF THE ESCAPED INCOME.' 9.3 . THE AFORESAID DECISION WAS FOLLOWED BY THE HON'BLE APEX COURT IN CHETTINAD PAGE 25 OF 27 CORPORATION PVT. LTD. VS. CIT.200 ITR320(SC). SUBSEQUENTLY, HON'BLE CALCUTTA HIGH COURT IN CIT VS. KESHORAM INDUSTRIES,271 ITR 353(CAL.) RELYING ON THE AFORESAID DECISION DENIED DEDUCTION U/S 80G OF THE ACT IN THE REASSESSMENT PROCEEDINGS, WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN. IT IS CLEAR FROM THE ABOVE DECISION OF THE HON'BLE SUPREME COURT THAT PROCEEDINGS UNDER SECTION 147 OF THE ACT ARE FOR THE BENEFIT OF THE REVENUE AND NOT OF THE ASSESSEE AND THE ASSESSEE CANNOT BE PERMITTED TO CONVERT THE REASSESSMENT PROCEEDINGS TO HIS ADVANTAGE. THE ASSESSEE CANNOT CLAIM THAT ASSESSMENT SHOULD BE COMPLETED AND LOSS/EXCESSIVE APPLICATION OF INCOME SHOULD BE DETERMINED TO ENABLE HIM TO CLAIM THE BENEFIT OF CARRY FORWARD AND SET OFF AGAINST THE INCOME OF SUBSEQUENT YEARS. PAGE 26 OF 27 9.4 IN VIEW OF THE FOREGOING, WE HAVE NOT HESITATION IN VACATING THE FINDINGS OF THE LD. CIT(A) AND RESTORING THE ASSESSMENT ORDERS OF THE AO. THEREFORE, GROUND NOS. 1 & 2 IN THE APPEALS FOR THE AY 2005-06 & 2006-06 AND GROUND NO. 1 IN THE APPEALS FOR THE AY 2006-07 AND 2008-09 ARE ALLOWED. 8. RESPECTFULLY FOLLOWING THE PRECEDENTS AS AFORESAI D, WE UPHOLD THE ORDER OF THE AUTHORITIES BELOW AND REJECT THE GRO UND RAISED BY THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-06-2017. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 07/06/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT PAGE 27 OF 27 TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES