DCIT 1(1)(1), MUMBAI V. ANKOLA PAPER MILLS P. LTD, MUMBAI

ITA 516/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1263 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARKAMOL SOHI
• Keywords: Reopening of assessment; Depreciation; Question of law; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 260A; 147; 68; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.516/M/2017 ASSESSMENT YEAR: 2012-13 ASSTT. COMMISSIONER OF INCOME-TAX-1(1)(1), 579, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. ANKOLA PAPER MILLS PVT. LTD., 505, MAKER BHAVAN III, 21, NEW MARINE LINES, MUMBAI 400 020 PAN: AAADCA 5682N (APPELLANT) (RE SPONDENT) CO NO.241/M/2018 (ARISING OUT OF ITA NO.516/M/2017 ASSESSMENT YEAR: 2012-13 M/S. ANKOLA PAPER MILLS PVT. LTD., 505, MAKER BHAVAN III, 21, NEW MARINE LINES, MUMBAI 400 020 PAN: AAADCA 5682N VS. ASSTT. COMMISSIONER OF INCOME-TAX-1(1)(1), 579, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NEELKANTH KHANDELWAL, A.R. REVENUE BY : SHRI HARKAMOL SOHI, D.R. DATE OF HEARING : 09.10.2018 DATE OF PRONOUNCEMENT : 28.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE APPEAL BY THE REVENUE AND THE CROSS OBJE CTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED 20.05.2016 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 2 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: I. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHILST IT IS TRUE THAT IT IS THE OBLIGATION OF THE AO TO CONDUCT PROPER SCRUTINY OF THE MATERIAL, GIVEN THE FACT THAT THE AO DID NOT EXAMINE WHETHER THE TRANSACTIONS OF RECEIPT OF SHARE PREMIUM ARE GENUINE, THE OBLIGATION TO CONDUC T PROPER INQUIRY ON FACTS WOULD SHIFT TO LEARNED CIT(A) IN VIEW OF THE HON'BL E DELHI HIGH COURT DECISION IN THE CASE OFCIT VS JANSAMPARK ADVERTISING AND MARKETING (P) LTD (ITA NO. 525/2014)? II. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DIRECTING THE DELETION OF THE SUM BROUGHT TO TAX BY THE AO AS UNEXPLAINED INCOME UNDER SECTION 56(1) OF THE INCOM E TAX ACT, 1961 IN RESPECT OF MONEYS CREDITED IN THE BOOKS AS SHARE PREMIUM, OF R S 2,85,00,000? III. WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE PROVED I DENTITY, CREDIT-WORTHINESS AND GENUINENESS OF MONEYS CREDITED IN THE BOOKS AS SHAR E PREMIUM, OF RS 2,85,00,000, JUST BY SUBMITTING PAN, COMPLETE POSTAL ADDRESS, TH E MODE OF PAYMENT ETC OF SHARE HOLDERS, AND THAT THE SHARE PREMIUM HAS BEEN RECEIV ED THROUGH BANKING CHANNEL ? IV. WHETHER ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW THE LD.CIT(A) WAS CORRECT IN DECIDING THE ISSUE IN FAVOUR OF ASSE SSEE BY RELYING ON THE DECISION OF HON'BLE ITAT IN THE CASE OF M/S. GREEN INFRA LTD. F OR AY.2009-10 ,WITHOUT APPRECIATING THE LEGAL POSITION THAT THE SAID ISSUE HAD NOT ATTAINED FINALITY SINCE DEPARTMENTS APPEAL FILED U/S 260A AGAINST THE SAID DECISION WAS STILL PENDING BEFORE HON'BLE BOMBAY HIGH COURT? THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITH DRAW THE AFORESAID GROUND OF APPEAL. 3. THE ASSESSEE HAS FILED A CROSS OBJECTION CHALLEN GING THE DECISION OF THE LD. CIT(A) UPHOLDING THE ACTION OF DCIT IN ISSUING NOTICE UNDER SECTION 148 OF THE ACT WHICH A CCORDING TO THE ASSESSEE IS WITHOUT ANY JURISDICTION AND THEREF ORE IS BAD IN LAW AND SO IS THE CONSEQUENT ASSESSMENT ORDER PASSE D UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D THE RETURN OF INCOME ON 25.09.12 DECLARING INCOME OF RS.62,07, 770/-. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY AND ORDER UNDER SECTION 143(3) WAS PASSED ON 19.02. 2015 ASSESSING THE INCOME AT RS.69,07,768/-. THEREAFTER ,NOTICE ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 3 UNDER SECTION 148 OF THE ACT WAS ISSUED ON 25.03.20 15. IN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, THE AO RECORDED THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM DURING THE YEAR AND HAS REASON TO BELIEVE THAT PREMIUM INTRODUCED I N THE BOOKS OF ACCOUNTS WAS ASSESSEES OWN UNDISCLOSED INCOME. THE ASSESSEE COMPLIED WITH THE NOTICE VIDE LETTER DATED 09.04.2015 REQUESTING THE AO TO TREAT THE RETURN FILED UNDER S ECTION 139(1) ON 25.09.2012 TO BE TREATED AS RETURN FILED IN RESP ONSE TO NOTICE UNDER SECTION 148 OF THE ACT AND ALSO REQUESTED FOR SUPPLYING THE REASONS RECORDED FOR REOPENING. THEREAFTER, T HE ASSESSEE WAS FURNISHED THE REASONS RECORDED BY THE AO TO REO PEN THE ASSESSMENT WHICH ARE REPRODUCED BELOW: REASONS FOR RE-OPENING IN THE CASE OF M/S. ANKOLA P APER MILLS PVT. LTD. IN THIS CASE, RETURN OF INCOME HAS BEEN FILED FOR A .Y.2012-13 ON 25.09.2012 DECLARING TOTAL INCOME AT RS.62,07,770/-. THE ORDER U/S.143(3) OF THE I.T.ACT PASSED ON 19.02.2015 DETERMINING THE TOTAL INCOME AT RS.69 ,07,770/-. AS PER LETTER RECEIVED FROM THE O/O ADDL.CLT-RG. 1( 1), MUMBAI DATED 27.02,2015 WHEREIN IT IS SEEN THAT M/S. ANOKLA PAPER MILLS PVT LTD., HAD RECEIVED TOTAL PREMIUM AMOUNT ON CASH ISSUE OF RS. 1,30,00,OOO/-. THE ASSE SSEE HAD RECEIVED A TOTAL PREMIUM OF RS. 2.85CRORES . AS PER INFORMATION RECE IVED FROM THE O/O THE ADDL.CIT, SOME OF THE PARTIES FROM WHOM PREMIUM WAS RECEIVED WERE ALLEGEDLY BOGUS/ENTRY PROVIDERS. HENCE THERE IS A REASON TO BELIEVE THAT THE ASSESSEE HAS ROUTED ITS OWN UNACCOUNTED FUNDS/INCOME THROUGH SUCH ENTRY PROVIDE RS. CONSIDERING THE FACTS NARRATED ABOVE AND CIRCUMSTAN CES OF THE CASE, I HAVE REASON TO BELIEVE THAT AT LEAST AN AMOUNT OF RS.1.30,00,00 0/- FOR THE A.Y.2012-13 HAS ESCAPED ASSESSMENT U/S!47 OF THE I.T.ACT, 1961. THE REFORE, THIS CASE IS REOPENED U/S.147 OF THE ACT. ISSUE NOTICE U/S.148 OF THE I.T.ACT. 5. THEREAFTER, THE ASSESSMENT FRAMED VIDE ORDER DAT ED 19.05.2015 PASSED UNDER SECTION 143(3) READ WITH SE CTION 147 OF THE ACT ADDING A SUM OF RS.2,85,00,000/- AS INCOME FROM OTHER SOURCES UNDER SECTION 56(1) OF THE ACT. ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 4 6. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) UPH ELD THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WHILE THE ADDITION WAS DELETED ON MERIT. NOW THE REVENUE HAS CHALLENG ED THE DELETION OF ADDITION WHEREAS THE ASSESSEE BY WAY OF FILING A CO HAS CHALLENGED THE REOPENING OF ASSESSMENT UNDER SE CTION 147 READ WITH SECTION 148 OF THE ACT. 7. THE LD. A.R. SUBMITTED BEFORE US THAT THE REASON S RECORDED BY THE AO ARE VAGUE AND NON SPECIFIC. TH E LD. A.R. SUBMITTED THAT THERE IS A MENTION OF CASH ISSUE IN THE REASONS RECORDED FOR REOPENING WHICH IS VERY VAGUE AND ONL Y KNOWN TO THE AO ABOUT THE MEANING AND CONTENTS OF THE REASON S RECORDED. THE AO RECORDED THAT THERE ARE SOME PARTIES FROM WH OM ASSESSEE HAS RECEIVED PREMIUM WHICH ARE ALLEGEDLY F ROM BOGUS ENTRY PROVIDERS. WHEREAS THE AO NOWHERE DISCUSSED THE SAID ISSUE AS TO HOW THE INVESTORS ARE ENTRY PROVIDERS. THE LD. A.R. DREW OUR ATTENTION TO PAGE NO.186 TO 188 WHICH ARE COPIES OF THE REASONS RECORDED UNDER SECTION 148 OF THE ACT ALONG WITH ANNEXURE I.E. PAGE NO.186 WHICH IS THE REASON RECOR DED WHERE AS PAGE NO.187 & 188 ARE ANNEXURE THERETO GIVING DE TAILS AS TO PARTIES FROM WHOM THE ASSESSEE HAS RECEIVED SHARE A PPLICATION MONEY AND WHICH THE AO HAS TREATED AS UNDISCLOSED I NCOME. THE LD. A.R. SUBMITTED THAT THE AO IN THE ANNEXURE TO THE REASONS RECORDED FOR REOPENING HAS MENTIONED THAT R S.60 LAKHS HAD RECEIVED FROM CHANNEL GUIDE INDIA PVT. LTD. WHE REAS AS A MATTER OF FACT ONLY RS.30 LAKHS WAS RECEIVED FROM T HE SAID COMPANY. THE LD. A.R. SUBMITTED THAT THE AO HAS MA DE AN ADDITION OF RS.2.85 CRORE WHEREAS IN THE REASONS RE CORDED FOR REOPENING THE ASSESSMENT THE AO HAS INFORMATION WIT H REGARD TO RS.1.30 CRORES THAT HAS ESCAPED ASSESSMENT. THE LD . A.R. ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 5 ARGUED THAT DIFFERENCE BETWEEN THE TWO AMOUNTS I.E. RS.2,85,00,000/- AND RS.1,30,00,000/- CAN ONLY BE M ADE PROVIDED ADDITION OF RS.1,30,00,000/- IS MADE AND U LTIMATELY SURVIVED AND ONLY QUA THE ISSUE WHICH CAME TO THE NOTICE OF THE AO DURING THE ASSESSMENT PROCEEDINGS. THE LD. A.R. ARGUED THAT THE AO HAS NOT MENTIONED AS TO WHAT HAS COME T O HIS NOTICE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS REGARDS THE DIFFERENCE BETWEEN RS.2,85,00,000/- AND RS.1,30 ,00,000/- AND THEREFORE SAME DOES NOT SURVIVE IN AS MUCH AS E XPLANATION 3 TO SECTION 147 CAN NOT ENLARGE THE SCOPE OF BASI C PROVISIONS AS CONTAINED IN SECTION 147 OF THE ACT. THE LD. A.R. ARGUED THAT PRIMARY CONDITIONS AS ENVISAGED BY SECTION 147 OF T HE ACT IS THE REASON TO BELIEVE ARE REQUIRED TO BE FULFILLED FOR RESORTING TO REASSESSMENT PROCEEDINGS. THE LD. A.R. IN DEFENCE OF HIS ARGUMENTS RELIED ON THE DECISION OF CO-ORDINATE BEN CH OF THE TRIBUNAL IN THE CASE OF JULIET INDUSTRIES LTD. IN I TA NO.5452/M/2016. THE LD. A.R. STRONGLY ASSAILED REO PENING OF ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THE GROUND THAT THE REASONING RECORDED BY THE AO IS VAG UE AND AO CAN NOT BE ALLOWED TO MAKE FISHING AND ROVING ENQU IRY UNDER THE GUISE OF REOPENING THE ASSESSMENT PROCEEDINGS. FINALLY, THE LD. A.R. PRAYED THAT THE REASSESSMENT PROCEEDINGS I NITIATED UNDER SECTION 147 OF THE ACT ARE BAD IN LAW AND SO IS THE CONSEQUENT ASSESSMENT ORDER PASSED UNDER SECTION 14 3(3) READ WITH SECTION 147 OF THE ACT. 8. THE LD. D.R., ON THE OTHER HAND, STRONGLY OPPOSE D THE ARGUMENTS OF THE LD. A.R. BY SUBMITTING THAT THE AO HAS DULY RECORDED THE REASON AND ONLY THEN HAVING SATISFIED AS TO THE REOPENING OF ASSESSMENT PROCEEDINGS ISSUED NOTICE U NDER ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 6 SECTION 148 OF THE ACT AND WAS RIGHTLY UPHELD BY TH E FIRST APPELLATE AUTHORITY. THE LD. D.R. SUBMITTED THAT T HOUGH THERE IS A MISTAKE ON THE PART OF THE AO IN MENTIONING AMOUN T IN THE REASONS RECORDED WHICH IN THE CASE OF CHANNEL GUIDE INDIA PVT. LTD. IS RS.30 LAKHS WHEREAS THE AO HAS MENTIONED RS .60 LAKHS IN THE REASONS RECORDED IN THE ANNEXURE ATTACHED TH ERETO. BUT SUCH MINOR CLERICAL MISTAKES WOULD NOT RENDER THE ENTIRE REASSESSMENT PROCEEDINGS WHICH ARE OTHERWISE BASED UPON A CONCRETE AND SUBSTANTIVE MATERIAL FORMING THE BASIS FOR REASON TO BELIEVE AS BEING INVALID IN LAW AND THEREFORE TH E CO FILED BY THE ASSESSEE SHOULD BE DISMISSED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER. WE FIND FROM THE PERUSAL OF REASONS RECORDE D AS REPRODUCED HEREINABOVE THAT THE AO HAS RECORDED THE REASON ON THE BASIS OF LETTER RECEIVED FROM ADDITIONAL CIT TH AT SOME PARTIES FROM WHOM THE PREMIUM RECEIVED WERE ALLEGEDLY BOGUS /ENTRY PROVIDERS AND THE ASSESSEE HAD RECEIVED A TOTAL PRE MIUM AMOUNT ON CASH ISSUE OF RS.1,30,00,000/-. THE AO O N THE BASIS OF SAID INFORMATION FORMED A REASON TO BELIEVE THA T ASSESSEE HAS INTRODUCED ITS OWN UNACCOUNTED FUNDS/INCOME THROUG H SUCH ENTRY PROVIDERS AND THUS REOPENED THE ASSESSMENT PR OCEEDINGS UNDER SECTION 147 OF THE ACT. IT IS QUITE CLEAR FR OM THE PERUSAL OF THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT ALON G WITH ANNEXURE THAT AO HAS RECORDED A VERY VAGUE AND NON SPECIFIC REASONS SO MUCH SO THAT AO HAS MENTIONED IN THE ANN EXURE ATTACHED WITH THE REASONS RECORDED UNDER SECTION 14 8 THAT ASSESSEE HAS RECEIVED FROM CHANNEL GUIDE INDIA PVT. LTD. RS.60 LAKHS WHEREAS AS A MATTER OF FACT THE ASSESSEE HAS ONLY RECEIVED ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 7 RS.30 LAKHS FROM THE SAID COMPANY. THIS ITSELF SHO WS THAT AO HAS NOT APPLIED HIS MIND CORRECTLY TO THE INFORMATI ON RECEIVED BY WAY OF LETTER FROM THE OFFICE OF ADDL. CIT. FURTHE R, THE AO HAS MADE AN ADDITION OF RS.2,85,00,000/- WHEREAS THE RE ASONS RECORDED FOR REOPENING ONLY MENTIONED THE RECEIPT O F PREMIUM OF RS.1,30,00,000/- WHICH HAS ESCAPED ASSESSMENT. THE AO HAS NOT SPELT OUT THE DETAILS OF RS.1,30,00,000/- IN TH E REASON RECORDED AND IT IS ONLY BEST KNOWN TO THE AO AS TO WHAT MEANING THE WORD CASH ISSUE CARRIES. IN OUR VIEW, THE AO IS FULLY EMPOWERED TO MAKE AN ADDITION BEYOND RS.1,30,00,000 /- MEANING THEREBY THAT DIFFERENCE BETWEEN RS.2,85,00, 000/- AND RS.1,30,00,000/- COULD HAVE VERY WELL BEEN MADE TO THE INCOME OF THE ASSESSEE HAD THE AMOUNT MENTIONED IN THE REA SONS RECORDED FOUND ITS PLACE IN THE ASSESSMENT ORDER BY WAY OF ADDITIONS AND ALSO SURVIVED THEREAFTER. BUT IN THE PRESENT CASE VARIOUS REASONS RECORDED BY THE AO ARE FULL OF INFI RMITIES AS THE REASONS STATE THAT THE ASSESSEE HAS RECEIVED RS.60 LAKHS FROM CHANNEL GUIDE INDIA PVT. LTD. WHEREAS AS A MATTER O F FACT THE ASSESSEE HAS RECEIVED ONLY RS.30 LAKHS FROM THE SAI D COMPANY. IN OUR VIEW, EVEN THE ADDITION AS PROPOSED IN THE R EASONS RECORDED TO FORM REASON TO BELIEVE IS NOT MADE IN T HE ASSESSMENT ORDER AS THE FACTS WERE WRONGLY MENTIONED IN THE RE ASONS RECORDED BY THE AO AND THEREFORE THE NOTICE ISSUED UNDER SECTION 148 IS BAD IN LAW AS THE EXPLANATION 3 TO S ECTION 147 CAN NOT ENLARGE SCOPE OF THE BASIC PROVISIONS AS C ONTAINED IN SECTION1 47 AND FOR ISSUING NOTICE UNDER SECTION 14 8 THE BASIC REQUIREMENTS AS ENVISAGED IN SECTION 147 I.E. REAS ON TO BELIEVE ARE REQUIRED TO BE FULFILLED FOR RESORTING TO REAS SESSMENT PROCEEDINGS. THE LD. A.R. RELIED ON THE DECISION O F CO-ORDINATE ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 8 BENCH OF THE TRIBUNAL IN THE CASE OF JULIET INDUSTR IES LTD. (SUPRA) WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 6.2 AT THE OUTSET, WE FIND IT CONVENIENT TO EXTRAC T THE RELEVANT STATUTORY PROVISIONS AS CONTAINED IN SECTION 147 OF THE INCOME TAX AS BELOW:- 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, A SSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY B E, FOR THE ASSESSMENT YEAR CONCERNED' (EMPHASIS SUPPLIED) EXPLANATION-3 AS INSERTED BY FINANCE ACT , 2009 RETROSPECTIVELY W.E.F.01/04/1989 READS AS FOLLOWS:- 'EXPLANATION 3. - FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSE SS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUC H ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S 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 SUPPLIED) UPON PERUSAL OF THE SAME, WE FIND THAT POST AMENDME NT, LD. AO HAS WIDE POWERS TO ASSESS NOT ONLY THOSE INCOMES WHICH WERE THE SUB JECT MATTER OF REASSESSMENT PROCEEDINGS BUT ALSO THOSE ESCAPED INCOMES WHICH CA ME TO HIS NOTICE DURING REASSESSMENT PROCEEDINGS. THE RATIONALE BEHIND INSE RTION OF EXPLANATION-3, AS EVIDENT FROM THE REASONS FOR INSERTION OF THIS CLAR IFICATORY EXPLANATION IN CL. (57) OF MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BIL L (NO. 2) OF 2009 [(2009) 224 CTR (ST) 145] ARE AS FOLLOWS:- 'SOME COURTS HAVE HELD THAT THE AO HAS TO RESTRICT THE REASSESSMENT PROCEEDINGS ONLY TO ISSUES IN RESPECT OF WHICH THE REASONS HAVE BEEN RECORDED FOR REOPENING THE ASSESSMENT. HE IS NOT EM POWERED TO TOUCH UPON ANY OTHER ISSUE FOR WHICH NO REASONS HAVE BEEN RECORDED. THE ABOVE INTERPRETATION IS CONTRARY TO THE LEGISLATIVE INTEN T. WITH A VIEW TO FURTHER CLARIFYING THE LEGISLATIVE I NTENT, IT IS PROPOSED TO INSERT AN EXPLANATION IN S. 147 TO PROVIDE THAT THE AO MAY ASSESS OR REASSESS INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS N OTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION, NOTWI THSTANDING THAT THE REASON FOR SUCH ISSUE HAS NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-S. (2) OF S. 148 . THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FRO M 1ST APRIL, 1989 AND WILL ACCORDINGLY APPLY IN RELATION TO ASST. YR. 1989-90 AND SUBSEQUENT YEARS.' HENCE, NEWLY INSERTED EXPLANATION 3 MAKES IT CLEAR THAT THE AO MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ISSUES WHICH HAS ESCAPED ASSESSMENT, IF SUCH ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 9 ISSUE COMES TO HIS NOTICE IN THE COURSE OF PROCEEDI NGS UNDER THIS SECTION EVEN THOUGH SAID ISSUE DID NOT FIND MENTION IN THE REASO NS RECORDED AND THE NOTICE ISSUED UNDER SECTION 148. 6.3 IN THE PRESENT CASE, WE FIND THAT REASSESSMENT PROCEEDINGS WERE INITIATED ON THE PREMISE THAT THE ASSESSEE OBTAINED ACCOMMODATIO N PURCHASE BILLS FOR RS.9,990/-. THIS ADDITION HAS BEEN ACCEPTED BY THE ASSESSEE, FOR WHATEVER REASONS, DURING QUANTUM PROCEEDINGS AND THE SAME HAS ALREADY ATTAINED FINALITY SINCE IT HAS NOT BEEN CONTESTED ANY FURTHER. 6.4 NOW THE QUESTION THAT ARISES FOR OUR CONSIDERAT ION IS THE POWER OF LD. AO TO GO BEYOND THE RECORDED REASONS. A PERUSAL OF THE QUANT UM ORDER REVEALS THAT LD. AO, DURING REASSESSMENT PROCEEDINGS, UPON NOTICING CHAN GES IN THE CAPITAL STRUCTURE OF THE ASSESSEE, CALLED FOR FURTHER INFORMATION FROM T HE ASSESSEE TO SCRUTINIZE THE SAME BY WAY OF ISSUANCE OF NOTICE U/S 142(1). IT IS TO BE NOTED THAT NO TANGIBLE MATERIAL / INFORMATION WAS AVAILABLE WITH LD. AO QU A THIS ITEM EITHER AT THE TIME OF INITIATION OF PROCEEDINGS OR DURING REASSESSMENT PR OCEEDINGS SUGGESTING FACTUM OF ESCAPEMENT OF INCOME. IT IS FURTHER NOTED THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) & FRAMING ASSESSMENT U/S 143(3) HAD ALRE ADY EXPIRED AND THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE HAD ALREADY ATTAINED FINALITY. IN THAT SCENARIO, THE LD. AO, IN OUR OPINION, IN THE ABSENCE OF ANY N EW TANGIBLE MATERIAL OR INFORMATION, BY MAKING ROVING / FISHING INQUIRIES C OULD NOT UNEARTH COMPLETELY NEW GROUNDS OF ADDITION BY CALLING FURTHER INFORMATION FROM ASSESSEE WHICH HAD ALREADY ATTAINED FINALITY BY WAY OF ACCEPTANCE OF ORIGINAL RETURN OF INCOME. THERE WAS NO IOTA OF EVIDENCE ON RECORD TO SUGGEST ESCAPEMENT OF INCOME QUA THIS ITEM. THEREFORE, THE LD. AO, IN OUR OPINION, HAS EXCEEDED HIS JURISDICTION BY WAY OF MAKING FISHING & ROVING INQUIRIES, WHICH COULD NOT BE SUSTAINED. THE REASSESSMENT PROCEEDINGS WERE NEVER MEANT TO GIVE SECOND INNING OR CHANCE TO REVENUE TO SCRUTINIZE THE ASSESSEE'S RETURN OF INCOME PARTICUL ARLY WHEN NO TANGIBLE MATERIAL SUGGESTING ESCAPEMENT OF INCOME WAS AVAILABLE ON RE CORD. THERE SHOULD HAVE BEEN MINIMUM MATERIAL TO TRIGGER FURTHER ACTION ON THE P ART OF LD. AO SO AS TO ASSUME VALID JURISDICTION U/S 147/148. IT IS TRITE LAW THA T THERE MUST BE AN END TO LITIGATION AND FINALITY OF ISSUES AND THE ISSUES COULD NOT BE AGITATED / RE- AGITATED OR REVISITED BY THE RESPECTIVE PARTIES EXCEPT WITHIN THE FRAMEWO RK OF LAW. THE BASIC OBJECTIVE OF REASSESSMENT PROCEEDINGS IS TO BRING TO TAX ESCAPED INCOMES AND THE SAME COULD NOT, BY ANY STRETCH OF IMAGINATION, EMPOWER LD. AO TO DELVE INTO COMPLETELY INDEPENDENT AND UNCONNECTED ISSUES WHICH ALREADY AT TAINED FINALITY AND WITH RESPECT TO WHICH NO NEW TANGIBLE MATERIAL WAS AVAIL ABLE ON RECORD. 6.5 THE EXPLANATION-3 TO SECTION 147 , IN OUR OPINION, COULD NOT ENLARGE THE SCOPE OF BASIC PROVISIONS AS CONTAINED IN SECTION 147 AND THE PRIMARY CONDITIONS AS ENVISAGED BY SECTION 147 VIZ. REASONS TO BELIEVE WAS REQUIRED TO BE FULFILL ED BEFORE RESORTING TO REASSESSMENT PROCEEDINGS. OUR VIEW IS FULLY SUPPORTED BY THE OBSERVATION OF OUR JURISDICTIONAL HON'BLE BOMBAY HI GH COURT RENDERED IN CIT V. JET AIRWAYS (I) LTD. [2011 331 ITR 236] WHICH HAS SUBSEQUENTLY BEEN FOLLOWED BY DELHI HIGH COURT IN RANBAXY LABORATORIES LTD. V. CIT [2011 336 ITR 136]. THE DECISION BY HON'BLE BOMBAY HIGH COURT HAS BEEN RENDERED AFTER C ONSIDERING THE JUDGMENT OF HON'BLE APEX COURT IN CIT VS. SUN ENGG. WORKS P. LT D. [198 ITR 297] AND SEVERAL OTHER JUDGMENTS AND THE HON'BLE COURT HAVE HELD AS UNDER:- ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 10 16. IN CIT VS. SUN ENGINEERING WORKS (P) LTD . (1992) 107 CTR (SC) 209 :(1992) 198 ITR 297 (SC) : (1992) 64 TAXMAN 442 (SC), THE S UPREME 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 ITEM OF INCOME IS IT OPEN TO THE ASSESSEE T O SEEK A REVIEW OF THE CONCLUDED ITEM FOR THE PURPOSE OF COMPUTATION OF TH E ESCAPED INCOME ?' THE ISSUE WHICH AROSE BEFORE THE SUPREME COURT WAS WHETHER, IN THE COURSE OF A REASSESSMENT ON AN ESCAPED ITEM OF INCOME COUL D 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 PROVIS IONS OF S. 147 , AS THEY STOOD PRIOR TO THE AMENDMENT ON 1ST APRIL, 1989. TH E SUPREME COURT HELD THAT THE EXPRESSION 'ESCAPED ASSESSMENT' INCLUDES B OTH 'NON ASSESSMENT' AS WELL AS 'UNDERASSESSMENT'. INCOME IS SAID TO HAV E ESCAPED ASSESSMENT WITHIN THE MEANING OF THE SECTION WHEN IT HAS NOT B EEN CHARGED IN THE HANDS OF AN ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. THE EXPRESSION 'ASSESS' REFERS TO A SITUATION WHERE THE ASSESSMENT OF THE ASSESSEE FOR A PARTICULAR YEAR IS, FOR THE FIRST TIME, MADE BY RES ORTING TO THE PROVISIONS OF S. 147 . THE EXPRESSION 'REASSESS' REFERS TO A SITUATION W HERE AN ASSESSMENT HAS ALREADY BEEN MADE BUT THE AO HAS REASON TO BELI EVE 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 VALIDLY REOPENED, THE PR EVIOUS 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 PREVI OUS YEAR. THE COURT HELD THAT THE OBJECT OF S. 147 ENURES TO THE BENEFIT OF THE REVENUE AND IT IS NOT OPEN TO THE ASSESSEE TO CONVERT THE REASSESSMEN T PROCEEDINGS AS AN APPEAL OR REVISION AND THEREBY SEEK RELIEF IN RESPE CT 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) DEALT WITH THE LANGUAGE OF SS. 22(2) AND 34 OF THE ACT OF 1922 WHILE THE JUDGMENT IN SUN ENGG. WORKS (P) LTD. (SUPRA) INTERPRETS THE PROVISI ONS OF S. 147 AS THEY STOOD PRIOR TO THE AMENDMENT ON 1ST APRIL, 1989. 18. THE EFFECT OF THE AMENDED PROVISIONS CAME TO BE CONSIDERED IN TWO DISTINCT LINES OF PRECEDENT ON THE SUBJECT. THE FIR ST LINE OF AUTHORITY, TO WHICH A REFERENCE HAS ALREADY BEEN MADE EARLIER, AD OPTED THE PRINCIPLE THAT WHERE THE AO HAS FORMED A REASON TO BELIEVE THAT IN COME 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 PROCEE DINGS FOR ASSESSMENT OR REASSESSMENT TO ASSESS OR REASSESS ANY OTHER INCOME , WHICH MAY HAVE ESCAPED ASSESSMENT BUT WHICH DID NOT FORM THE SUBJE CT- MATTER OF THE NOTICE UNDER S. 148 . THIS VIEW WAS ADOPTED IN THE JUDGMENT OF THE PUNJ AB & HARYANA HIGH COURT IN VIPAN KHANNA (SUPRA) AND IN T HE JUDGMENT OF THE KERALA HIGH COURT IN TRAVANCORE CEMENTS LTD. (SUPRA ), THIS LINE OF AUTHORITY, WOULD NOW CEASE TO REFLECT THE CORRECT POSITION IN LAW, BY VIRTUE OF THE AMENDMENT WHICH HAS BEEN BROUGHT IN BY THE INSERTIO N OF EXPLN. 3 TO S. 147 BY FINANCE (NO. 2) ACT OF 2009. THE EFFECT OF THE EXPLANATION IS THAT ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 11 ONCE AN AO HAS FORMED A REASON TO BELIEVE THAT INCO ME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND HAS PROCEEDED TO ISSUE A NOTICE UNDER S. 148 , IT IS OPEN TO HIM TO ASSESS OR REASSESS INCOME IN RESP ECT 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 JUDGMENT OF THE RAJASTHAN HIGH COURT IN CIT VS. SHRI RAM SINGH (2008) 217 CTR (RAJ) 345 : (2008) 306 ITR 343 (RAJ). THE RAJASTHAN HIGH COURT CONSTRUED T HE WORDS USED BY PARLIAMENT IN S. 147 PARTICULARLY 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 NOTIC E SUBSEQUENTLY IN THE COURSE 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 ASSESSMENT 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 PROCEEDIN GS UNDER S. 147 . TO CLARIFY IT FURTHER, OR TO PUT IT IN OTHER WORDS, IN OUR OPINION, IF IN THE COURSE OF PROCEEDINGS UNDER 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 ASSESSMENT FOR ANY ASSESSMENT YEAR, DID NOT ESCAPE ASSESSMENT, THEN, THE MERE FACT THAT THE AO ENTERTA INED A REASON TO BELIEVE, ALBEIT EVEN A GENUINE REASON TO BELIEVE, W OULD NOT CONTINUE TO VEST HIM WITH THE JURISDICTION, TO SUBJECT TO TAX, ANY O THER INCOME, CHARGEABLE TO TAX, WHICH THE AO MAY FIND TO HAVE ESCAPED ASSESSME NT, AND WHICH MAY COME TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF P ROCEEDINGS UNDER S. 147 .' 20. PARLIAMENT, WHEN IT ENACTED THE EXPLN. (3) TO S. 147 BY THE FINANCE (NO. 2) ACT, 2009 CLEARLY HAD BEFORE IT BOTH THE LINES O F PRECEDENT ON THE SUBJECT. THE PRECEDENT DEALT WITH TWO SEPARATE QUESTIONS. WH EN IT EFFECTED THE AMENDMENT BY BRINGING IN EXPLN. 3 TO S. 147 , PARLIAMENT STEPPED IN TO CORRECT WHAT IT REGARDED AS AN INTERPRETATIONAL ERR OR IN THE VIEW WHICH WAS TAKEN BY CERTAIN COURTS THAT THE AO HAS TO RESTRICT THE ASSESSMENT OR REASSESSMENT PROCEEDINGS ONLY TO THE ISSUES IN RESP ECT OF WHICH REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT. THE COR RECTIVE EXERCISE EMBARKED UPON BY 'PARLIAMENT IN THE FORM OF EXPLN. 3 CONSEQUENTLY PROVIDES THAT THE AO MAY ASSESS OR REASSESS THE INC OME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS THOUGH THE REASONS FOR SUCH ISSUE WERE NOT INCLUDED IN THE NOTICE UNDER S. 148(2) . THE DECISIONS OF THE KERALA HIGH COURT IN TRAVANC ORE CEMENTS LTD. (SUPRA) AND OF THE PUNJAB & HARYANA HI GH COURT IN VIPAN KHANNA (SUPRA) 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 BASI S OF THAT DECISION. THE VIEW WHICH WAS TAKEN BY THE RAJASTHAN HIGH COURT WA S ALSO TAKEN IN ANOTHER ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 12 JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT 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 GROUNDS MENTIONED IN THE NOTICE UNDER S. 148 WERE INCORRECT OR NON- EXISTENT. THE DECISIONS OF THE PUNJAB & HARYANA HIG H COURT IN ATLAS CYCLE INDUSTRIES (SUPRA) AND OF THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH (SUPRA) WOULD NOT BE AFFECTED BY THE AMENDMENT BROUGHT IN B Y THE INSERTION OF EXPLN. 3 TO S. 147 . 21. EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSE RTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR R EASSESSMENT 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 ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE AO COULD NOT MAK E AN ASSESSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOT ICE DURING THE PROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOL D THE FIELD AFTER THE INSERTION OF EXPLN. 3 BY THE FINANCE ACT (NO. 2) OF 2009. HOWEVER, EXPLN. 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFI LLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF S.147. AN EXPLANATIO N TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE C ONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SEC. 147 HA S THIS EFFECT THAT THE AO 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 I NCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COMES TO HIS NOTICE DURING TH E COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UND ER S. 148 , HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOM E WHICH HE HAS INITIALLY FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEP ENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTIC E 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 FIRS T PRINCIPLE, BASED ON THE LANGUAGE USED IN S. 147(1) AND ON THE BASIS OF THE PRECEDENT ON THE SUBJECT. WE AGREE WITH THE SUBMISSIONS 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 INCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO H IS 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 ALTERNATIVE WOULD BE TO REWRITE THE LA NGUAGE USED BY PARLIAMENT. OUR VIEW HAS BEEN SUPPORTED BY THE BACK GROUND 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 ALSO' BY THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH (SUPRA). PAR LIAMENT HAS NOT TAKEN ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 13 AWAY THE BASIS OF THAT DECISION. WHILE IT IS OPEN T O 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, 19 89 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 TH E PRESENT CASE AS BEING IN ERROR. THE QUESTION OF LAW SHALL, ACCORDINGLY, STAN D ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL I S, ACCORDINGLY, DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. (EMPHASIS, BEING SUPPLIED BY US) THE OBSERVATION OF HON'BLE DELHI HIGH COURT IN RANBAXY LABORATORIES LTD. V. CIT [2011 336 ITR 136] WHICH ARE RELEVANT TO ISSUE IN HAND ARE AS UNDER:- 18. WE ARE IN COMPLETE AGREEMENT WITH THE REASONING OF THE DIVISION BENCH OF BOMBAY HIGH COURT IN THE CASE OF JAGANMOHAN RAO (SUPRA) [SIC--JET AIRWAYS (I) LTD. (SUPRA)]. WE MAY ALSO NOTE THAT TH E HEADING OF S. 147 IS 'INCOME ESCAPING ASSESSMENT' AND THAT OF S. 148 'ISSUE OF NOTICE WHERE INCOME ESCAPED ASSESSMENT'. SEC. 148 IS SUPPLEMENTA RY AND COMPLIMENTARY TO S. 147 . SUB-S. (2) OF S. 148 MANDATES REASONS FOR ISSUANCE OF NOTICE BY THE AO AND SUB-S. (1) THEREOF MANDATES SERVICE OF NOTIC E TO THE ASSESSEE BEFORE THE AO PROCEEDS TO ASSESS, REASSESS OR RECOMPUTE ES CAPED INCOME. SEC. 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE AO THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ALL THESE CONDITIONS ARE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED I NCOME CHARGEABLE TO TAX. AS PER EXPLN. 3 IF DURING THE COURSE OF THESE PROCEEDI NGS THE AO COMES TO CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWITHSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS T O BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WO ULD BE COMPETENT TO MAKE ASSESSMENT OF THOSE ITEMS. HOWEVER, THE LEGISL ATURE COULD NOT BE PRESUMED TO HAVE INTENDED TO GIVE BLANKET POWERS TO THE AO THAT ON ASSUMING JURISDICTION UNDER S. 147 REGARDING ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, HE WOULD KEEP ON MAKING ROVING INQU IRY AND THEREBY INCLUDING DIFFERENT ITEMS OF INCOME NOT CONNECTED O R RELATED WITH THE REASONS TO BELIEVE, ON THE BASIS OF WHICH HE ASSUME D JURISDICTION. FOR EVERY NEW ISSUE COMING BEFORE AO DURING THE COURSE OF PRO CEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, AND W HICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTICE UNDER S. 148 . (EMPHASIS, BEING SUPPLIED BY US) ALTHOUGH BOTH THE DECISIONS HAVE BEEN RENDERED IN A SITUATION WHERE NO ADDITIONS WERE MADE BY LD. AO WITH RESPECT TO THOSE ITEMS WHICH WERE THE SUBJECT MATTER OF REASSESSMENT PROCEEDINGS AND THE ADDITIONS WERE MADE AGAINST INDEPENDENT AND UNCONNECTED ISSUES WHICH IS NOT THE CASE HERE. HOWEVER, WE FIND THE OBSERVATIONS OF HON'BLE COURTS AS EMPHASIZED BY US TO BE VERY RELEVANT AND PERTINENT TO ISSUE BEFORE U S. THE EXPLANATION 3, AS PER THE DECISION OF HON'BLE BOMBAY HIGH COURT, CANN OT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN T HE SUBSTANTIVE PART OF S. 147 SINCE AN EXPLANATION TO A STATUTORY PROVISION IS I NTENDED TO EXPLAIN ITS ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 14 CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATORY. SIMILARLY, AS PER HON'BLE DELHI HIGH COURT, THE LD. AO WAS NOT VESTED WITH BLANKET POWERS AND DEBARRED FRO M MAKING FISHING AND ROVING INQUIRIES. FURTHER, BOTH THE HON'BLE COURTS HAVE OBSERVED THAT A FRESH NOTICE U/S 148 WITH RESPECT TO NEW ITEMS WOULD BE R EQUIRED, WHICH IS MISSING IN THE PRESENT CASE. 6.6 IN VIEW OF THE ABOVE STATED ANALYSIS, WE FIND T HAT LD. AO WAS NOT RIGHT IN ASSUMING JURISDICTION WITH RESPECT TO INDEPENDENT A ND UNCONNECTED ITEMS WITHOUT ANY TANGIBLE MATERIAL OR INFORMATION SUGGES TING ESCAPEMENT OF INCOME WHICH WAS THE BASIC REQUIREMENT OF SECTION 147 . HENCE, IMPUGNED ADDITIONS U/S 68 COULD NOT SURVIVE. 10. IT IS CLEAR FROM THE ABOVE THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE CO-O RDINATE BENCH OF THE TRIBUNAL IN THE ABOVE CASE. WE, THEREFORE, ARE OF THE CONSIDERED VIEW THAT THE REASONS RECORDED BY THE AO ARE VERY VAGUE AND NON SPECIFIC AND THEREFORE THE REASSESSME NT PROCEEDINGS WERE NOT VALIDLY INITIATED AND THEREFOR E THE CONSEQUENT ASSESSMENT ORDER PASSED UNDER SECTION 14 3(3) R.W.S. 147 OF THE ACT IS BAD IN LAW. 11. ACCORDINGLY, THE CROSS OBJECTION FILED BY THE A SSESSEE IS ALLOWED. 12. SINCE WE HAVE DECIDED THE CO IN FAVOUR OF THE A SSESSEE THE APPEAL OF THE REVENUE BECOMES INFRUCTUOUS AND REQUI RES NO ADJUDICATION. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE CO OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.11.2018. * KISHORE, SR. P.S. ITA NO.516/M/2017 & CO NO.241/M/2018 M/S. ANKOLA PAPER MILLS PVT. LTD. 15 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.