ROYAL WESTERN INDIA TURF CLUB, MUMBAI V. PR. CIT -8, MUMBAI

ITA 640/MUM/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3717 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA BILLA
• Assessee Lawyers: SALIL KAPOOR SUMIT LALCHANDANI
• Keywords: Reopening of assessment; Depreciation; Opportunity of being heard; Period of limitation; Retrospective amendment; Bad and doubtful debts; Assessment record; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 115JB; 13; 147; 148; 263; 63; 139

Judgement Text

1 ITA 640/MUM/2021 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A. NO.640/MUM/2021 (ASSESSMENT YEAR 2011-12) ROYAL WESTERN INDIA TURF CLUB MAHALAXMI RACE COURSE MAHALXMI, MUMBAI-400 034 PAN : AABCR8519H VS PRINCIPAL COMMISSIONER OF INCOME- TAX-8, MUMBAI APPELLANT RESPONDENT APPELLANT BY S/SHRI SALIL KAPOOR, SUMIT LALCHANDANI & SMT ANANYA KAPOOR, AR RESPONDENT BY SMT. SUNITA BILLA, [CIT, (DR)] DATE OF HEARING 23-09-2021 DATE OF PRONOUNCEMENT 12-10-2021 O R D E R PER SAKTIJIT DEY (JM) CAPTIONED APPEAL HAS BEEN FILED BY ASSESSEE ASSAIL ING THE ORDER DATED 19- 03-2021 PASSED BY LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-8 (PCIT), MUMBAI UNDER SECTION 263 OF THE INCOME TAX ACT, 196 1 FOR THE ASSESSMENT YEAR 2011-12 (WRONGLY MENTIONED AS 2015-16 IN THE BODY O F THE ORDER). 2. AT THE OUTSET, SHRI SALIL KAPOOR, LEARNED COUNSE L FOR THE ASSESSEE, DRAWING OUR ATTENTION TO GROUND 3 RAISED A PRELIMINARY ISSU E CHALLENGING THE VALIDITY OF THE 2 ITA 640/MUM/2021 REVISION ORDER PASSED BEYOND THE PERIOD OF LIMITATI ON PRESCRIBED UNDER SECTION 263(2) OF THE ACT. 3. BEFORE WE DEAL WITH THIS ISSUE, IT IS NECESSARY TO DEAL WITH BASIC RELEVANT FACTS. BRIEFLY STATED, THE ASSESSEE IS A RESIDENT COMPANY ENGAGED IN THE BUSINESS OF CONDUCTING HORSE RACES, TURF CLUB HOUSE AND PROV IDING HOSPITALITY SERVICE TO ITS MEMBERS AND THEIR GUESTS. FOR THE ASSESSMENT YEAR U NDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 09-09-2011 DECLARING TOTAL INCOME OF RS.1,49,08,690/-. ASSESSMENT IN THE CASE OF THE ASSESSEE WAS ORIGINAL LY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 06-02-2014 DETER MINING THE TOTAL INCOME AT RS.27,23,84,049/-. AGAINST THE ASSESSMENT ORDER SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), WHEREIN, SUBSTANTIAL RELIEF WAS GRANTED TO THE ASSESSEE. WHI LE GIVING EFFECT TO THE ORDER OF LEARNED COMMISSIONER (APPEALS), THE ASSESSING OFFIC ER IN ORDER DATED 24-06-2017 DETERMINED THE INCOME AT NIL UNDER THE NORMAL PROVI SIONS OF THE ACT AND COMPUTED BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT RS.1,39,38,254/-. WHEN THE MATTER STOOD THUS, THE ASSESSING OFFICER RECEIV ED INFORMATION THAT THE ASSESSEE HAD TRANSFERRED CERTAIN RECEIPTS DIRECTLY TO ITS RESERVE UNDER THE HEAD LIFE MEMBERSHIP FEE ETC WHICH INCLUDED AN AMOUNT OF RS.2,00,50,000/- REPRESENTING CONTRIBUTION FROM CERTAIN MEMBERS TOWA RDS VARIOUS INFRASTRUCTURE FACILITIES OF THE CLUB FOR MUTUAL BENEFIT OF THE ME MBERS OF THE CLUB AND SUCH CONTRIBUTIONS ARE NON REFUNDABLE. BEING OF THE VIEW THAT THE RECEIPT OF RS.2,00,50,000/- HAS ESCAPED ASSESSMENT, THE ASSESS ING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ULTIMAT ELY PASSED AN ORDER ON 26- 12-2018 UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DETERMINING THE TOTAL INCOME AT RS.2,00,50,000/-. AGAINST THE ASSESSMENT ORDER S O PASSED, ASSESSEE PREFERRED 3 ITA 640/MUM/2021 APPEAL BEFORE LEARNED FIRST APPELLATE AUTHORITY. HO WEVER, PRESENTLY WE ARE NOT CONCERNED WITH THAT. 4. IN EXERCISE OF POWERS CONFERRED UNDER SECTION 26 3 OF THE ACT, LEARNED PCIT CALLED FOR THE ASSESSMENT RECORDS OF THE ASSESSEE F OR THE IMPUGNED ASSESSMENT YEAR. AFTER EXAMINING THE RECORD, HE WAS OF THE VI EW THAT THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT I S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE ASSESSING OFFICE R WHILE COMPLETING THE ASSESSMENT HAS NOT ENQUIRED INTO AND EXAMINED THE F OLLOWING ISSUES:- (1) NON DEDUCTION OF TAX ON PAYMENTS MADE TO CONTRA CTORS AS WELL AS PROFESSIONAL FEES AGGREGATING TO RS.2,56,529/-; (2) CASH DEPOSIT OF RS.31,95,28,429/- MADE IN SAVIN GS BANK ACCOUNT MAINTAINED AT BANK OF INDIA, MAHALAXMI BRAN CH, MUMBAI. 5. ACCORDINGLY, HE ISSUED A NOTICE UNDER SECTION 26 3 OF THE ACT REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORD ER SHOULD NOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE . IN RESPONSE TO THE SAID NOTICE, ASSESSEE FILED ITS OBJECTION VEHEMENTLY OPPO SING THE INITIATION OF PROCEEDINGS UNDER SECTION 263 OF THE ACT. HOWEVER, LEARNED PCIT DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. ULTIMATEL Y, SHE PASSED THE IMPUGNED ORDER HOLDING THE ASSESSMENT ORDER PASSED UNDER SEC TION 143(3) R.W.S. 147 OF THE ACT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY SET IT ASIDE TO THE ASSESSING OFFICER FOR FRAMING A DE NOVO ASSESSMENT. 6. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT FOR THE SPECIFIC PURPO SE OF ASSESSING THE ESCAPED INCOME OF RS.2,00,50,000/-, BEING THE CONTRIBUTION RECEIVED FROM MEMBERS TRANSFERRED TO THE RESERVE. HE SUBMITTED, THE ISSUE S ON WHICH LEARNED PCIT HELD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL FOR NON-ENQUIRY BY THE 4 ITA 640/MUM/2021 ASSESSING OFFICER WERE NEVER THE SUBJECT MATTER OF REOPENING; HENCE, THE ASSESSING OFFICER HAD NO OCCASION TO ENQUIRE INTO T HOSE ISSUES. HE SUBMITTED, IF AT ALL ANY ENQUIRY INTO THE ISSUES RAISED BY LEARNED P CIT WAS REQUIRED, IT HAD TO BE DONE AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEED INGS AND NOT DURING THE RE- ASSESSMENT PROCEEDINGS. THUS, HE SUBMITTED, THERE B EING NO ERROR IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, PROCEEDING UNDER SECTION 263 OF THE ACT WOULD NOT LIE. HE SUBM ITTED, SINCE THE LEARNED PCIT COULD NOT HAVE REVISED ORIGINAL ASSESSMENT ORDER PA SSED UNDER SECTION 143(3) OF THE ACT DUE TO BAR OF LIMITATION, SHE HAS PROCEEDED TO REVISE THE RE-ASSESSMENT ORDER. THUS, HE SUBMITTED, THE IMPUGNED ORDER OF LE ARNED PCIT IS BARRED BY LIMITATION AS PROVIDED UNDER SECTION 263(2) OF THE ACT. IN SUPPORT OF SUCH CONTENTION, LEARNED COUNSEL RELIED UPON THE FOLLOWI NG DECISIONS:- S.NO. PARTICULARS 1. CIT VS. ALAGENDRAN FINANCE LTD., [2007] 293 ITR 1 ( SC) 2. ASHOKA BUILDCON LTD. VS. ACIT, [2010] 325 ITR 574 ( BOM.) 3. CIT VS. ICICI BANK LTD., [2012] 343 ITR 74 (BOM.) 4. INDIRA INDUSTRIES VS. PCIT, [2018] 95 TAXMANN.COM 1 03 (MAD.) 5. CIT VS. LARK CHEMICALS LTD, [2014] 368 ITR 655 (BOM .) 6. CIT VS. BHARTI AIRTEL LTD., [2013] 37 TAXMANN.COM 2 18 (DEL.) 7. CIT VS. SHRIRAM ENGG. CONSTRUCTION CO. LTD., [201 1 ] 330 ITR 568 (MAD.) 8. L.G.ELECTRONICS INDIA (P.) LTD. VS. PCIT, [2016] 38 8 ITR 135 (ALL.) 5 ITA 640/MUM/2021 9. JINDAL STEEL & POWER LTD. VS. PCIT, ITAT-NEW DELHI, DATED 14.05.2020 10. MALABAR INDUSTRIAL CO. LTD. VS. CIT, [2000] 243 ITR 83 (SC) 11. CIT VS. GABRIEL INDIA LTD., [1993] 71 TAXMANN 585 ( BOM.) 12. PCIT VS. DELHI AIRPORT METRO EXPRESS PVT. LTD., DHC -DATED 05.09.20 17 13. PCIT VS. MEDICARE LTD., DHC-DATED 14.09.2017 14. ITO VS. D.G.HOUSING PROJECTS LTD., [2012] 343 ITR 32 9 (DEL.) 15. DIT VS. JYOTI FOUNDATION., [2013] 357 ITR 388 (DEL. ) 16. SHRI NARAYAN TATU RANE VS. ITO, ITAT-NEW DELHI-DATE D 06.05.2016. BRAHMA CENTER DEVELOPMENT P. LTD. VS. PCIT, ITAT-NE W DELHI- DATED 18.12.2019. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D, BEFORE THE REVISIONARY AUTHORITY THE ASSESSEE HAD MADE NO REPRESENTATION I N SUPPORT OF ITS CLAIM. SHE SUBMITTED, THE ISSUE OF LIMITATION WAS NEVER RAISED BEFORE THE REVISIONARY AUTHORITY DURING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. FURTHER, SHE SUBMITTED, SINCE LEARNED PCIT HAS SET ASIDE THE ASS ESSMENT ORDER WITH A DIRECTION TO MAKE DE NOVO ASSESSMENT, NO PREJUDICE HAS BEEN CA USED TO THE ASSESSEE. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS IN THE LIGH T OF DECISIONS RELIED UPON AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, THE ORIGINAL ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 06-02-2014. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED UNDER SEC TION 147 OF THE ACT AND 6 ITA 640/MUM/2021 NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE ON 26-03-2018. THE REASON RECORDED FOR REOPENING OF ASSESSMENT UND ER SECTION 147 OF THE ACT, A COPY OF WHICH IS AT PAGE 40 OF THE PAPER BOOK, WOUL D REVEAL THAT FOR ASSESSING THE ESCAPED INCOME OF RS.2,00,50,000/- BEING THE CONTRI BUTION RECEIVED FROM CERTAIN MEMBERS TOWARDS INFRASTRUCTURE FACILITIES, THE ASSE SSING OFFICER HAD REOPENED THE ASSESSMENT. ULTIMATELY, THE ASSESSING OFFICER COMPL ETED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ASSESSING THE ALLEGED ESCAPED INCOME OF RS.2,00,50,000/-. THUS, NEITHER THE ISSUE RELATING TO NON DEDUCTION OF TAX ON PAYMENT MADE TO CONTRACTORS AND PROFESSIONAL FEES N OR THE CASH DEPOSIT OF RS.31,95,28,429/- IN THE SAVINGS BANK ACCOUNT WERE FORMING PART OF REASONS RECORDED. IN OTHER WORDS, THE REOPENING OF ASSESSME NT WAS FOR THE SPECIFIC PURPOSE OF ASSESSING THE AMOUNT OF RS.2,00,50,000/- . THAT BEING THE CASE, IT IS NECESSARY TO EXAMINE WHETHER THE ASSESSING OFFICER IN THE RE-ASSESSMENT PROCEEDINGS COULD HAVE GONE INTO THE ASPECTS RAISED BY LEARNED PCIT. 9. A READING OF SECTION 147 OF THE ACT MAKES IT CLE AR THAT THE ASSESSING OFFICER, IN COURSE OF PROCEEDINGS UNDER THE SAID PROVISION C AN NOT ONLY ASSESS/REASSESS THE ESCAPED INCOME BASED ON WHICH THE ASSESSMENT WAS RE OPENED, BUT CAN ALSO ASSESS ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF PROCEEDINGS UNDER THE AFORESAID PROVISION. EXPLANATION 3 TO SECTION 147 O F THE ACT FURTHER CLARIFIES THE SUBSTANTIVE PROVISION BY SAYING THAT THE ASSESSING OFFICE, IN COURSE OF PROCEEDINGS UNDER THE SAID PROVISION CAN NOT ONLY ASSESS/RE-ASS ESS THE ESCAPED INCOME BASED ON WHICH THE ASSESSMENT WAS REOPENED, BUT CAN ALSO ASSESS ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THE AFORESAID PROVISION, 7 ITA 640/MUM/2021 NOTWITHSTANDING THAT SUCH ISSUE DOES NOT FORM PART OF REASONS RECORDED FOR REOPENING OF ASSESSMENT. THUS, ON A HOLISTIC READIN G OF SECTION 147 OF THE ACT IT BECOMES VERY MUCH CLEAR THAT ALONG WITH ESCAPED INC OME FOR WHICH THE ASSESSMENT WAS REOPENED, THE ASSESSING OFFICER CAN ASSESS OTHER ESCAPED INCOME WHICH SUBSEQUENTLY COMES TO HIS NOTICE IN COURSE OF RE-ASSESSMENT PROCEEDINGS. IN THE FACTS OF THE PRESENT CASE, UNDISPUTEDLY, THE ISSUES RAISED BY LEARNED PCIT NEITHER WERE THE SUBJECT MATTER OF REOPENING AS PER REASONS RECORDED, NOR DID SUCH MATTER COME TO THE NOTICE OF THE ASSESSING OFF ICER IN COURSE OF RE-ASSESSMENT PROCEEDINGS. 10. THE REOPENING OF ASSESSMENT AS CONTEMPLATED UND ER SECTION 147 OF THE ACT IS FOR THE SPECIFIC PURPOSE OF ASSESSING THE ESCAPE D INCOME. THEREFORE, IN A RE- ASSESSMENT PROCEEDING, THE ASSESSING OFFICER CAN ON LY ASSESS THAT INCOME WHICH HAS ESCAPED ASSESSMENT. THE INCOME WHICH IS SUBJECT MATTER OF ASSESSMENT IN THE ORIGINAL ASSESSMENT PROCEEDINGS OR WHICH WAS IN THE DOMAIN OF THE ASSESSING OFFICER IN COURSE OF ORIGINAL ASSESSMENT PROCEEDING S CERTAINLY CANNOT BE CONSIDERED IN THE RE-ASSESSMENT PROCEEDINGS. IN OUR VIEW, IF AT ALL, ANY ORDER WHICH CAN BE CONSIDERED TO BE ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE FOR NON CONSIDERATION OF THE ISSUES RAISED BY LEARNED PCIT, CERTAINLY, IT HAS TO BE THE ORIGINAL ASSESSMENT ORDER PASSED UNDE R SECTION 143(3) OF THE ACT AND NOT THE RE-ASSESSMENT ORDER PASSED UNDER SECTIO N 143(3) R.W.S. 147 OF THE ACT. THEREFORE, LEARNED PCIT COULD HAVE EXERCISED H ER POWERS UNDER SECTION 263 OF THE ACT ONLY IN RESPECT OF THE ORIGINAL ASSESSME NT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. AT THIS STAGE, WE MAY REFER TO THE FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT IN CASE OF CIT VS ALAGENDRAN FINANCE LTD (SUPRA): 7. A BARE PERUSAL OF THE ORDER PASSED BY THE COMMI SSIONER OF INCOME TAX WOULD CLEARLY DEMONSTRATE THAT ONLY THAT PART OF ORDER OF ASSESSM ENT WHICH RELATED TO LEASE 8 ITA 640/MUM/2021 EQUALIZATION FUND WAS FOUND TO BE PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THE PROCEEDINGS FOR REASSESSMENT HAVE NOTHING TO DO WIT H THE SAID HEAD OF INCOME. DOCTRINE OF MERGER, THEREFORE, WOULD NOT APPLY IN A CASE OF THIS NATURE. 8. FURTHERMORE, EXPLANATION (C) APPENDED TO SUB-SEC TION (1) OF SECTION 263 OF THE ACT IS CLEAR AND UNAMBIGUOUS AS IN TERMS THEREOF DOCTRINE OF MERGER APPLIES ONLY IN RESPECT OF SUCH ITEMS WHICH WERE THE SUBJECT MATTER OF APPEAL AND NOT WHICH WERE NOT. THE QUESTION CAME UP FOR CONSIDERATION BEFORE THIS COUR T IN COMMISSIONER OF INCOME TAX V. SUN ENGINEERING WORKS P. LTD. [198 ITR 297]. THEREIN THE ASSESSEE RAISED A CONTE NTION THAT ONCE JURISDICTION UNDER SECTION 147 OF THE ACT IS INVOKED, THE WHOLE ASSESSMENT PROCEEDING BECAME REOPENED, WHICH WAS NEGATIVED BY THE COURT OPINING: 'SECTION 147, WHICH IS SUBJECT TO SECTION 148, DIVI DES CASES OF INCOME ESCAPING ASSESSMENT INTO TWO CLAUSES I.E. VIZ. (A) THOSE DUE TO THE NON- SUBMISSION OF RETURN OF INCOME OR NON-DISCLOSURE OF TRUE AND FULL FACTS AND (B) OTHER INSTANCES. EXPLANATION (1) DEFINES AS TO WHAT CONSTITUTES ESCAPE OF ASSESSMENT . IN ORDER TO INVOKE JURISDICTION UNDER SECTION 147(A) OF THE ACT, THE ITO MUST HAVE REASON TO BELIEVE THAT SOME INCOME CHARGEABLE TO TAX OF AN ASSESSEE HAS ESCAPED ASSESS MENT BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE EITHER TO MAKE A RETURN UNDER SECTION 139 FOR THE RELEVANT ASSESSMENT YEAR OR TO DISCLOSE FULLY AND T RULY MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT YEAR. BOTH THE CONDITIONS MUST EXIST BEFORE AN ITO CAN PROCEED TO EXERCISE JURISDICTION UNDER SECTION 147(A) OF THE A CT. UNDER SECTION 147(B) THE INCOME- TAX OFFICER ALSO HAS THE JURISDICTION TO INITIATE P ROCEEDINGS FOR REASSESSMENT WHERE HE HAS REASON TO BELIEVE, ON THE BASIS OF INFORMATION IN HIS POSSESSION, THAT INCOME CHARGEABLE TO TAX HAS BEEN EITHER UNDER- ASSESSED O R HAS BEEN ASSESSED AT TOO LOW A RATE OR HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELI EF UNDER THE ACT OR EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE HAS BEEN COMPUTED. IN EITHER CASE WHETHER THE INCOME-TAX OFFICER INVOKES HIS JURISDICTION UNDER CLAUSE (A) O R CLAUSE (B) OR BOTH, THE PROCEEDINGS FOR BRINGING TO TAX AN 'ESCAPED ASSESSMENT' CAN ONL Y COMMENCE BY ISSUANCE OF A NOTICE UNDER SECTION 148 OF THE ACT WITHIN THE TIME PRESCR IBED UNDER THE ACT. THUS, UNDER SECTION 147, THE ASSESSING OFFICER HAS BEEN VESTED WITH THE POWER TO 'ASSESS OR REASSESS' THE ESCAPED INCOME OF AN ASSESSEE. THE US E OF THE EXPRESSION 'ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE THE LOSS OR DEPRE CIATION ALLOWANCE' IN SECTION 147 AFTER THE CONDITIONS FOR REASSESSMENT ARE SATISFIED , IS ONLY RELATABLE TO THE PRECEDING EXPRESSION IN CLAUSES (A) AND (B) VIZ., 'ESCAPED AS SESSMENT'. THE TERM 'ESCAPED ASSESSMENT' INCLUDES BOTH 'NON- ASSESSMENT' AS WELL AS 'UNDER ASSESSMENT'. INCOME IS SAID TO HAVE 'ESCAPED ASSESSMENT' WITHIN THE MEANIN G OF THIS SECTION WHEN IT HAS NOT BEEN CHARGED IN THE HANDS OF AN ASSESSEE IN THE REL EVANT YEAR OF ASSESSMENT. 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 SECTION 147 BECAUSE THE ASSESSMENT HAD NOT BEEN MADE IN THE REG ULAR MANNER UNDER THE ACT. THE EXPRESSION 'REASSESS' REFERS TO A SITUATION WHERE A N ASSESSMENT HAS ALREADY BEEN MADE BUT THE INCOME-TAX OFFICER HAS, ON THE BASIS OF INF ORMATION IN HIS POSSESSION, REASON TO BELIEVE THAT THERE HAS BEEN UNDER ASSESSMENT ON ACC OUNT OF THE EXISTENCE OF ANY OF THE GROUNDS CONTEMPLATED BY THE PROVISIONS OF SECTION 1 47(B) READ WITH THE EXPLANATION (I) THERETO.' 9. WE MAY AT THIS JUNCTURE ALSO NOTICE THE DECISION OF THIS COURT IN HIND WIRE INDUSTRIES LTD (SUPRA) WHEREIN THE DECISION OF THIS COURT IN V . JAGANMOHAN RAO V. CIT AND CEPT [75 ITR 373] INTERPRETING THE PROVISIONS OF SECTION 34 OF THE ACT WAS REPRODUCED WHICH 9 ITA 640/MUM/2021 READS AS UNDER: 'SECTION 34 IN TERMS STATES THAT ON CE THE INCOME- TAX OFFICER DECIDES TO REOPEN THE ASSESSMENT, HE COULD DO SO WITHIN THE PE RIOD PRESCRIBED BY SERVING ON THE PERSON LIABLE TO PAY TAX A NOTICE CONTAINING ALL OR ANY OF THE REQUIREMENTS WHICH MAY BE INCLUDED IN A NOTICE UNDER SECTION 22(2) AND MAY PR OCEED TO ASSESS OR REASSESS SUCH INCOME, PROFITS OR GAINS. IT IS, THEREFORE, MANIFES T THAT ONCE ASSESSMENT IS REOPENED BY ISSUING A NOTICE UNDER SUB-SECTION (2) OF SECTION 2 2, THE PREVIOUS UNDERASSESSMENT IS SET ASIDE AND THE WHOLE ASSESSMENT PROCEEDINGS START AF RESH. WHEN ONCE VALID PROCEEDINGS ARE STARTED UNDER SECTION 34(1)(B), THE INCOME-TAX OFFICER HAD NOT ONLY THE JURISDICTION, BUT IT WAS HIS DUTY TO LEVY TAX ON THE ENTIRE INCOM E THAT HAD ESCAPED ASSESSMENT DURING THAT YEAR.' 10. THERE MAY NOT BE ANY DOUBT OR DISPUTE THAT ONCE AN ORDER OF ASSESSMENT IS REOPENED, THE PREVIOUS UNDERASSESSMENT WILL BE HELD TO BE SET ASIDE AND THE WHOLE PROCEEDINGS WOULD START AFRESH BUT THE SAME WOULD N OT MEAN THAT EVEN WHEN THE SUBJECT MATTER OF REASSESSMENT IS DISTINCT AND DIFF ERENT, THE ENTIRE PROCEEDING OF ASSESSMENT WOULD BE DEEMED TO HAVE BEEN REOPENED. 11. IN SUN ENGINEERING WORKS P. LTD (SUPRA) ALSO, V . JAGANMOHAN RAO (SUPRA) WAS NOTICED STATING: 'THE PRINCIPLE LAID DOWN BY THIS COURT IN JAGANMOHA N RAO'S CASE, THEREFORE, IS ONLY TO THE EXTENT THAT ONCE AN ASSESSMENT IS VALIDLY REOPE NED BY ISSUANCE OF A NOTICE UNDER SECTION 22(2) OF THE 1922 ACT (CORRESPONDING TO SEC TION 148 OF THE ACT) THE PREVIOUS UNDER ASSESSMENT IS SET ASIDE AND THE ITO HAS THE 1 3 ITA 1307/MUM/2020 JURISDICTION AND DUTY TO LEVY TAX ON THE ENTIRE INCOME THAT HAD ESCAPED ASSESSMENT DURING THE PREVIOUS YEAR THE JUDGMENT IN JAGANMOHAN RAO'S CASE , THEREFORE, CANNOT BE READ TO IMPLY AS LAYING DOWN THAT IN THE REASSESSMENT PROCE EDINGS VALIDLY INITIATED, THE ASSESSEE CAN SEEK REOPENING OF THE WHOLE ASSESSMENT AND CLAI M CREDIT IN RESPECT OF ITEMS FINALLY CONCLUDED IN THE ORIGINAL ASSESSMENT. THE ASSESSEE CANNOT CLAIM RECOMPUTATION 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. OF COURSE, IN THE REASSESS MENT PROCEEDINGS IT IS OPEN TO AN ASSESSEE TO SHOW THAT THE INCOME ALLEGED TO HAVE ES CAPED ASSESSMENT HAS IN TRUTH AND IN FACT NOT ESCAPED ASSESSMENT BUT THAT THE SAME HA D BEEN SHOWN UNDER SOME INAPPROPRIATE HEAD IN THE ORIGINAL RETURN, BUT TO R EAD THE JUDGMENT IN JAGANMOHAN RAO'S CASE, AS IF LAYING DOWN THAT REASSESSMENT WIPES OUT THE ORIGINAL ASSESSMENT AND THAT REASSESSMENT IS NOT ONLY CONFINED TO 'ESCAPED ASSES SMENT' OR 'UNDER ASSESSMENT' BUT TO THE ENTIRE ASSESSMENT FOR THE YEAR AND STARTS TH E ASSESSMENT PROCEEDING DE NOVO GIVING THE RIGHT TO AN ASSESSEE TO REAGITATE MATTER S WHICH HE HAD LOST DURING THE ORIGINAL ASSESSMENT PROCEEDING, WHICH HAD ACQUIRED FINALITY, IS NOT ONLY ERRONEOUS BUT ALSO AGAINST THE PHRASEOLOGY OF SECTION 147 OF THE ACT A ND THE OBJECT OF REASSESSMENT PROCEEDINGS. SUCH AN INTERPRETATION WOULD BE READIN G THAT JUDGMENT TOTALLY OUT OF CONTEXT IN WHICH THE QUESTIONS AROSE FOR DECISION I N THAT CASE. IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WORD OR A SENTENCE FROM T HE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATIO N AND TREAT IT TO BE THE COMPLETE 'LAW' DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERE D IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION OF THIS CO URT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDE RED AND WHILE APPLYING THE DECISION TO A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCE RTAIN THE TRUE PRINCIPLE LAID DOWN BY THE 10 ITA 640/MUM/2021 DECISION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTENCES FROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTIONS UNDER CO NSIDERATION BY THIS COURT, TO SUPPORT THEIR REASONINGS' IT WAS FURTHERMORE HELD: 'AS A RESULT OF THE AFORESAID DISCUSSION, WE FIND T HAT 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 ADDITION TO THAT ITEM O R ITEMS WHICH HAVE LED TO THE ISSUANCE OF NOTICE UNDER SECTION 148 AND WHERE RESS ESSMENT IS MADE UNDER SECTION 147 IN RESPECT OF INCOME WHICH HAS ESCAPED TAX, THE INC OME TAX OFFICER'S JURISDICTION IS CONFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDER-ASSESSED AND DOES NOT EXTEND TO REVISING, REOPENING OR RECONSIDE RING THE WHOLE ASSESSMENT OR PERMITTING THE ASSESSEE TO REAGITATE QUESTIONS WHIC H HAD BEEN DECIDED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IT IS ONLY THE UNDER- ASSES SMENT 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 W ITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT-MATTER OF PROCEEDINGS UNDER SECTION 147' 12. WE MAY AT THIS JUNCTURE ALSO TAKE NOTE OF THE F ACT THAT EVEN THE TRIBUNAL FOUND THAT ALL THE SUBSEQUENT EVENTS WERE IN RESPECT OF THE MA TTERS OTHER THAN THE ALLOWANCE OF 'LEASE EQUALIZATION FUND'. THE SAID FINDING OF FACT IS BINDING ON US. DOCTRINE OF MERGER, THEREFORE, IN THE FACT SITUATION OBTAINING HEREIN C ANNOT BE SAID TO HAVE ANY APPLICATION WHATSOEVER. IT IS NOT A CASE WHERE THE SUBJECT MATT ER OF REASSESSMENT AND SUBJECT MATTER OF ASSESSMENT WERE THE SAME. THEY WERE NOT. 13. IT MAY BE OF SOME INTEREST TO NOTICE THAT A SIM ILAR CONTENTION RAISED AT THE INSTANCE OF AN ASSESSEE WAS REJECTED BY A 3-JUDGE BENCH OF T HIS COURT IN COMMISSIONER OF INCOME-TAX V. SHRI ARBUDA MILLS LTD. [231 ITR 50]. THIS COURT TOOK NOTE OF THE AMENDMENT MADE IN SECTION 263 OF THE ACT BY THE FIN ANCE ACT, 1989 WITH RETROSPECTIVE EFFECT FROM JUNE 1, 1988, INSERTING EXPLANATION (C) TO SUB-SECTION (1) OF SECTION 263 OF THE ACT STATING: 'THE CONSEQUENCE OF THE SAID AMEND MENT MADE WITH RETROSPECTIVE EFFECT IS THAT THE POWERS UNDER SECTION 263 OF THE COMMISSIONER SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS A S HAD NOT BEEN CONSIDERED AND DECIDED IN AN APPEAL. ACCORDINGLY, EVEN IN RESPECT OF THE AFORESAID THREE ITEMS, THE POWERS OF THE COMMISSIONER UNDER SECTION 263 SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO THEM BECAUSE THE SAME HAD NOT B EEN CONSIDERED AND DECIDED IN THE APPEAL FILED BY THE ASSESSEE. THIS IS SUFFICIEN T TO ANSWER THE QUESTION WHICH HAS BEEN REFERRED.' WE, THEREFORE, ARE CLEARLY OF THE OPINION THAT IN A CASE OF THIS NATURE, THE DOCTRINE OF MERGER WILL HAVE NO APPLICATION. 14. THE MADRAS HIGH COURT IN A.K. THANGA PILLAI (SU PRA), IN OUR OPINION, HAS RIGHTLY CONSIDERED THE MATTER ALBEIT UNDER SECTION 17 OF TH E WEALTH TAX ACT, 1957 WHICH IS IN PARI MATERIA WITH THE PROVISIONS OF THE ACT. RELYIN G ON SUN ENGINEERING WORKS P. LTD (SUPRA), IT WAS HELD: 'UNDER SECTION 17 OF THE WEAL TH-TAX ACT, 1957, EVEN AS IT IS UNDER SECTION 147 OF THE INCOME-TAX ACT, PROCEEDINGS FOR REASSESSMENT CAN BE INITIATED WHEN WHAT IS ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT FO R ANY ASSESSMENT YEAR. THE POWER TO DEAL WITH UNDERASSESSMENT AND THE SCOPE OF REASS ESSMENT PROCEEDINGS AS EXPLAINED BY THE SUPREME COURT IN THE CASE OF SUN ENGINEERING [1992] 198 ITR 297, IS IN RELATION TO THAT WHICH HAS ESCAPED ASSESSMENT, AND DOES NOT EXT END TO REOPENING THE ENTIRE 11 ITA 640/MUM/2021 ASSESSMENT FOR THE PURPOSE OF REDOING THE SAME DE N OVO. AN ASSESSEE CANNOT AGITATE IN ANY SUCH REASSESSMENT PROCEEDINGS MATTERS FORMING P ART OF THE ORIGINAL ASSESSMENT WHICH ARE NOT REQUIRED TO BE DEALT WITH FOR THE PUR POSE OF LEVYING TAX ON THAT WHICH HAD ESCAPED TAX EARLIER. CASES OF UNDERASSESSMENT ARE A LSO TREATED AS INSTANCES OF ESCAPED ASSESSMENT. THE ORDER OF REASSESSMENT IS ONE WHICH DEALS WITH THE ASSESSMENT ALREADY MADE IN RESPECT OF ITEMS WHICH ARE NOT REQUIRED TO BE REOPENED, AS ALSO MATTERS WHICH ARE REQUIRED TO BE DEALT WITH IN ORDER TO BRING WHA T HAD ESCAPED IN THE EARLIER ORDER OF ASSESSMENT, TO ASSESSMENT. AN ASSESSEE WHO HAS FAIL ED TO FILE AN APPEAL AGAINST THE ORIGINAL ORDER OF ASSESSMENT CANNOT UTILISE THE REA SSESSMENT PROCEEDINGS AS AN OCCASION FOR SEEKING REVISION OR REVIEW OF WHAT HAD BEEN ASS ESSED EARLIER. HE MAY ONLY QUESTION THE EXTENT OF THE REASSESSMENT IN SO FAR AS THE ESC APED ASSESSMENT IS CONCERNED. THE REVENUE IS SIMILARLY BOUND' THE SAME PRINCIPLE WAS REITERATED BY A DIVISION BENCH OF THE CALCUTTA HIGH COURT IN COMMISSIONER OF INCOME-TAX V . KANUBHAI ENGINEERS (P.) LTD. [241 ITR 665]. 15. WE, THEREFORE, ARE CLEARLY OF THE OPINION THAT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THIS CASE AND, IN PARTICULAR, HAVI NG REGARD TO THE FACT THAT THE COMMISSIONER OF INCOME TAX EXERCISING ITS REVISIONA L JURISDICTION REOPENED THE ORDER OF ASSESSMENT ONLY IN RELATION TO LEASE EQUALIZATION F UND WHICH BEING NOT THE SUBJECT OF THE REASSESSMENT PROCEEDINGS, THE PERIOD OF LIMITATION PROVIDED FOR UNDER SUB-SECTION (2) OF SECTION 263 OF THE ACT WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ASSESSMENT AND NOT FROM THE ORDER OF REASSESSMENT. THE REVISIONAL JURISDICTION HAVING, THUS, BEEN INVOKED BY THE COMMISSIONER OF INCOME TAX BEYOND TH E PERIOD OF LIMITATION, IT WAS WHOLLY WITHOUT JURISDICTION RENDERING THE ENTIRE PR OCEEDING A NULLITY. 11. FOLLOWING THE AFORESAID DECISION OF THE HONBLE SUPREME COURT, THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF SOKA BUILDCON LTD VS ACIT (SUPRA), HAS HELD, AS UNDER:- 7) SECTION 263 EMPOWERS THE COMMISSIONER TO CALL F OR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND TO PASS SUCH ORDERS A S THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING, MODIFYING OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT, IF HE CONSIDERS THAT ANY ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. SUB- SECTION (2) OF SECTION 263 STIPULATES THAT NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE F INANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. THAT PERIOD OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORIGINAL ORDER OF ASSESSMENT DATE D 27 DECEMBER 2006 WAS PASSED, HAS EXPIRED ON 31 MARCH 2009. HENCE THE EXERCISE OF THE REVISIONAL JURISDICTION IN RESPECT OF THE ORIGINAL ORDER OF REASSESSMENT IS BARRED BY LIM ITATION. THIS IS SOUGHT TO BE OBVIATED BY THE COMMISSIONER O F INCOME TAX BY SEEKING TO REVISE, UNDER SECTION 263, THE ORDER DATED 27 DECEMBER 2007 . THE ORDER DATED 27 DECEMBER, 2007 WAS PASSED AFTER THE ASSESSMENT WAS REOPENED O N THE GROUND OF AN ESCAPEMENT OF INCOME UNDER SECTION 147 AND AN ORDER OF REASSES SMENT WAS PASSED BY WHICH THE CLAIM UNDER SECTION 72A CAME TO BE DISALLOWED. THE SUBMISSION THAT HAS BEEN URGED ON BEHALF OF THE ASSESSEE IS THAT, SINCE THE ASSESSMEN T WAS OPENED AND AN ORDER OF REASSESSMENT WAS PASSED ONLY ONE ISSUE NAMELY, THE CLAIM UNDER SECTION 72A, WHEN THE 12 ITA 640/MUM/2021 COMMISSIONER AS A REVISIONAL AUTHORITY UNDER SECTIO N 263 SEEKS TO EXERCISE HIS JURISDICTION ON MATTERS WHICH DID NOT FORM THE SUBJ ECT OF THE ORDER OF REASSESSMENT, THE PERIOD OF LIMITATION WOULD BEGIN TO RUN FROM THE OR IGINAL ORDER OF ASSESSMENT. THIS SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE AS SESSEE WOULD HAVE TO BE ACCEPTED IN VIEW OF THE JUDGMENT OF THE SUPREME COURT IN COM MISSIONER OF INCOME TAX V/S. ALAGENDRAN FINANCE LTD. THE ISSUE WHICH AROSE BEFOR E THE SUPREME COURT WAS WHETHER, FOR THE PURPOSE OF COMPUTING THE PERIOD OF LIMITATI ON ENVISAGED UNDER SUB-SECTION (1) OF SECTION 263, THE DATE OF THE ORDER OF ASSESSMENT OR OF THE ORDER OF REASSESSMENT IS TO BE TAKEN INTO CONSIDERATION. IN THAT CASE, THE ASSESSE E FILED ITS RETURN FOR ASSESSMENT YEARS 1994-95, 1995-96 AND 1996-97 AND THE ASSESSMENTS WE RE COMPLETED ON 27 FEBRUARY 1997, 12 MAY 1997 AND 30 MARCH 1998. IN THE ORDERS OF ASSESSMENT, THE RETURN OF THE ASSESSEE UNDER THE HEAD OF 'LEASE EQUALISATION FUND ' WERE ACCEPTED. PROCEEDINGS FOR REASSESSMENT WERE INITIATED BY THE ASSESSING OFFICE R AND ORDERS OF REASSESSMENT WERE PASSED IN RESPECT OF THE FOLLOWING ITEMS NAMELY (I) EXPENSES CLAIMED FOR SHARE ISSUE; (II) BAD AND DOUBTFUL DEBTS; AND (III) EXCESS DEPRECIATI ON ON GAS CYLINDERS AND GOODS CONTAINERS. THOUGH THE RETURN OF INCOME IN RESPECT OF THE 'LEASE EQUALISATION FUND' WAS NOT THE SUBJECT MATTER OF THE REASSESSMENT PROCEEDI NGS, THE COMMISSIONER OF INCOME TAX INVOKED HIS REVISIONAL JURISDICTION UNDER SECTI ON 263 AND BY HIS ORDER CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT FURNISHED COMP LETE DETAILS AND THE ORDER OF THE ASSESSING OFFICER WAS PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE TRIBUNAL HELD THAT THE ORDER WHICH WAS PASSED UNDER SECTION 263 ON 29 MARCH 2004 WAS BARRED BY LIMITATION. THE SUPREME COURT HELD THAT THE COMMISS IONER OF INCOME TAX, WHILE EXERCISING HIS JURISDICTION UNDER SECTION 263 FOUND THAT ONLY THAT PART OF THE ORDER OF ASSESSMENT WHICH RELATED TO THE LEASE EQUALISATION FUND WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT THE PROCEEDINGS FOR REASSESSMEN T HAD NOTHING TO DO WITH THE SAID HEAD OF INCOME. THE SUPREME COURT CLEARLY HELD THAT THE DOCTRINE OF MERGER WAS NOT ATTRACTED TO A CASE OF THAT NATURE. THE SUPREME COURT FOLLOWED ITS EARLIER JUDGMENT IN C.I.T. V/S. SUN ENGINEERING CO. PVT. LTD.2 AND HELD THAT THE TRIBUNAL HAD FOUND THAT ALL THE SUBSEQUENT EVENTS WERE IN RESPECT OF MATTERS OTHER THAN THE LEASE EQUALISATIO N FUND. IN OTHER WORDS, THIS WAS NOT A CASE WHERE THE SUBJECT MATTER OF THE 17 ITA 1307/MU M/2020 ASSESSMENT AND THE REASSESSMENT WAS THE SAME. THE SUPREME COURT THEN H ELD AS FOLLOWS:- 'WE, THEREFORE, ARE CLEARLY OF THE OPINION THAT KE EPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THIS CASE AND, IN PARTICULAR, HAVI NG REGARD TO THE FACT THAT THE COMMISSIONER OF INCOME-TAX EXERCISING HIS REVISIONA L JURISDICTION REOPENED THE ORDER OF ASSESSMENT ONLY IN RELATION TO LEASE EQUALISATION F UND WHICH BEING NOT THE SUBJECT OF REASSESSMENT PROCEEDINGS, THE PERIOD OF LIMITATION PROVIDED FOR UNDER SUB-SECTION (2) OF SECTION 263 OF THE ACT WOULD BEGIN TO RUN FROM THE DATE OF THE ORDER OF ASSESSMENT AND NOT FROM THE ORDER OF REASSESSMENT. THE REVISIONAL JURISDICTION HAVING, THUS BEEN INVOKED BY THE COMMISSIONER OF INCOME-TAX BEYOND TH E PERIOD OF LIMITATION, IT WAS WHOLLY WITHOUT JURISDICTION RENDERING THE ENTIRE PR OCEEDING A NULLITY. ' 8) WHERE AN ASSESSMENT HAS BEEN REOPENED UNDER SECT ION 147 IN RELATION TO A PARTICULAR GROUND OR IN RELATION TO CERTAIN 2 (1992) 198 I.T.R . 297 SPECIFIED GROUNDS AND, SUBSEQUENT TO THE PASSING OF THE ORDER OF REASSESSM ENT, THE JURISDICTION UNDER SECTION 263 IS SOUGHT TO BE EXERCISED WITH REFERENCE TO ISS UES WHICH DO NOT FORM THE SUBJECT OF THE REOPENING OF THE ASSESSMENT OR THE ORDER OF REA SSESSMENT, THE PERIOD OF LIMITATION PROVIDED FOR IN SUB-SECTION (2) OF SECTION 263 WOUL D COMMENCE FROM THE DATE OF THE 13 ITA 640/MUM/2021 ORDER OF ASSESSMENT AND NOT FROM THE DATE ON WHICH THE ORDER REOPENING THE REASSESSMENT HAS BEEN PASSED. 9) SECTION 147 EMPOWERS THE ASSESSING OFFICER, IF H E HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR TO ASSESS OR REASSESS THE SAID INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. EXPLANATION 3 WHICH HAS BEEN INSERTED BY THE FINANCE ACT (NO.2) OF 2009 WITH RETROSPECTIVE EFFECT FROM 1 APRIL, 1989 PROVIDES THAT FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THE SEC TION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE WHICH HAS ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY, IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SECTION (2) OF SECTION 1 48. THE SUBSTANTIVE PART OF SECTION 147 EMPOWERS THE ASSESSING OFFICER TO ASSESS OR REA SSESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND ANY OTHER INCOME W HICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THE SECTION. THE EFFECT OF EXPLANATION 3 IS TO EMPOWER THE ASSES SING OFFICER TO ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO THE N OTICE IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION, THOUGH THE REASONS W HICH WERE 18 ITA 1307/MUM/2020 RECORDED IN THE NOTICE UNDER SECTION 148(2) DID NOT CONTAIN REFERENCE TO THAT ISSUE. 10) THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF O F THE REVENUE IS THAT WHEN SEVERAL ISSUES ARE DEALT WITH IN THE ORIGINAL ORDER OF ASSE SSMENT AND ONLY ONE OR MORE OF THEM ARE DEALT WITH IN THE ORDER OF REASSESSMENT PASSED AFTER THE ASSESSMENT HAS BEEN REOPENED, THE REMAINING ISSUES MUST BE DEEMED TO HA VE BEEN DEALT WITH IN THE ORDER OF REASSESSMENT. HENCE, IT HAS BEEN URGED THAT THE OMI SSION OF THE ASSESSING OFFICER, WHILE MAKING AN ORDER OF REASSESSMENT TO DEAL WITH THOSE ISSUES UNDER SECTION 143 (3) READ WITH 147 CONSTITUTES AN ERROR WHICH CAN BE REVISED IN EXERCISE OF THE JURISDICTION UNDER SECTION 263. THE SUBMISSION CANNOT BE ACCEPTED EITH ER AS A MATTER OF FIRST PRINCIPLE, BASED ON A PLAIN READING OF THE PROVISIONS OF SECTI ONS 147 AND 263, NOR IS IT SUSTAINABLE IN VIEW OF THE LAW LAID DOWN BY THE SUPREME COURT. THE SUPREME COURT HAS NOW CLEARLY HELD IN THE DECISION IN ALAGENDRAN FINANCE THAT THE DOCTRINE OF MERGER DOES NOT APPLY WHERE THE SUBJECT MATTER OF REASSESSMENT AND OF THE ORIGINAL ORDER OF ASSESSMENT IS NOT ONE AND THE SAME. IN OTHER WORDS, WHERE THE ASSESSM ENT IS SOUGHT TO BE REOPENED ONLY ONE ONE OR MORE SPECIFIC GROUNDS AND THE REASSESSME NT IS CONFINED TO ONE OR MORE OF THOSE GROUNDS, THE ORIGINAL ORDER OF ASSESSMENT WOU LD CONTINUE TO HOLD THE FIELD, SAVE AND EXCEPT FOR THOSE GROUNDS ON WHICH A REASSESSMEN T HAS BEEN MADE UNDER SECTION 143(3) READ WITH SECTION 147. CONSEQUENTLY, AN APPE AL BY THE ASSESSEE ON THOSE GROUNDS ON WHICH THE ORIGINAL ORDER OF ASSESSMENT W AS PASSED AND WHICH DO NOT FORM THE SUBJECT OF REASSESSMENT WOULD CONTINUE TO SUBSI ST AND WOULD NOT ABATE. THE ORDER OF ASSESSMENT CANNOT BE REGARDED AS BEING SUBSUMED WITHIN THE ORDER OF REASSESSMENT IN RESPECT OF THOSE ITEMS WHICH DO NOT FORM PART OF THE ORDER OF REASSESSMENT. WHERE A REASSESSMENT HAS BEEN MADE PU RSUANT TO A NOTICE UNDER SECTION 148, THE ORDER OF REASSESSMENT PREVAILS IN RESPECT OF THOSE ITEMS WHICH FORM PART OF REASSESSMENT. ON ITEMS WHICH DO NOT FORM PART OF TH E REASSESSMENT, THE ORIGINAL ASSESSMENT CONTINUES TO HOLD THE FIELD. WHEN THE ASSESSING OFFICER REOPENS AN ASSESSMENT ON A PARTICULAR ISSUE, IT IS OPEN TO HIM TO MAKE A REASSESSMENT ON THAT ISSUE AS WELL AS IN RESPECT OF OTHER ISSUES WHICH 14 ITA 640/MUM/2021 SUBSEQUENTLY COME TO HIS NOTICE DURING THE COURSE O F THE PROCEEDINGS UNDER SECTION 147. THE SUBMISSION OF THE REVENUE IS THAT BY NOT P ASSING AN ORDER OF REASSESSMENT IN RESPECT OF OTHER INDEPENDENT ISSUES, THE ORDER OF T HE ASSESSING OFFICER CAN BE CONSTRUED TO BE ERRONEOUS AND TO BE PREJUDICIAL TO THE INTERE ST OF THE REVENUE WITHIN THE MEANING OF SECTION 263. THE SUBMISSION CANNOT BE ACCEPTED I N THE FACTS OF THE PRESENT CASE. THE SUBSTANTIVE PART OF SECTION 147 AS WELL AS EXPLANAT ION 3 ENABLES THE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX WHICH H E HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND OTHER INCOME WHICH HAS ESCAPED ASSES SMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE 19 ITA 130 7/MUM/2020 PROCEEDINGS UNDER THE SECTION. THERE IS NOTHING ON THE RECORD OF THE PRES ENT CASE TO INDICATE THAT THERE WAS ANY OTHER INCOME WHICH HAD COME TO THE NOTICE OF TH E ASSESSING OFFICER AS HAVING ESCAPED ASSESSMENT IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 147 AND WHEN HE PASSED THE ORDER OF REASSESSMENT. THE COMMISSIONER, WHEN HE EXERCISED HIS JURISDICTION UNDER SECTION 263, IN THE FACTS OF THE PRESENT CASE , WAS UNDER A BAR OF LIMITATION SINCE LIMITATION WOULD BEGIN TO RUN FROM THE DATE ON WHIC H THE ORIGINAL ORDER OF ASSESSMENT WAS PASSED. WE MUST HOWEVER CLARIFY THAT THE BAR OF LIMITATION IN THIS CASE ARISES BECAUSE THE REVISIONAL JURISDICTION UNDER SECTION 2 63 IS SOUGHT TO BE EXERCISED IN RESPECT OF ISSUES WHICH DID NOT FORM THE SUBJECT MATTER OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 143(3) READ WITH 147. IN RESPECT OF THOSE I SSUES, LIMITATION WOULD COMMENCE WITH REFERENCE TO THE ORIGINAL ORDER OF ASSESSMENT. IF THE EXERCISE OF THE REVISIONAL JURISDICTION UNDER SECTION 263 WAS TO BE IN RESPECT OF ISSUES WHICH FORMED THE SUBJECT MATTER OF THE REASSESSMENT, AFTER THE ORIGINAL ASSE SSMENT WAS REOPENED, THE COMMENCEMENT OF LIMITATION WOULD BE WITH REFERENCE TO THE ORDER OF REASSESSMENT. THE PRESENT CASE DOES NOT FALL IN THAT CATEGORY. 11) COUNSEL APPEARING ON BEHALF OF THE REVENUE RELI ED UPON THE JUDGMENT OF THE SUPREME COURT IN INCOME TAX OFFICER V/S. K.L. SRIHA RI (UHF)3. THAT WAS A CASE WHERE AN ASSESSMENT WAS REOPENED UNDER SECTION 147. THE SUPR EME COURT, AFTER CONSIDERING THE ORIGINAL ORDER OF ASSESSMENT DATED 19 MARCH 1983 AN D THE ORDER OF REASSESSMENT DATED 16 JULY 1987 PASSED UNDER SECTION 147 HELD THAT THE SUBSEQUENT ORDER MADE A FRESH ASSESSMENT OF THE ENTIRE INCOME OF THE ASSESSEE. ON CE, IN THE EXERCISE OF THE POWER UNDER SECTION 147, THE ASSESSING OFFICER HAD REASSE SSED THE ENTIRE INCOME OF THE ASSESSEE, THE SUPREME COURT HELD THAT THE ORIGINAL ORDER WOULD STAND EFFACED BY THE SUBSEQUENT ORDER. SRIHARI WAS, THEREFORE, A CASE WH ERE THE SUBJECT MATTER OF THE ORIGINAL ORDER OF ASSESSMENT AS WELL AS OF THE ORDER OF REAS SESSMENT WAS THE SAME. THIS IS DISTINCT FROM THE SITUATION IN THE SUBSEQUE NT JUDGMENT OF 3 (2001) 118 TAXMAN 890 (S.C.) ALAGENDRAN FINANCE WHERE THE SUPREME COU RT NOTED THAT THE SUBJECT MATTER OF THE ORIGINAL ASSESSMENT AND THE ORDER OF REASSES SMENT WAS NOT THE SAME. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THOSE IN ALAGENDRAN FINANCE WHICH MUST, THEREFORE, APPLY. 12) FOR THESE REASONS, WE ARE OF THE VIEW THAT THE EXERCISE OF THE REVISIONAL JURISDICTION UNDER SECTION 263 IS BARRED BY LIMITATION. WE CLARI FY THAT THIS WOULD NOT PRECLUDE THE REVENUE FROM TAKING RECOURSE TO ANY OTHER REMEDY TH AT MAYBE AVAILABLE IN LAW. 12. THE OTHER DECISIONS CITED BY LEARNED COUNSEL FO R THE ASSESSEE ALSO PROPOUND SIMILAR LEGAL PRINCIPLE. THUS, IN OUR VIEW , THE ORIGINAL ASSESSMENT ORDER 15 ITA 640/MUM/2021 HAVING BEEN PASSED ON 06-02-2014, THE IMPUGNED ORDE R PASSED UNDER SECTION 263 OF THE ACT IS BARRED BY LIMITATION IN VIEW OF SECTI ON 263(2) OF THE ACT. AT THIS STAGE, WE CONSIDER IT OUR DUTY TO DEAL WITH THE SUBMISSION S OF LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE DID NOT REPRESENT ITS CASE BEFORE LEARNED PCIT AND DID NOT RAISE THE ISSUE OF LIMITATION. ON PERUS AL OF RECORDS, IT IS SEEN THAT LEARNED PCIT ISSUED THE SHOW CAUSE NOTICE UNDER SEC TION 263 OF THE ACT ON 08-03- 2021 AND PASSED THE IMPUGNED ORDER ON 19-03-2021 WI TH UNDUE HASTE. IN FACT, THE ASSESSEE HAS RAISED SPECIFIC GROUNDS BEFORE US, BEING GROUNDS 8 AND 9, TO THE EFFECT THAT NEITHER HEARING NOTICE WAS ISSUED TO TH E ASSESSEE NOR ANY OPPORTUNITY OF BEING HEARD WAS PROVIDED. THUS, WE DO NOT FIND M ERIT IN THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE. 13. SINCE WE HAVE HELD THAT THE IMPUGNED ORDER PASS ED UNDER SECTION 263 OF THE ACT IS BARRED BY LIMITATION, THE CONSEQUENCE WO ULD BE, IT HAS TO BE DECLARED AS INVALID AND THE ASSESSMENT ORDER HAS TO BE RESTORED . ACCORDINGLY, WE DO SO. 14. IN VIEW OF OUR DECISION ABOVE, VARIOUS OTHER GR OUNDS RAISED BY THE ASSESSEE HAVING BECOME ACADEMIC, ARE NOT ADJUDICATED. 15. IN THE RESULT, APPEAL IS ALLOWED, AS INDICATED ABOVE. ORDER PRONOUNCED ON 12/10/2021. SD/- SD/- (RAJESH KUMAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 12/10/2021 PAVANAN 16 ITA 640/MUM/2021 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI