DCIT, CC-2(2), Kolkata, Kolkata V. M/s/ Aryan Minning & Trading Corporation Ltd, Kolakta

ITSSA 123/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5620 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSIYAN
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Question of law; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 153A; 195; 32; 147; 148; 263; 132; 139

Judgement Text

1 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T(SS).A. NOS. 122 & 123/KOL/2017 ASSESSMENT YEARS: 2009-10 & 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), KOLKATA. VS. M/S. ARYAN MINING & TRADING CORPORATION LTD., (PAN: AADCA7247B) APPELLANT RESPONDENT FOR THE APPELLANT SHRI A. K. SINGH, CIT, DR FOR THE RESPONDENT SHRI A. K. TULSIYAN, FCA DATE OF HEARING 26.02.2019 DATE OF PRONOUNCEMENT 22.05.2019 ORDER PER SHRI A.T.VARKEY, JM BOTH THESE APPEALS OF THE REVENUE ARISE OUT OF SEPA RATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 21, KOLKATA FOR AY 2009-10 AND 2010-11 DATED 02.06.2017. 2. FIRST WE TAKE UP IT(SS)A NO. 123/KOL/2017 FOR AY 2010-11. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE TOTAL TAX E FFECT ON THE DISPUTED ADDITION RAISED BY REVENUE IS ONLY RS.17,67,639/- WHICH IS BELOW THE T AXABLE LIMIT OF RS. 20 LACS PRESCRIBED BY CBDT FOR FILING AN APPEAL BY REVENUE IN THE TRIBUN AL, THEREFORE, REVENUES APPEAL NEEDS TO BE WITHDRAWN AS PER CBDT CIRCULAR NO.3/2018 DATED 1 1.07.2018. THEREFORE, THE APPEAL OF THE REVENUE IS TREATED AS DISMISSED BEING WITHDRAWN . 3. NOW WE ARE COMING TO IT(SS)A NO. 122/KOL/2017 FO R AY 2009-10. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF T HE LD. CIT(A) IN ALLOWING THE APPEAL OF THE ASSESSEE WHEREIN THE ASSESSEE HAD RAISED THE LE GAL ISSUE BY RAISING ADDITIONAL GROUND 2 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 BEFORE THE LD. CIT(A) WHEREIN THE ASSESSEE HAS CHAL LENGED THE JURISDICTION OF THE AO TO REOPEN AND ASSESS THE INCOME/LOSS FROM CLIENT CODE MODIFICATION WITHOUT MENTIONING ABOUT IT IN THE REASON RECORDED TO REOPEN THE ASSESSMENT AND WITHOUT MAKING ANY ADDITION/DISALLOWANCE ON THE PRODUCTION/ SUPPRESSIO N OF IRON ORE WHICH WAS THE PRECISE REASON RECORDED IN THE REASON TO RE-OPEN ALLEGING E SCAPEMENT OF INCOME. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPAN Y IS MAINLY ENGAGED IN THE BUSINESS OF MINING AND TRADING OF IRON ORE AND MANGANESE ORE HA D FILED ITS RETURN OF INCOME REFLECTING TOTAL INCOME OF RS.40,65,54,550/- ON 29.09.2009. T HE ORIGINAL SCRUTINY ASSESSMENT U/S. 143(3) OF THE ACT COMPLETED ON 12.12.2011 AT RS.50, 60,22,409/-. LATER A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AGAINST THE ASSESSEE U/S. 1 32 OF THE ACT ON 13.09.2012 AND THE ASSESSMENT U/S. 153A WAS COMPLETED ON 28.04.2014 AT A TOTAL INCOME OF RS.40,60,22,409/-. 5. THEREAFTER, NOTICE U/S. 148 OF THE ACT WAS ISSUE D ON 17.02.2015 ON THE BASIS OF COMPARISON OF THE DATA AFTER INFORMATION REGARDING ACTUAL PRODUCTION OF IRON ORE GATHERED FROM THE REPORT OF JUSTICE M. B. SHAH COMMISSION ON ILLEGAL MINING AND STATUTORY AUDITED ACCOUNT OF ASSESSEE. THE REASONS FOR REOPENING IS FOUND PLACED AT PAGE 51 OF THE PAPER BOOK WHICH IS AS UNDER: AFTER COMPARING THE INFORMATION REGARDING ACTUAL PRODUCTION GATHERED FROM THE REPORT OF JUSTICE M. B. SHAH COMMISSION ON ILLEGAL MINING AND STATUTORY AUDITED ACCOUNT OF THE ASSESSEE COMPANY, IT WAS OBSERVED THAT THE ASSESSEE COMPANY HAS SUPPRESSED ITS ACTUAL QUANTITY OF PRODUCTION OF IRON ORE TO THE TUNE OF 8 ,78,079 MT VALUED AT RS.1,79,41,61,259/- (TAKING THE RATE OF GROSS SALE/TURNOVER OF ASSESSEE COMPANY AS REFLECTED IN THEIR ANNUAL ACCOUNT WHICH COMES TO RS.2043.28 PER MT). THE ASSE SSEE COMPANY HAS SHOWN PRODUCTION OF IRON ORE OF 10,98,385 MT IN ITS STATUTORY AUDITE D ACCOUNT FOR THE FY 2008-09 RELEVANT TO AY 2009-10 WHEREAS FROM THE M. B. SHAH COMMISSION R EPORT AT PAGE NO. 291, ANNEXURE-7, VOL. II A OF 1 ST REPORT ON ODISHA, IT REVEALS THAT ACTUAL PRODUCTIO N OF IRON ORE OF THE ASSESSEE COMPANY IN THE SAME PERIOD WAS 19,76,464 MT. HENCE , THE PRODUCTION OF IRON ORE REMAINS UNDISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY, WORKED OUT TO 8,78,089 MT VALUED AT RS.1,79,41,61,259/- FOR THE AY 2009-10. CONSIDERING THE ABOVE, I HAVE REASON TO BELIEVE TH AT INCOME TO THE TUNE OF RS.1,79,41,61,259/- CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT IN AY 2009-10. A BARE PERUSAL OF THE REASONS RECORDED REVEALS THAT THE AO HAD REOPENED THE ASSESSMENT ON THE BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME , SINCE THERE IS SUPPRESSION IN THE ACTUAL 3 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 QUANTITY OF PRODUCTION OF IRON ORE TO THE TUNE OF 8 ,78,079 MT VALUED AT RS.1,79,41,61,259/-. HOWEVER, DURING THE REASSESSMENT PROCEEDINGS, THE A O AT PAGE 3 HAS DROPPED THE REASSESSMENT ON THIS ISSUE AFTER TAKING NOTE OF THE LETTER FROM THE DIRECTORATE OF MINES, ORISSA, BHUBANESWAR BY STATING AT PAGE 3 OF ASSESSM ENT ORDER IN VIEW OF THE FACT DISCUSSED, IT IS ACCEPTED THAT THE PRODUCTION DATA FOR FY 2008 -09 IS 1098385 MT AS SAME IS REFLECTED IN THE RETURNS FILED BY THE ASSESSEE WITH THE DG MI NES (H1 FORM) FOR THE RELEVANT YEAR AND CONFIRMED BY THE LETTER OF DIRECTORATE OF MINES, OD ISHA. HENCE, NO ADVERSE INFERENCE SO FAR AS PRODUCTION OF IRON ORE BY THE ASSESSEE IS BEING DRAWN. [ EMPHASIS GIVEN BY US] 6. THEREAFTER, THE AO PROCEEDED ON ANOTHER ISSUE OF ARTIFICIAL LOSS CREATED BY MISUSING CLIENTS CODE MODIFICATION AS PER INFORMATION RECEI VED FROM THE DIRECTORATE OF INCOME-TAX (I&CI), MUMBAI AND THEREAFTER, HE DISALLOWED THE CL AIM MADE BY ASSESSEE OF LOSS OF RS.2,30,62,270/- AND MADE AN ADDITION OF THE SAID A MOUNT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO ALLOW THE LEGAL ISSUE RAISED BY THE ASSESSEE AGAINST THE JURISDICTION TO REOPEN AND ASSESS THE NEW ISSUE [ ARTIFICIAL LOSS CREATED BY MISUSING CLIENTS CODE MODIFICATION ], WITHOUT MAKING ANY ADDITION/DISALLOWANCE FOR WHICH REASON WAS RECORDED TO RE-OPEN [ SUPPRESSION IN THE ACTUAL QUANTITY OF PRODUCTION OF IRON ORE ]. THE LD. CIT(A) HAS RELIED ON THE FOLLOWING JUDG MENTS: I) CIT VS. JET AIRWAYS (I) LTD. (2011) 331 ITR 0236 (BOM.); II) CIT VS., RANBAXY LABORATORIES LTD. (ITA NO. 148 /2008 DATED 03.06.2011)(DEL. HIGH COURT); III) CIT VS. SRI RAM SINGH (2008) 306 ITR 343 (RAJ. ); IV) DCIT VS. TAKHSHILA EDUCATIONAL SOCIETY (2016) 2 84 CTR 0306 (PAT.) V) ORIENTAL BANK OF COMMERCE VS. ACIT 272 CTR 56 AGGRIEVED, THE REVENUE IS BEFORE US. 7. THE LD. CIT, DR ASSAILING THE DECISION OF THE LD . CIT(A) CONTENDED THAT AFTER THE EXPLANATION (3) TO SEC. 147 HAS BEEN INSERTED BY FI NANCE NO. 2 ACT, 2009 RETROSPECTIVELY W.E.F. APRIL 1, 1989, AND THE LD. CIT(A) ERRED IN A LLOWING THE LEGAL ISSUE RAISED BY THE 4 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 ASSESSEE. FOR THAT HE RELIED ON THE ORDER OF THE H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF MAJINDER SINGH KANG VS. CIT (2012) 25 T AXMANN.COM 124 (P&H) AND ALSO THE DECISION OF THE HONBLE HIGH COURT OF PUNJAB & HARY ANA IN THE CASE OF CIT VS. MEHAK FINVEST (P.) LTD. (2014) 52 TAXMANN.COM 51 (P&H) WH EREIN THE HONBLE HIGH COURT HELD AFTER CONSIDERING SCOPE OF EXPLANATION (3) TO SEC. 147 OF THE ACT THAT THE AO IS EMPOWERED TO MAKE ADDITION EVEN ON THE GROUND ON WHICH REASSE SSMENT NOTICE MIGHT NOT HAVE BEEN ISSUED WHERE DURING REASSESSMENT PROCEEDINGS, HE FI NDS THAT SOME OTHER INCOME HAS ESCAPED ASSESSMENT WHICH COMES TO HIS NOTICE DURING THE COU RSE OF PROCEEDINGS FOR REASSESSMENT U/S. 148 OF THE ACT. ACCORDING TO THE HONBLE HIGH COURT , THE PROVISION NOWHERE POSTULATES OR CONTEMPLATES THAT THE AO CANNOT MAKE ANY ADDITION O R ANY OTHER GROUND UNLESS SOME ADDITION IS MADE ON THE GROUND ON WHICH REASSESSMEN T HAD BEEN INITIATED. IT WAS POINTED OUT TO US BY THE LD. DR THAT THE DECISION IN MAJINDER S INGH KANG (SUPRA) WAS CHALLENGED BY THE ASSESSEE BY SPECIAL LEAVE PETITION NO. 13028 OF 201 1 WHICH WAS DISMISSED AND HAS BEEN FOLLOWED BY THE SUBSEQUENT ORDER OF THE HONBLE P&H HIGH COURT IN THE CIT VS. MEHAK FINVEST (P.) LTD., SUPRA. SO, IT WAS CONTENDED BY THE LD. DR THAT THE LD. LD. CIT(A)S ORDER IS LEGALLY NOT SUSTAINABLE AND HAS TO BE INTERFERE D WITH AND THE APPEAL HAS TO BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATION ON MERITS. ON THE OTHER HAND, THE LD. AR FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (A) AND DOES NOT WANT US TO INTERFERE IN THE ORDER OF THE LD. CIT(A). 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEARNED AR HAS BROUGHT TO OUR NOTICE THAT THE AO WHILE INVOKING HIS JURISDICTION TO REOPEN THE COMPLETED ASSESSMENT REC ORDED IN THE REASONS RECORDED THE ISSUE OF PRODUCTION/SUPPRESSION OF IRON ORE BY THE ASSESS EE AS THE REASON FOR ESCAPEMENT OF INCOME WAS FOR REOPENING THE COMPLETED ASSESSMENT. HOWEVER, AO HAS NOT MADE ANY ADDITION OR DISALLOWANCE ON THIS SPECIFIC ISSUE (I. E. FOR PRODUCTION/SUPPRESSION OF IRON ORE) ON THE BASIS OF WHICH REOPENING WAS INITIATED. ACCO RDING TO THE LD AR, THE AO COULD NOT HAVE PROCEEDED TO MAKE ANY OTHER ADDITION, WITHOUT MAKING ANY ADDITION/DISALLOWANCE ON THE ISSUE FOR WHICH HE BASED HIS BELIEF IN RESPECT OF THE ESCAPEMENT OF INCOME, AND FOR 5 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 WHICH HE RESORTED TO RE-OPENING. FOR THAT PROPOSITI ON HE RELIED UPON THE ORDER OF THE HONBLE BOMBAY HIGH COURT IN CIT VS JET AIRWAYS (I) LTD. (2010) 195 TAXMAN 117 (BOMBAY). WE NOTE THAT THE LEGAL ISSUE WHICH IS BEF ORE US IS NO LONGER RES INTEGRA AND THE HONBLE HIGH COURT AFTER TAKING NOTE OF THE EXPLANA TION 3 INSERTED BY THE FINANCE BILL 2009 HAS HELD IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: 2. THE TWO APPEALS BY THE REVENUE PERTAIN TO ASSESSME NT YEARS 1994-95 AND 1995-96. THE TRIBUNAL HAS NOTED THAT AN IDENTICAL ISSUE WAS AGITATED BY THE ASSESSEE FOR ASSESSMENT YEAR 1997-98 AND THAT THE TRIBUNAL, WHIL E ALLOWING THE CLAIM OF THE ASSESSEE, HELD THAT THE RE-OPENING OF THE ASSESSMEN T WAS NOT VALID IN LAW. THE COURT HAS BEEN INFORMED THAT THE APPEAL AGAINST THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 1997-98 HAS BEEN DISMISSED FOR NON-COMPLIANCE OF A CONDITIONAL ORDER OF REMOVING OFFICE OBJECTIONS. BE THAT AS IT MAY, HAVING REGARD TO THE NATURE OF THE QUESTION OF INTERPRETATION INVOLVED, WE HAVE HEARD ARGUMENTS ON THE QUESTION OF LAW AS FRAMED IN THESE APPEALS AND PROCEED TO ANSWER IT ON MERITS. 3. SECTION 147 OF THE INCOME-TAX ACT, 1961 PROVIDES T HAT IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME 'AND ALSO ANY OTHER INCOME CHA RGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION'. THE PROVISO DEALS WITH REOPENI NG OF AN ASSESSMENT UPON THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR AND DOES NOT FALL FOR INTERPRETATION IN THIS APPEAL. EXPLANATION 3 TO SECTION 147 WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009, WITH EFFECT FROM 1-4-1 989. EXPLANATION 3 PROVIDES AS FOLLOWS : 'EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR RE ASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOT ICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB -SECTION (2) OF SECTION 148.' 4. PRIOR TO ITS AMENDMENT WITH EFFECT FROM 1-4-1989, SECTION 147 PROVIDED AS FOLLOWS : '147. INCOME ESCAPING ASSESSMENT. - IF (A) THE INCOME-TAX OFFICER HAS REASON TO BELIEVE T HAT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO M AKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR TO THE INCOME-TAX OFFIC ER OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT Y EAR, OR (B) NOTWITHSTANDING THAT THERE HAS BEEN NO OMISSIO N OR FAILURE AS MENTIONED IN CLAUSE (A) ON THE PART OF THE ASSESSEE, THE INCO ME-TAX OFFICER HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, 6 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE , AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN SECTIONS 14 8 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR).' 5. THE CONDITION PRECEDENT TO THE EXERCISE OF THE JUR ISDICTION UNDER SECTION 147 IS THE FORMATION OF A REASON TO BELIEVE BY THE ASSESSING O FFICER THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UPON THE FORMATION OR A REASON TO BELIEVE, THE ASSESSING OFFICER, BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147 HAS TO SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH A RETURN OF HIS INCOME. UPON THE FORMATION OF THE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, THE ASSESSING OFFICER IS EMPOWE RED TO ASSESS OR REASSESS SUCH INCOME 'AND ALSO' ANY OTHER INCOME CHARGEABLE TO TA X WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE C OURSE OF THE PROCEEDINGS UNDER SECTION 147. 6. THE EFFECT OF EXPLANATION 3 WHICH WAS INSERTED BY THE FINANCE (NO. 2) ACT OF 2009 IS THAT EVEN THOUGH THE NOTICE THAT HAS BEEN ISSUED UN DER SECTION 148 CONTAINING THE REASONS FOR REOPENING THE ASSESSMENT DOES NOT CONTA IN A REFERENCE TO A PARTICULAR ISSUE WITH REFERENCE TO WHICH INCOME HAS ESCAPED ASSESSME NT, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISS UE WHICH HAS ESCAPED ASSESSMENT, WHEN SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS. THE REASONS FOR THE INSERTION OF EXPLANATION 3 ARE TO B E FOUND IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE (NO. 2) BILL O F 2009. THE MEMORANDUM TREATS THE AMENDMENT TO BE CLARIFICATORY AND CONTAINS THE FOLL OWING EXPLANATION : 'SOME COURTS HAVE HELD THAT THE ASSESSING OFFICER H AS TO RESTRICT THE REASSESSMENT PROCEEDINGS ONLY TO ISSUES IN RESPECT OF WHICH THE REASONS HAVE BEEN RECORDED FOR REOPENING THE ASSESSMENT. HE IS NOT EMPOWERED TO TO UCH UPON ANY OTHER ISSUE FOR WHICH NO REASONS HAVE BEEN RECORDED. THE ABOVE INTERPRETA TION IS CONTRARY TO THE LEGISLATIVE INTENT. WITH A VIEW TO FURTHER CLARIFYING THE LEGISLATIVE I NTENT, IT IS PROPOSED TO INSERT AN EXPLANATION IN SECTION 147 TO PROVIDE THAT THE ASSE SSING OFFICER 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, NOTWITHSTANDING THA T THE REASON FOR SUCH ISSUE HAS NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB-SEC TION (2) OF SECTION 148.' 7. IN ORDER TO APPRECIATE THE REASONS FOR THE AMENDME NT INSERTING EXPLANATION 3, IT WOULD BE NECESSARY TO ADVERT TO SOME OF THE JUDGMEN TS OF THE HIGH COURTS, PRIOR TO THE AMENDMENT. THE PUNJAB AND HARYANA HIGH COURT, IN ITS DECISION, IN VIPAN KHANNA V. ASSTT. CIT [2002] 255 ITR 220 1 DEALT WITH THE QUESTION AS TO WHETHER, AFTER INITI ATING PROCEEDINGS UNDER SECTION 147 ON THE GROUND THAT THE PETITIONER HAD CLAIMED DEPRECIATION AT A HIGHER RATE, THE ASSESSING OFFICER WOULD BE JUSTIFI ED IN LAUNCHING AN INQUIRY INTO ISSUES WHICH WERE NOT CONNECTED WITH THE CLAIM OF DEPRECIA TION. THIS QUESTION WAS ANSWERED IN THE NEGATIVE. 7 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 A DIVISION BENCH OF THE KERALA HIGH COURT HELD IN T RAVANCORE CEMENTS LTD. V. CIT [2008] 305 ITR 170 1 , THAT UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148(2), WHEN PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER ON ISSUES IN RESPECT OF WHICH HE HAD FORMED A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, IT WAS NOT OPEN TO THE ASSESSING OFFICER TO CARRY OUT AN ASSESSMENT, OR RE ASSESSMENT IN RESPECT OF OTHER ISSUES WHICH WERE TOTALLY UNCONNECTED WITH THE PROCEEDINGS THAT WERE ALREADY INITIATED AND WHICH CAME TO HIS KNOWLEDGE DURING THE COURSE OF TH E PROCEEDINGS. THE DIVISION BENCH HELD THAT IN RESPECT OF AN ISSUE WHICH IS TOTALLY U NCONNECTED TO THE BASIS ON WHICH THE ASSESSING OFFICER FORMED A REASON TO BELIEVE THAT I NCOME ESCAPED ASSESSMENT AND ISSUED A NOTICE UNDER SECTION 148, IT WAS OPEN TO H IM TO ISSUE A FRESH NOTICE BY FOLLOWING SUB-SECTION (2) OF SECTION 148 WITH REGARD TO THE E SCAPED INCOME WHICH CAME TO HIS KNOWLEDGE DURING THE COURSE OF THE PROCEEDINGS. THE KERALA HIGH COURT HELD AS FOLLOWS : '. . .THE ASSESSING OFFICER GETS JURISDICTION UNDER SECTION 148 TO ASSESS OR REASSESS THE INCOME WHICH HAS ESCAPED ASSESSMENT ONLY AFTER SUB- SECTION (2) OF SECTION 148 IS COMPLIED WITH. THE QUESTION IS WHETHER SUB-SECTION (2) OF SECTION 148 HAS TO BE COMPLIED WITH IF ANY OTHER INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, OR WHICH COMES TO HIS KNOWLEDGE SUBSEQUENTLY IN THE COURSE O F THE PROCEEDINGS. IN OTHER WORDS, WHEN PROCEEDINGS ARE ALREADY ON IN RESPECT OF ONE I TEM IN RESPECT OF THE INCOME FOR WHICH HE HAD ALREADY RECORDED REASONS IS IT NECESSA RY THAT HE SHOULD RECORD REASONS FOR ASSESSING OR REASSESSING ANY OF THE ITEMS WHICH ARE TOTALLY UNCONNECTED WITH THE PROCEEDINGS ALREADY INITIATED. SUPPOSE UNDER TWO HE ADS, INCOME HAS ESCAPED ASSESSMENT AND THOSE TWO HEADS ARE INTER-LINKED AND CONNECTED, THE PROCEEDINGS INITIATED OR NOTICE ALREADY ISSUED UNDER SUB-SECTIO N (2) OF SECTION 148 WOULD BE SUFFICIENT IF THE ESCAPED INCOME ON THE SECOND HEAD COMES TO THE KNOWLEDGE OF THE OFFICER IN THE COURSE OF THE PROCEEDINGS. BUT IF BO TH THE ITEMS ARE UNCONNECTED AND TOTALLY ALIEN THEN THE ASSESSING AUTHORITY HAS TO F OLLOW SUB-SECTION (2) OF SECTION 148 WITH REGARD TO THE ESCAPED INCOME WHICH COMES TO HI S KNOWLEDGE DURING THE COURSE OF THE PROCEEDINGS.' HENCE, THE VIEW OF THE PUNJAB AND HARYANA HIGH COUR T AND THE KERALA HIGH COURT WAS THAT, ONCE THE ASSESSING OFFICER HAS REASON TO BELI EVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND PROCEEDS TO ISSUE A NOTICE U NDER SECTION 148, IT IS NOT OPEN TO HIM TO ASSESS OR, AS THE CASE MAY BE, REASSESS THE INCOME UNDER AN INDEPENDENT OR UNCONNECTED ISSUE, WHICH WAS NOT THE BASIS OF THE N OTICE FOR REOPENING THE ASSESSMENT. 8. PARLIAMENT STEPPED IN TO CORRECT WHAT IT REGARDED AS AN INCORRECT INTERPRETATION OF THE PROVISIONS OF SECTION 147. THE MEMORANDUM EXPLA IN-ING THE PROVISIONS OF FINANCE (NO. 2) BILL OF 2009 STATES IN THIS BACKGROUND THAT SOME COURTS HAD HELD THAT THE ASSESSING OFFICER HAS TO RESTRICT THE REASSESSMENT PROCEEDINGS ONLY TO ISSUES IN RESPECT OF WHICH REASONS HAVE BEEN RECORDED FOR REOPENING T HE ASSESSMENT AND THAT IT WAS NOT OPEN TO HIM TO TOUCH UPON ANY OTHER ISSUE FOR WHICH NO REASONS HAVE BEEN RECORDED. THIS INTERPRETATION WAS REGARDED BY PARLIAMENT AS B EING CONTRARY TO LEGISLATIVE INTENT. HENCE, EXPLANATION 3 CAME TO BE INSERTED TO PROVIDE THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS INCOME IN RESPECT OF ANY ISSUE W HICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER SEC TION 147 THOUGH THE REASONS FOR SUCH ISSUE WERE NOT INCLUDED IN THE REASONS RECORDE D IN THE NOTICE UNDER SECTION 148(2). 8 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 9. THE EFFECT OF SECTION 147 AS IT NOW STANDS AFTER T HE AMENDMENT OF 2009 CAN, THEREFORE, BE SUMMARISED AS FOLLOWS : (I) THE ASSESSING OFFICE R MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR; (II) UPON THE FORMATION OF THAT BELIEF AND BEFORE HE PRO CEEDS TO MAKE AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION, THE ASSESSING OFFICE R HAS TO SERVE ON THE ASSESSEE A NOTICE UNDER SUB-SECTION (1) OF SECTION 148; (III) THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, WHICH HE HAS REASON TO BELIEV E, HAS ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPE D ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THE SECTION; AND (IV) THOUGH THE NOTICE UNDER SECTION 148(2) DOES NOT INC LUDE A PARTICULAR ISSUE WITH RESPECT TO WHICH INCOME HAS ESCAPED ASSESSMENT, HE MAY NONE THELESS, ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH HAS ESCAPED AS SESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S UNDER THE SECTION. 10. NOW THE SUBMISSION OF THE LEARNED COUNSEL APPEARIN G ON BEHALF OF THE ASSESSEE IN THE PRESENT CASE IS THAT THE WORDS 'AND ALSO' IN SE CTION 147 POSTULATE THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME WHICH HE HAS REASON TO BELIEVE HAS ESCAPED ASSESSMENT TOGETHER WITH ANY OTHER INCOME CHARGEABL E TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. IN OTHER WORDS, UNLESS THE ASSESSING OFFICER ASSESSES THE IN COME WITH REFERENCE TO WHICH HE HAD FORMED A REASON TO BELIEVE WITHIN THE MEANING OF SE CTION 147, IT WOULD NOT BE OPEN TO HIM TO ASSESS OR REASSESS ANY OTHER INCOME CHARGEAB LE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS. ON THE OTHER HAND, IT HAS BEEN URGED O N BEHALF OF THE REVENUE THAT EVEN IF, DURING THE COURSE OF ASSESSMENT OR, AS THE CASE MAY BE REASSESSMENT, THE ASSESSING OFFICER DOES NOT ASSESS OR REASSESS THE INCOME WHIC H HE HAS REASON TO BELIEVE HAS ESCAPED ASSESSMENT AND WHICH FORMED THE SUBJECT-MAT TER OF A NOTICE UNDER SECTION 148(2), IT IS NONETHELESS OPEN TO HIM TO ASSESS ANY OTHER INCOME WHICH, DURING THE COURSE OF THE PROCEEDINGS IS BROUGHT TO HIS NOTICE AS HAVING ESCAPED ASSESSMENT. 11. THE RIVAL SUBMISSIONS WHICH HAVE BEEN URGED ON BEH ALF OF THE REVENUE AND THE ASSESSEE CAN BE DEALT WITH, BOTH AS A MATTER OF FIR ST PRINCIPLE, INTERPRETING THE SECTION AS IT STANDS AND ON THE BASIS OF PRECEDENTS ON THE SUB JECT. INTERPRETING THE PROVISION AS IT STANDS AND WITHOUT ADDING OR DEDUCTING FROM THE WOR DS USED BY PARLIAMENT, IT IS CLEAR THAT UPON THE FORMATION OF A REASON TO BELIEVE UNDE R SECTION 147 AND FOLLOWING THE ISSUANCE OF A NOTICE UNDER SECTION 148, THE ASSESSI NG OFFICER HAS THE POWER TO ASSESS OR REASSESS THE INCOME, WHICH HE HAS REASON TO BELIEVE HAD ESCAPED ASSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX. THE WORDS 'AND ALSO' CANNOT BE IGNORED. THE INTERPRETATION WHICH THE COURT PLACES ON THE PROVIS ION SHOULD NOT RESULT IN DILUTING THE EFFECT OF THESE WORDS OR RENDERING ANY PART OF THE LANGUAGE USED BY PARLIAMENT OTIOSE. PARLIAMENT HAVING USED THE WORDS 'ASSESS OR REASSES S SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT', THE WORDS 'AND ALSO' CANNOT BE READ AS BEING IN THE ALTERNATIVE. ON THE CONTRAR Y, THE CORRECT INTERPRETATION WOULD BE TO REGARD THOSE WORDS AS BEING CONJUNCTIVE AND CUMU LATIVE. IT IS OF SOME SIGNIFICANCE THAT PARLIAMENT HAS NOT USED THE WORD 'OR'. THE LEG ISLATURE DID NOT REST CONTENT BY MERELY USING THE WORD 'AND'. THE WORDS 'AND', AS WE LL AS 'ALSO' HAVE BEEN USED TOGETHER AND IN CONJUNCTION. 9 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 THE SHORTER OXFORD DICTIONARY DEFINES THE EXPRESSIO N 'ALSO' TO MEAN 'FURTHER, IN ADDITION, BESIDES, TOO'. THE WORD HAS BEEN TREATED AS BEING RELATIVE AND CONJUNCTIVE. EVIDENTLY, THEREFORE, WHAT PARLIAMENT INTENDS BY US E OF THE WORDS 'AND ALSO' IS THAT THE ASSESSING OFFICER, UPON THE FORMATION OF A REASON T O BELIEVE UNDER SECTION 147 AND THE ISSUANCE OF A NOTICE UNDER SECTION 148(2) MUST ASSE SS OR REASSESS: (I) 'SUCH INCOME'; AND ALSO (II) ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE PROCEEDINGS UNDER THE SECTION. THE WORDS 'SUCH INCOME' REFER TO THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND IN RESPECT OF WHICH THE ASSESSING OF FICER HAS FORMED A REASON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT. HENCE, THE LANGUAGE WHICH HAS BEEN USED BY PARLIAMENT IS INDICATIVE OF THE POSITION THAT THE ASSESSMENT O R REASSESSMENT MUST BE IN RESPECT OF THE INCOME IN RESPECT OF WHICH HE HAS FORMED A REAS ON TO BELIEVE THAT IT HAS ESCAPED ASSESSMENT AND ALSO IN RESPECT OF ANY OTHER INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE COURSE OF THE PROCEEDINGS A S HAVING ESCAPED ASSESSMENT. IF THE INCOME, THE ESCAPEMENT OF WHICH WAS THE BASIS OF TH E FORMATION OF THE SEASON TO BELIEVE IS NOT ASSESSED OR REASSESSED, IT WOULD NOT BE OPEN TO THE ASSESSING OFFICER TO INDEPENDENTLY ASSESS ONLY THAT INCOME WHICH COMES T O HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION AS HAVI NG ESCAPED ASSESSMENT. IF UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148(2), THE ASSE SSING OFFICER ACCEPTS THE OBJECTIONS OF THE ASSESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WAS THE BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HIM TO ASSESS INCOM E UNDER SOME OTHER ISSUE INDEPENDENTLY. PARLIAMENT WHEN IT ENACTED THE PROVI SIONS OF SECTION 147 WITH EFFECT FROM 1-4-1989 CLEARLY STIPULATED THAT THE ASSESSING OFFI CER HAS TO ASSESS OR REASSESS THE INCOME WHICH HE HAD REASON TO BELIEVE HAD ESCAPED A SSESSMENT AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH CAME TO HIS NOTICE D URING THE PROCEEDINGS. IN THE ABSENCE OF THE ASSESSMENT OR REASSESSMENT OF THE FO RMER, HE CANNOT INDEPENDENTLY ASSESS THE LATTER. 12. IN CIT V. SUN ENGG. WORKS (P.) LTD. [1992] 198 ITR 297 1 , THE SUPREME 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 TO SEEK A REVIEW OF THE CONCLUDED ITEM FOR THE PURPOSE OF COMPUTATION OF THE ESCAPED INCOME?' THE ISSUE WHICH AROSE BEFORE THE SUPREME COURT WAS WHETHER, IN THE COURSE OF A REASSESSMENT ON AN ESCAPED ITEM OF INCOME COULD AN ASSESSEE SEEK A REVIEW IN RESPECT OF AN ITEM WHICH STOOD CONCLUDED IN THE ORIGINAL OR DER OF ASSESSMENT. THE SUPREME COURT DEALT WITH THE PROVISIONS OF SECTION 147, AS THEY STOOD PRIOR TO THE AMENDMENT ON 1-4-1989. THE SUPREME COURT HELD THAT THE EXPRESSIO N 'ESCAPED ASSESSMENT' INCLUDES BOTH 'NON-ASSESSMENT' AS WELL AS 'UNDER ASSESSMENT' . INCOME IS SAID TO HAVE ESCAPED ASSESSMENT WITHIN THE MEANING OF THE SECTION WHEN I T HAS NOT BEEN 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 RESORTING TO THE PROVISIONS OF SECTION 147. THE EXPRESSION 'REASSESS' REFERS TO A SITUATION WHERE AN ASSESSMENT HAS ALREADY BEEN MADE BUT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT THERE IS UNDER ASSESSMENT ON ACCOUNT OF THE EXISTENCE OF ANY OF THE GROUNDS CONTEMPLATED BY EXPLANATION 1 TO SECTION 14 7. THE SUPREME COURT ADVERTED TO 10 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 THE JUDGMENT IN V. JAGANMOHAN RAO V. CIT [1970] 75 ITR 373 , WHICH HELD THAT ONCE AN ASSESSMENT IS VALIDLY REOPENED, THE PREVIOUS UND ER ASSESSMENT IS SET ASIDE AND THE INCOME-TAX OFFICER HAS THE JURISDICTION AND DUTY TO LEVY TAX ON THE ENTIRE INCOME THAT HAD ESCAPED ASSESSMENT DURING THE PREVIOUS YEAR. TH E COURT HELD THAT THE OBJECT OF SECTION 147 ENURES TO THE BENEFIT OF THE REVENUE AN D IT IS NOT OPEN TO THE ASSESSEE TO CONVERT THE REASSESSMENT PROCEEDINGS AS AN APPEAL O R REVISION AND THEREBY SEEK RELIEF IN RESPECT OF ITEMS WHICH WERE REJECTED EARLIER OR IN RESPECT OF ITEMS NOT CLAIMED DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. THE JUDGMENT IN V. JAGANMOHAN RAO'S CASE (SUPRA) DE ALT WITH THE LANGUAGE OF SECTIONS 22(2) AND 34 OF THE ACT OF 1922 WHILE THE JUDGMENT IN SUN ENGG. WORKS (P.) LTD.'S CASE (SUPRA) INTERPRETS THE PROVISIONS OF SECTION 147 AS THEY STOOD PRIOR TO THE AMENDMENT ON 1-4-1989. 13. THE EFFECT OF THE AMENDED PROVISIONS CAME TO BE CO NSIDERED IN TWO DISTINCT LINES OF PRECEDENT ON THE SUBJECT. THE FIRST LINE OF AUTHORI TY, TO WHICH A REFERENCE HAS ALREADY BEEN MADE EARLIER, ADOPTED THE PRINCIPLE THAT WHERE THE ASSESSING OFFICER HAS FORMED A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T AND HAS ISSUED A NOTICE UNDER SECTION 148 ON CERTAIN SPECIFIC ISSUES, IT WAS NOT OPEN TO HIM DURING THE COURSE OF THE PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT TO ASSES S OR REASSESS ANY OTHER INCOME, WHICH MAY HAVE ESCAPED ASSESSMENT BUT WHICH DID NOT FORM THE SUBJECT-MATTER OF THE NOTICE UNDER SECTION 148. THIS VIEW WAS ADOPTED IN THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN VIPAN KHANNA'S CASE (SUPRA) A ND IN THE JUDGMENT OF THE KERALA HIGH COURT IN TRAVANCORE CEMENTS LTD.'S CASE (SUPRA ). THIS LINE OF AUTHORITY, WOULD NOW CEASE TO REFLECT THE CORRECT POSITION IN LAW, B Y VIRTUE OF THE AMENDMENT WHICH HAS BEEN BROUGHT IN BY THE INSERTION OF EXPLANATION 3 T O SECTION 147 BY FINANCE (NO. 2) ACT OF 2009. THE EFFECT OF THE EXPLANATION IS THAT ONCE AN ASSESSING OFFICER HAS FORMED A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND HAS PROCEEDED TO ISSUE A NOTICE UNDER SECTION 148, IT I S OPEN TO HIM TO ASSESS OR REASSESS INCOME IN RESPECT OF ANY OTHER ISSUE THOUGH THE REA SONS FOR SUCH ISSUE HAD NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SECTION 148( 2). 14. THE SECOND LINE OF PRECEDENT IS REFLECTED IN A JUD GMENT OF THE RAJASTHAN HIGH COURT IN CIT V. SHRI RAM SINGH [2008] 306 ITR 343 . THE RAJASTHAN HIGH COURT CONSTRUED THE WORDS USED BY PARLIAMENT IN SECTION 147 PARTICULARL Y THE WORDS THAT THE ASSESSING OFFICER 'MAY ASSESS OR REASSESS SUCH INCOME AND ALS O ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS' UNDER SECTION 147. THE R AJASTHAN HIGH COURT HELD AS FOLLOWS : '. . . IF IS ONLY WHEN, IN PROCEEDINGS UNDER SECTIO N 147 THE ASSESSING OFFICER, ASSESSES OR REASSESSES ANY INCOME CHARGEABLE TO TAX, WHICH HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, WITH RESPECT TO WHICH HE HAD 'REAS ON 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, AND WHICH HAS COME TO HIS NOTICE SUBSEQ UENTLY, IN THE COURSE OF PROCEEDINGS UNDER SECTION 147. TO CLARIFY IT FURTHER, OR TO PUT IT IN OTHER WORDS, IN OUR OPINION, IF IN THE COURSE OF PROCEEDINGS UNDER SECTION 147, THE ASSESSING OFFICE R WERE TO COME TO THE CONCLUSION, 11 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 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 ASSESSING OFFICER ENTERTAINED A REASO N TO BELIEVE, ALBEIT EVEN A GENUINE REASON TO BELIEVE, WOULD NOT CONTINUE TO VEST HIM W ITH THE JURISDICTION, TO SUBJECT TO TAX, ANY OTHER INCOME, CHARGEABLE TO TAX, WHICH THE ASSE SSING OFFICER MAY FIND TO HAVE ESCAPED ASSESSMENT, AND WHICH MAY COME TO HIS NOTIC E SUBSEQUENTLY, IN THE COURSE OF PROCEEDINGS UNDER SECTION 147.' 15. PARLIAMENT, WHEN IT ENACTED THE EXPLANATION (3) TO SECTION 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. WHEN I T EFFECTED THE AMENDMENT BY BRINGING IN EXPLANATION 3 TO SECTION 147, PARLIAMEN T STEPPED IN TO CORRECT WHAT IT REGARDED AS AN INTERPRETATIONAL ERROR IN THE VIEW W HICH WAS TAKEN BY CERTAIN COURTS THAT THE ASSESSING OFFICER HAS TO RESTRICT THE ASSESSMEN T OR REASSESSMENT PROCEEDINGS ONLY TO THE ISSUES IN RESPECT OF WHICH REASONS WERE RECORDE D FOR REOPENING THE ASSESSMENT. THE CORRECTIVE EXERCISE EMBARKED UPON BY 'PARLIAMENT IN THE FORM OF EXPLANATION 3 CONSEQUENTLY PROVIDES THAT THE ASSESSING OFFICER MA Y ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE WHICH COMES TO HIS NOTICE SUBS EQUENTLY IN THE COURSE OF THE PROCEEDINGS THOUGH THE REASONS FOR SUCH ISSUE WERE NOT INCLUDED IN THE NOTICE UNDER SECTION 148(2). THE DECISIONS OF THE KERALA HIGH CO URT IN TRAVANCORE CEMENTS LTD.'S CASE (SUPRA) AND OF THE PUNJAB & HARYANA HIGH COURT IN VIPAN KHANNA'S CASE (SUPRA) WOULD, THEREFORE, NO LONGER HOLD THE FIELD. HOWEVER , INSOFAR AS THE SECOND LINE OF AUTHORITY IS CONCERNED, WHICH IS REFLECTED IN THE J UDGMENT OF THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH'S CASE (SUPRA), EXPLANATION 3 AS INSERTED BY PARLIAMENT WOULD NOT TAKE AWAY THE BASIS OF THAT DECISION. THE VIEW WHIC H WAS TAKEN BY THE RAJASTHAN HIGH COURT WAS ALSO TAKEN IN ANOTHER JUDGMENT OF THE PUN JAB & HARYANA HIGH COURT IN CIT V. ATLAS CYCLE INDUSTRIES [1989] 180 ITR 319 1 . THE DECISION IN ATLAS CYCLE INDUSTRIES' CASE (SUPRA) HELD THAT THE ASSESSING OFFICER DID NO T HAVE JURISDICTION TO PROCEED WITH THE REASSESSMENT, ONCE HE FOUND THAT THE TWO GROUND S MENTIONED IN THE NOTICE UNDER SECTION 148 WERE INCORRECT OR NON-EXISTENT. THE DEC ISIONS OF THE PUNJAB & HARYANA HIGH COURT IN ATLAS CYCLE INDUSTRIES' CASE (SUPRA) AND OF THE RAJASTHAN HIGH COURT IN SHRI RAM SINGH'S CASE (SUPRA) WOULD NOT BE AFFECTED BY THE AMENDMENT BROUGHT IN BY THE INSERTION OF EXPLANATION 3 TO SECTION 147.- 16. EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTE D BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR REASSESSMENT ON GROU NDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER SECTION 148 SETT ING OUT THE REASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECIS IONS HAD HELD THAT WHEN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE ASSESSING OFFICE R COULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOT ICE DURING THE PROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLANATION 3 BY THE FINANCE ACT (NO. 2) OF 2009. HOWEVER, EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN T HE SUBSTANTIVE PART OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AN D CORE NUGATORY. SECTION 147 HAS THIS EFFECT THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE 12 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER I NCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REA SON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASS ESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE IN TENDS TO DO SO, A FRESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHI CH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 17. WE HAVE APPROACHED THE ISSUE OF INTERPRETATION THA T HAS ARISEN FOR DECISION IN THESE APPEALS, BOTH AS A.MATTER OF FIRST PRINCIPLE, BASED ON THE LANGUAGE USED IN SECTION 147(1) AND ON THE BASIS OF THE PRECEDENT ON THE SUB JECT. WE AGREE WITH THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE THAT SECTION 147(1) AS IT STANDS POSTULATES THAT UPON THE FORMATION OF A REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME 'AND ALSO' ANY OTHER INCOME CH ARGEABLE TO TAX WHICH COMES TO HIS NOTICE SUBSEQUENTLY DURING THE PROCEEDINGS AS HAVIN G 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 BACKGROUND WHICH LED TO T HE INSERTION OF EXPLANATION 3 TO SECTION 147. PARLIAMENT MUST BE REGARDED AS BEING A WARE OF THE INTERPRETATION THAT WAS PLACED ON THE WORDS 'AND ALSO' BY THE RAJASTHAN HIG H COURT IN SHRI RAM SINGH'S CASE (SUPRA). PARLIAMENT HAS NOT TAKEN AWAY THE BASIS OF THAT DECISION. WHILE IT IS OPEN TO PARLIAMENT, HAVING REGARD TO THE PLENITUDE OF ITS L EGISLATIVE POWERS TO DO SO, THE PROVISIONS OF SECTION 147(1) AS THEY STOOD AFTER TH E AMENDMENT OF 1-4-1989 CONTINUE TO HOLD THE FIELD. 18. IN THAT VIEW OF THE MATTER AND FOR THE REASONS THA T WE HAVE INDICATED, WE DO NOT REGARD THE DECISION OF THE TRIBUNAL IN THE PRESENT CASE AS BEING IN ERROR. THE QUESTION OF LAW SHALL, ACCORDINGLY, STAND ANSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL IS, ACCORDINGLY, DISMISSED. TH ERE SHALL BE NO ORDER AS TO COSTS. 9. IT SHOULD BE KEPT IN MIND THAT THE CONCEPT OF ASSESSMENT IS GOVERNED BY THE TIME- BARRING RULE AND THE ASSESSEE ACQUIRES A RIGHT AS T O THE FINALITY OF PROCEEDINGS. QUEITUS OF THE COMPLETED ASSESSMENT IS THE FUNDAMENTAL RULE AN D EXCEPTION TO THIS RULE IS RE-OPENING OF ASSESSMENT BY AO UNDER SECTION 147 OR EXERCISE O F REVISIONAL JURISDICTION BY CIT UNDER SECTION 263 OF THE ACT. THEREFORE, THE PARLIAMENT IN ITS WISDOM HAS PROVIDED SAFEGUARDS FOR EXERCISE OF THE REOPENING OF ASSESSMENT JURISDI CTION TO AO; AND REVISIONAL JURISDICTION OF CIT BY PROVIDING CONDITION PRECEDENT WHICH IS SI NE QUA NON FOR ASSUMPTION/USURPATION OF JURISDICTION. IN THE CASE OF REOPENING OF ASSES SMENT, THE REASON TO BELIEVE ESCAPEMENT OF INCOME IS THE JURISDICTIONAL FACT AND LAW (MIXED QU ESTION OF FACT AND LAW) AND FOR REVISIONAL JURISDICTION THE ORDER OF THE AO SHOULD BE ERRONEOU S AS WELL AS PREJUDICIAL TO THE REVENUE. 13 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 UNLESS THE CONDITION PRECEDENT IS NOT SATISFIED, TH E AO OR THE CIT CAN EXERCISE THEIR REOPENING JURISDICTION OR REVISIONAL JURISDICTION R ESPECTIVELY. THE LEGISLATIVE HISTORY IN RESPECT TO THE REOPENING U/S. 147 OF THE ACT, IS TH AT THE PARLIAMENT BY DIRECT TAX LAWS (AMENDMENT) ACT 1987 W.E.F. 01.04.1989 HAD SUBSTITU TED FOR REASON TO BELIEVE ESCAPEMENT OF INCOME TO FOR REASONS TO BE RECORDED BY HIM IN WRITING, IS OF THE OPINION WHICH GAVE UNBRIDLED SUBJECTIVE SATISFACTION TO THE AO WAS LATER SUBSTITUTED BACK TO REASON TO BELIEVE ESCAPEMENT OF INCOME , BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989. THE HONBLE APEX COURT AS WELL AS THE HONBLE HIGH COURTS HAVE ALREADY HELD IN PLETHORA OF CASES THE TEST OF A PRUDENT PERSON INS TRUCTED IN LAW IN UNDERSTANDING JURISDICTIONAL FACT AND LAW (MIXED QUESTION OF FACT AND LAW) THE REASON TO BELIEVE ESCAPEMENT OF INCOME (SUPRA). FOR REOPENING THE ASSESSMENT BY THE AO T HE CONDITION PRECEDENT OF REASON TO BELIEVE ESCAPEMENT OF INCOME IS SINE QUA NON. IT MUST BE KEPT IN MIND THAT REASONS TO BELIEVE POSTULATES FOUNDATION BASED ON INFORMATION AND BELIEF BASED ON REASON. EVEN IF THERE IS FOUNDATION BASED ON IN FORMATION, STILL THERE MUST BE SOME REASON WARRANT HOLDING THE BELIEF THAT INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT. IT HAS TO BE KEPT IN MIND THAT THE HONBLE SUPREME COU RT IN GANGA SARAN & SONS P. LTD. VS. ITO (1981) 130 ITR 1 (SC) HELD THAT THE EXPRESSION REASON TO BELIEVE OCCURRING IN SEC. 147 IS STRONGER THAN THE EXPRESSION IF SATISFIED AND SUCH REQUIREMENT HAS TO BE MET BY THE AO IN THE REASONS RECORDED BEFORE USURPING THE JURISDICTION U/S. 147 OF THE ACT. WE NOTE THAT BEFORE THE AO ASSUMES JURISDICTION TO RE -OPEN IT IS NECESSARY THAT THE CONDITIONS LAID DOWN IN THE SAID SECTION 147 HAS TO BE SATISFI ED VIZ., AO SHOULD RECORD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX FOR THAT ASSESSMENT YE AR HAS ESCAPED ASSESSMENT . IF THIS CONDITION IS NOT SATISFIED AT THE FIRST PLACE, THEN IT CANNOT BE SAID THE AO HAS VALIDLY ASSUMED JURISDICTION U/S. 147 OF THE AC T. THEREFORE, THE QUESTION FOR CONSIDERATION IS WHETHER ON THE BASIS OF THE REASON S RECORDED BY THE AO, HE COULD HAVE VALIDLY USURPED THE JURISDICTION TO REOPEN AND REAS SESS THE ASSESSEE ON A DIFFERENT ISSUE WHICH HAS NOT FOUND PLACE IN THE REASON RECORDED, W HEN THE FACT IS THAT THE PRECISE BASIS (ISSUE) RECORDED IN REASONS TO BELIEVE ESCAPEMENT O F INCOME HAS DISAPPEARED OR DROPPED. FOR THAT IT HAS TO BE SEEN AS TO WHETHER THE AO ON THE BASIS OF WHATEVER MATERIAL BEFORE 14 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 HIM, [WHICH HE HAD INDICATED IN HIS REASONS RECORD ED] THE AO HAD REASONS WARRANT HOLDING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS IMPORTANT TO REMEMBER THAT THE REASONS RECORDED BY AO TO REOPEN HAS TO BE EVALUATED ON A STAND-ALONE BASIS AND NO ADDITION/EXTRAPOLATION CAN BE MADE OR ASSUM ED, WHILE ADJUDICATING THE LEGAL ISSUE OF AOS USURPATION OF JURISDICTION U/S. 147 O F THE ACT. MOREOVER, THE PARLIAMENT HAS GIVEN POWER TO AO TO REOPEN THE ASSESSMENT, IF THE CONDITION PRECEDENT AS DISCUSSED ABOVE IS SATISFIED, AND NOT OTHERWISE. IT HAS TO BE KEPT IN MIND THAT THE JURISDICTIONAL FACT AND LAW IS THE INCOME WHICH ACCORDING TO AO, ESCAPED ASSESSMENT, WHICH H E HAS TO SPELL OUT WHILE RECORDING REASONS FOR REOPENING U/S. 147 OF T HE ACT. THIS INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH ACCORDING TO HIM, CONS TITUTED THE BASIS/FOUNDATION FOR REOPENING IS PRECISELY THE JURISDICTIONAL FACT AND LAW WHICH EMPOWERED HIM TO USURP THE JURISDICTION TO REOPEN AND REASSESS THE ESCAPED INC OME AS CONTEMPLATED U/S. 147 OF THE ACT. WE NOTE THAT IN THE PRESENT CASE IN HAND NOTICE U/S . 148 FOR REOPENING WAS ISSUED ON 17.02.2015 AND THE REASONS RECORDED FOR REOPENING T HE ASSESSMENT WAS THAT THE ASSESSEE HAS SUPPRESSED THE ACTUAL PRODUCTION OF IRON ORE T O THE TUNE OF 8,78,079 MT VALUED AT RS.1,79,41,61,259/- THEREBY ESCAPEMENT OF INCOME H APPENED AND FOR WHICH PRECISE REASON RECORDED AO INVOKED THE REOPENING JURISDICTION AFTE R THE ASSESSMENT WAS FRAMED U/S. 153A/143(3) OF THE ACT ON 28.04.2014 (SUPRA). HOWE VER, WE NOTE THAT AT PAGE 3 OF THE REASSESSMENT ORDER THE AO HAS ACCEPTED THE CONTENTI ON OF THE ASSESSEE AFTER GOING THROUGH THE FORM HI FILED BEFORE DG, MINES AND HAS RECORDED THAT HE IS NOT DRAWING ANY ADVERSE INFERENCE SO FAR AS PRODUCTION OF IRON ORE BY THE A SSESSEE AND DID NOT MAKE ANY ADDITION/DISALLOWANCE ON THIS ISSUE FOR WHICH PURPO SE ONLY HE INVOKED HIS REOPENING JURISDICTION U/S. 147 OF THE ACT. SO, WE NOTE THAT HERE IS A CASE WHEREIN THE AO INVOKED THE REOPENING JURISDICTION FOR A SPECIFIC PURPOSE WHICH ISSUE WAS DROPPED, THEN ACCORDING TO ASSESSEE AND RIGHTLY SO, THE CONDITION PRECEDENT FO R ASSUMING JURISDICTION HAS DISAPPEARED/ABSENT, THEN THE AO LACKS JURISDICTION TO PROCEED FURTHER TO REASSESS ANY OTHER INCOME WHICH HE HAS NOT TAKEN NOTE IN THE REASONS R ECORDED TO REOPEN. THEREFORE, THE AO OUGHT NOT TO HAVE PROCEEDED TO REASSESS THE ASSESSE E ON A NEW ISSUE OF ARTIFICIAL LOSS CREATED BY MISUSING THE CLIENTS CODE MODIFICATION. AND, TH EREFORE, THE JURISDICTIONAL FACT WHICH IS 15 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 SINE QUA NON TO ASSUME JURISDICTION IS FOUND TO BE LACKING/ABSENT AND, THEREFORE, THE VERY INVOCATION OF JURISDICTION TO REOPEN ITSELF IS NOT EXISTING AND, THEREFORE, WHEN THE FOUNDATION ON WHICH REOPENING WAS INITIATED IS NON-EXISTING TH EN THE AOS ASSUMPTION OF JURISDICTION IS WITHOUT JURISDICTION AND SO ALL SUBSEQUENT ACTIO N IS A NULLITY IN THE EYES OF LAW. AT THE COST OF REPETITION WE SAY THAT AO WITHOUT SATISFYIN G THE CONDITION PRECEDENT AS STIPULATED UNDER SECTION 147 OF THE ACT CANNOT HAVE SUCCESSFUL LY USURPED THE REOPENING JURISDICTION, SO AS DISCUSSED ABOVE THE PRECISE FACT FOR WHICH TH E AO RE-OPENED IN THIS CASE DISAPPEARED AFTER AO DROPPED THE SAME, THEREAFTER IDEALLY THE A O SHOULD HAVE DROPPED THE REASSESSMENT PROCEEDINGS AND OUGHT NOT TO HAVE PROC EEDED TO REASSESS THE ASSESSEE ON AN ISSUE WHICH HE DID NOT REFER AT ALL IN THE REASONS RECORDED TO JUSTIFY RE-OPENING. THE EXPLANATION (3) TO SEC. 147 OF THE ACT, WILL COME TO THE AID OF THE AO/DEPARTMENT ONLY WHEN THE AO HAS SUCCESSFULLY USURPED/ASSUMED THE RE OPENING JURISDICTION ON THE STRENGTH OF THE REASONS RECORDED BY HIM TO RE-OPEN THE ASSES SMENT. SO WITHOUT SUCCESSFULLY SATISFYING THE CONDITION PRECEDENT TO REOPEN I.E. R EASON TO BELIEVE ESCAPEMENT OF INCOME, WHICH CAN BE DISCERNED FROM READING OF THE REASONS RECORDED BY THE AO THAT TOO ON A STAND ALONE BASIS, THE AO CANNOT PROCEED TO MAKE ANY OTHE R ADDITIONS WITHOUT MAKING ANY ADDITIONS ON THE FACTS SPECIFICALLY STATED IN THE R EASONS RECORDED FOR WHICH HE DECIDED TO REOPEN. WE WOULD LIKE TO MAKE IT CLEAR THAT IN THI S CASE WHEN THE AO REALIZED THAT THE REASON FOR RE-OPENING I.E, SUPPRESSION OF IRON ORE PRODUCTION IS NON-EXISTING, THEN THE AO SHOULD HAVE FIRST DROPPED THIS REASSESSMENT; AND TH EREAFTER OUGHT TO HAVE RECORDED REASONS INDICATING ESCAPEMENT OF INCOME ON ACCOUNT OF MISUS E OF CLIENT CODE MODIFICATION AND ISSUED FRESH NOTICE U/S 148 OF THE ACT AND INITIATE D REASSESSMENT FOR THE SAME. WE NOTE THAT THE HONBLE BOMBAY HIGH COURT IN JET AIRWAYS (I) LT D. (SUPRA) HAVE DISCUSSED ALL THE CASE LAWS ON THE ISSUE AND CONSIDERED VARIOUS HONBLE HI GH COURTS DECISIONS. HOWEVER, WE NOTE THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN MAJ INDER SINGH KANG (SUPRA) HAS NOT DELVED INTO THE RATIO DECIDENDI LAID BY THE HONBLE BOMBAY HIGH COURT DECISION IN JET AIRWAYS (I) LTD. (SUPRA). THE HONBLE PUNJAB &HARY ANA HIGH COURT IN THE CASE OF CIT VS. MEHAK FINVEST (P) LTD. (SUPRA) HAS FOLLOWED THE DIV ISION BENCH ORDER IN MAJINDER SING 16 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 KANG (SUPRA) SINCE IT WAS BINDING ON THE SAME HIGH COURT AND TAKING INTO CONSIDERATION THAT THE SLP AGAINST THE MAJINDER SINGH KANG HAS BE EN DISMISSED. 10. HOWEVER, WE NOTE THAT THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF JET AIRWAYS (SUPRA) HAS CONSIDERED AT LENGTH THE EFFECT OF THE INSERTION OF EXPLANATION (3) TO SEC. 147 OF THE ACT BY THE FINANCE NO. 2 ACT, 2009 RETROSPECTIV ELY W.E.F. APRIL 1, 1989 AND HAS LAID DOWN THE RATIO DECIDENDI OF THE ISSUE BEFORE US. WE NOTE THAT THE JURISDICTIONAL HIGH COURT I.E. HONBLE CALCUTTA HIGH COURT IN ITAT NO. 60 OF 2014 IN GA NO. 1736 OF 2014 CIT VS. M/S. INFINITY INFOTECH PARKS LTD. HAS CONCURRED WITH THE VIEW TAKEN BY THE HONBLE DELHI HIGH COURT JUDGMENT IN RANBAXY LABORATORIES V S. CIT 336 ITR 136 (DEL.) AND HONBLE BOMBAY HIGH COURT IN CIT VS. JET AIRWAYS IN DIA LTD. 331 ITR 236 (BOM.) APPROVED THE TRIBUNALS VIEW ON THE SAME WHICH IS R EPRODUCED AS UNDER: WE FURTHER FIND THAT SIMILAR VIEW WAS TAKEN BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS INDIA LTD. (SUPRA ) AND THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES INDIA LTD. (SUPRA). THE RATIO LAID DOWN IN THESE DECISIONS IS THAT REASSESSMENT MUST BE IN THE FIRST PLACE, BE IN RESP ECT OF INCOME ESCAPED ASSESSMENT FOR WHICH THE REASONS WERE RECORDED AND ONLY THEREAFTER IN RE SPECT OF SOME OTHER ITEMS OF ESCAPED INCOME. IF, HOWEVER, THE INCOME, ESCAPEMENT OF WHI CH WAS THE FOUNDATION FOR RECORDING OF REASONS TO BELIEVE, IS NOT ASSESSED OR REASSESSED I N THE ORDER UNDER SECTION 147, THEN IT IS NOT MERE OPEN TO THE AO TO INDEPENDENTLY ASSESS ANY OTH ER INCOME, WHICH COMES TO HIS NOTICE SUBSEQUENTLY. ( EMPHASIS GIVEN BY US) 11. SINCE WE HAVE TAKEN NOTE THAT THERE IS NO WHISP ER ABOUT THE ESCAPEMENT OF INCOME I.E. LOSS CREATED BY MISUSING CLIENTS CODE MODIFIC ATION HAS BEEN MENTIONED IN THE REASONS FOR REOPENING CONVEYED TO THE ASSESSEE VIDE LETTER DATED 19.03.2015 NO ADDITION IN RESPECT OF THIS CAN BE MADE WITHOUT MAKING ANY ADDITION IN RES PECT TO THE ITEM SHOWN TO HAVE BEEN ESCAPED ASSESSMENT IN THE REASONS RECORDED BY IBID LETTER DATED 19.03.2015. DURING REASSESSMENT WHEN THE AO FINDS THAT THE ITEM ON THE BASIS OF WHICH HE REOPENED DOES NOT SURVIVE, THEN THE REASONS RECORDED TO REOPEN LOSES ITS SIGNIFICANCE AND THE FALL OUT IS THAT THE AOS JURISDICTION TO REASSESS IS WITHOUT JURISDICTI ON AND THEREFORE IS ILLEGAL AND FRAGILE IN THE EYES OF LAW; AND THEREAFTER HE SHOULD HAVE DROPPED THE REASSESSMENT PROCEEDING THERE ONLY AS DISCUSSED SUPRA. THEREFORE, AFTER HAVING NO JUR ISDICTION TO REASSESS HIS FURTHER ACTION OF A NEW FACT FINDING IN THE ABSENCE OF ANY ITEM SPECIFI ED IN THE REASONS RECORDED WHICH IS THE 17 IT(SS)A NOS. 122 & 123/KOL/2017 ARYAN MINING & TRADING CORPN. LTD., AY 2009-10 & 20 10-11 FOUNDATION ON WHICH HE REOPENS WHEN NO LONGER SUBSI STS, THE AOS ACTION IS HIT BEING QUARUM NON-JUDICE AND, THEREFORE, THE IMPUGNED ADDITION IS NON-EST I N THE EYES OF LAW AND SO IT HAS TO NECESSARILY GO. THEREFORE, THE APPEAL OF THE REVENUE IS DEVOID OF ANY MERITS AND, WE FIND THAT THE LEGAL ISSUE HAS BEEN RIGHTLY DECID ED IN FAVOUR OF THE ASSESSEE AND THE ACTION OF THE LD. CIT(A) IS UPHELD. SINCE WE HAVE DECIDED THE LEGAL ISSUE, THE MERITS OF THE CASE HAVE BECOME ACADEMIC IN NATURE AND NEEDS NO ADJUDIC ATION. 12. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 22/05/201 9 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22ND MAY, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT DCIT, CENTRAL CIRCLE-2(2), KOLKATA 2 RESPONDENT M/S. ARYAN MINING & TRADING CORPORATIO N LTD., P-1, HIDE LANE, 8 TH FLOOR, KOLKATA-700 073. 3 4 5 CIT(A)-21, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR