MAHESH KUMAR,DELHI V. ITO,WARD-68(6), DELHI

ITA 2650/DEL/2024

AI Insights

The case involves Mahesh Kumar, the appellant, who challenged the reassessment order passed by the Income Tax Officer (ITO) for the Assessment Year 2012-13. The reassessment was based on alleged undisclosed income from long-term capital gains (LTCG) and unexplained cash credits and expenditures. The CIT(A) deleted some of these additions, leading to the legal challenge regarding the validity of the reopening of the assessment. The Tribunal, after considering various precedents and the specifics of the case, concluded that the reopening was not valid as the foundational additions were no longer in place, and thus allowed the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714380 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA K. RAMAWAT
• Assessee Lawyers: NEERAJ MANGLA
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Question of law; Unexplained cash credit; Unexplained expenditure; Salary income; Cost of acquisition; Tax effect; Gift; Reopening of assessment; Capital Gains; Sham transactions; Accommodation entries; Source of fund; Competent authority; Wholly owned subsidiary; Reason to believe; Bogus
• Section: 147; 148; 143(3); 68; 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, DELHI BEFORE JUSTICE (RETD.) C.V. BHADANG, PRESIDENT (THIRD MEMBER), SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.2650/Del/2024 [Assessment Year: 2012-13] Mahesh Kumar, 6/305/1A, Doonger Mohalla, Delhi-110032. PAN-AOOPK6335A vs ITO, Ward-68(6), Delhi. APPELLANT RESPONDENT Appellant by Shri Neeraj Mangla, CA Respondent by Shri Krishna K. Ramawat, Sr. DR Date of Hearing 06.08.2025 Date of Pronouncement 06.08.2025 ORDER PER MAHAVIR SINGH, V.P. : This appeal by the assessee is arising out of the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘Ld. CIT(A)’] in Appeal No. CIT(A), Delhi-21/10419/2019-20 dated 30.03.2024. The assessment was framed by ITO, Ward-68, New Delhi for Assessment Year (hereinafter referred to as ‘AY’) 2012-13 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 25.11.2019. 2. At the outset, Ld. Counsel for the assessee drew our attention to the additional grounds raised vide letter dated 18.09.2024. He drew our attention to the specific ground raised challenging re-opening u/s 147 of the Act as bad in law. 3. For this, the assessee drew our attention to Ground no. 3 which reads as under:- 3. “That the reassessment order passed u/s 147 of the Act is further not tenable under the law because the additions made on the basis of reasons recorded for reopening were deleted by Ld. CIT(A) and thus, no additions on the basis of reasons recorded for reopening survives in case of assessee.” Printed from counselvise.com 2 ITA NO.2650/DEL/2024 (A.Y.2012-13) 4. The Ld. Counsel for the assessee being aggrieved from the additions made by the Assessing Officer (hereinafter referred to as ‘AO’) and confirmed by the Ld. CIT(A) raising various grounds forming part of the appeal. He stated that the legal issue raised by the assessee as regards to re-opening of assessment and assumption of jurisdiction u/s 147 of the Act by the AO which is purely legal issue but could not be incorporated with the original grounds of appeal agitated and as such the same now is being taken as additional ground. He also stated that being purely of legal in nature and no new facts are required to be investigated in the present appeal and keeping in view the decision of the Hon’ble Supreme Court in the case of NTPC vs CIT 229 ITR 383 (SC), the ground need to be admitted and be adjudicated. 5. The Ld. Sr. DR opposed the admissibility of the additional ground but could not controvert the facts situation narrated by the Ld. Counsel for the assessee. 6. After hearing both the sides and going through the facts we are of the view that the issue of re-opening of assessment being purely legal in nature and goes to the route of the matter. Further no new facts are to be investigated. Accordingly, we admit this ground and adjudicate thereupon. 7. At the outset, the Ld.Counsel for the assessee drew our attention to the reasons recorded, which are mentioned by AO in para 2 and 2.1 as under:- 2. “Subsequently, an information in the case was received from ITO (Inv.), Unit-7, New Delhi and a report in this regard has been received which is available on record. As реr information, the assessee has received accommodation entries amounting to Rs.9,60,000/- on different dates during the F.Y. 2011-12 pertaining to assessment year 2012-13 in the form of long term capital gain on which exemption u/s 10(38) of the I.T. Act was claimed. During investigations, it is found that he is one of the beneficiaries of accommodation entries received in the form of LTCG through an entry operator group who is involved in manipulation of prices of various scrips by rigging them and launder money in the garb of LTCG. 2.1. As per information, the assessee has taken accommodation entry of Rs.9,60,000/- in the shape of long term capital gain earned by manipulation of transactions of sale purchase of shares in a scrip controlled by the group of entry operator. But on examination of the return of come, it is found that the assessee Printed from counselvise.com 3 ITA NO.2650/DEL/2024 (A.Y.2012-13) has not shown the amount of long term capital gain of Rs.9,60,000/- at all and thus concealed the particulars of his income. The same being found undisclosed unexplained, a notice u/s 148 of the I.T. Act 1961 was issued after obtaining prior approval of the competent authority.” 8. The Ld.Counsel for the assessee took us through the computation of income and stated that the AO has made the following additions:- Income as per ITR Rs.2,07,380/- Add:-Addition on account of LTCG u/s 68 as discussed above 10 Rs.9,60,000/- Add:-Addition u/s 68 as discussed above para 11 Rs.15,48,000/- Add:-Addition u/s 68 as discussed above para 12 Rs.20,62,375/- Taxable income Rs.47,77,755/- 9. The Ld.Counsel for the assessee stated that apart from the reasons recorded for making addition of LTCG of Rs.9.60 lakhs, the AO made addition of Rs.15.48 lakhs being cash and cheques deposited in assessee’s bank account u/s 68 of the Act as well as addition of Rs.20,62,375/- being amount invested in purchase of property u/s 68 of the Act. The Ld.Counsel for the assessee, thereafter, took us through the order of Ld.CIT(A) and stated that the Ld.CIT(A) has deleted the addition made by the AO on account of bogus share transactions claimed as LTCG by observing as under:- VI. BOGUS SHARE TRANSACTIONS a. “The shares were never purchased in the year 2009-10 or any earlier year as claimed. The contract notes furnished are fabricated and bogus. The shares are received in the demat account of the beneficiary by way of off market transfer from conduit accounts. In the conduit account, shares were received from another conduit account by way of off market transaction. In this second or end conduit account, these shares were received by way of purchase through current stock market transaction. This clearly establishes that the shares were actually acquired immediately (very few days) before the day as it has been shown to be credited in the demat account of beneficiary and not long back (years) earlier as claimed by the subject. Unaccounted money, in cash, was utilized for these arranged purchase of shares from market. These shares were transferred through one or a series of layers to the demat account of the beneficiary assessee. The beneficiary assessee sold the shares market paying STT and received sales consideration through banking channel. The entry providers arranged/furnished bogus contract notes, showing the purchases long time back Printed from counselvise.com 4 ITA NO.2650/DEL/2024 (A.Y.2012-13) on a fictitious date. The sales consideration was reduced by concerned cost of acquisition and the gains claimed as exempt. In case of loss, such loss is set off against the taxable profits. Thus unaccounted money was brought into the books by fictitious and sham transactions and evading due taxes. This argument of the assessee cannot be accepted in toto. Because the STATEMENT OF ACCOUNTS is filed. A cheque of Rs 1145491 is received and an STT of Rs 1435 is paid and other charges of Rs 115 is also paid. Since these details are clearly there the credit for the share transaction has to be given. This is treated as genuine transaction and the addition on account of Rs 1145490 is deleted.” 10. In view of the above, the Ld. Counsel for the assessee stated that the very reason for which reasons were recorded for reopening of assessment u/s 148 of the Act does not survive and hence, the re-opening has to go and consequent assessment order is to be quashed. For this, the Ld. Counsel for the assessee relied on the decision of the Hon’ble Delhi High Court in thecase of ATS Infrastructure Ltd. Vs ACIT [2024] 166 taxmann.com 61 (Delhi) wherein Hon’ble Delhi High Court considering the case law relied upon by the Ld.Sr.DR in the case of Pr.CIT(Central)-3, New Delhi vsJakhotia Plastics (P.) Ltd. [2018] 94 taxmann.com 89 (Delhi) has quashed the re- opening by observing in para 26 to 33 as under:- 26. This position in law also finds resonance in the judgment of the Punjab and Haryana High Court in Majinder Singh Kang Versus Commissioner of Income-tax and Another11 and where it was observed:- \"8. Learned counsel for the assessee submitted that the Assessing Officer had reopened the assessment by issuing notice under section 148 of the Act on the ground that the income from salary, perquisites and unexplained cash deposits in various accounts along with interest thereon had escaped assessment. The counsel urged that the Assessing Officer, however, while passing the reassessment order had sought to make addition of another amount without any addition having been made on the ground on the basis of which reassessment had been initiated. According to the learned counsel, no reassessment order could be passed by the Assessing Officer. Learned counsel for the assessee relied upon the following observations made by this court in CIT v. Atlas Cycle Industries [1989] 180 ITR 319 (page 322): Printed from counselvise.com 5 ITA NO.2650/DEL/2024 (A.Y.2012-13) \" ...we are of the view that the Tribunal was right in cancelling the reassessment as both the grounds on which reassessment notice was issued were not found to exist, and the moment such is the position, the Income-tax Officer does not get the jurisdiction to make a reassessment.\" 9. Support was also drawn from the decision of the Rajasthan High Court in CIT v. Shri Ram Singh (2008) 306 ITR 343 (Raj) wherein judgment of this court in Atlas Cycle Industries' case (1989) 180 ITR 319 (P&H) was followed.\" ……………………………… 12. A plain reading of Explanation 3 to section 147 clearly depicts that the Assessing Officer has power to make additions even on the ground on which reassessment notice might not have been issued in case during the reassessment proceedings, he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for reassessment under section 148 of the Act. The provision nowhere postulates or contemplates that it is only when there is some addition on the ground on which reassessment had been initiated, that the Assessing Officer can make additions on any other ground on the basis of which income may have escaped assessment. The reassessment proceedings, thus, in the present case cannot be held to be vitiated. 27. For the sake of completeness, we may note that a Division Bench of this Court had expressed certain doubts with respect to the view taken by the Court in Ranbaxy Laboratories Ltd. This becomes evident upon a consideration of the opinion expressed by the Court in Principal Commissioner of Income Tax vs. Jakhotia Plastics Pvt. Ltd. 12 The Court in Jakhotia Plastics had expressed certain reservations with respect to what it viewed as undue importance having been placed by the Bombay High Court on the words \"and also\" in Jet Airways (I) Ltd. 28. In light of the above, the Court in Jakhotia Plastics had observed that since there was some doubt as to the accuracy of the interpretation accorded in Ranbaxy Laboratories Ltd., it would be appropriate for the matter being placed for the consideration of a larger Bench. This becomes evident from a reading of paragraphs 13, 14 and 15 of the report and which are extracted hereinbelow:- \"13. This Court specifically is of the opinion that the Karnataka High Court's view in the case of N. Govindaraju (supra) is a more accurate one. In this Court's view the emphasis placed in Jet Airways's case (supra) Printed from counselvise.com 6 ITA NO.2650/DEL/2024 (A.Y.2012-13) on \"and also\" undermines the essential Order dated 22.01.2018 in ITA 727/2017 objective of Section 147 of the Act and unduly restricts and narrows it. The circumstance clarifies existence of an additional power to bring to tax other sums. This per se would not mean that the sums or amounts sought to be brought to tax in a reassessment notice (which are ultimately not the subject of the final reassessment orders), act as a limitation. 14. Having regard to the facts, this Court is of the opinion that since there is some doubt as to the accuracy of the interpretation in the case of Ranbaxy Laboratories Limited (supra) and which was subsequently followed in the case of Monarch Educational Society (supra), the appropriate course would be to refer the issue to a larger Bench. 15. The following issue is accordingly framed for reference to the Full Bench i.e. whether the view expressed in the case of Ranbaxy Laboratories Limited (supra) [following Jet Airways's case (supra) of the Bombay High Court and followed later in Monarch Educational Society's case (supra)] with respect to the interpretation of Section 147 read with Explanation (3) of the Act, is restrictive, so as to sustain only additions made in the course of reassessment proceedings subject to the additions of amounts adverted to in the reassessment notice in the \"reasons to believe\" under Sections 147/148 of the Act and notice pursuant thereof?\" However, the aforesaid reference ultimately came to be closed on 07 February 2020 on account of low tax effect. 29. In our considered opinion, and bearing in mind the import of Explanation 3 as well as the language in which Section 147 of the Act stands couched, we find no justification to differ from the legal position which had been enunciated in Ranbaxy Laboratories Ltd. We also bear in consideration the said decision having been affirmed and approved subsequently in Commissioner of Income-tax (Exemption) vs. Monarch Educational Society13 and Commissioner of Income-tax vs. Software Consultants 14. 30. We thus, come to the conclusion that the enunciation with respect to the indelible connection between Section 148A(b) and 2016 SCC OnLine Del 6636 2012 SCC OnLine Del 316 Section 148 A(d) of the Act are clearly not Printed from counselvise.com 7 ITA NO.2650/DEL/2024 (A.Y.2012-13) impacted by Explanation 3. As we read Sections 147 and 148 of the Act, we come to the firm conclusion that the subject of validity of initiation of reassessment would have to be independently evaluated and cannot be confused with the power that could ultimately be available in the hands of the AO and which could be invoked once an assessment has been validly reopened. 31. Explanation 3, or for that matter, the Explanation which presently forms part of Section 147, would come into play only once it is found that the power to reassess had been validly invoked and the formation of opinion entitled to be upheld in light of principles which are well settled. The Explanations would be applicable to issues which may come to the notice of the AO in the course of proceedings of reassessment subject to the supervening requirement of the reassessment action itself having been validly initiated. 32. Explanation 3, cannot consequently be read as enabling the AO to attempt to either deviate from the reasons originally recorded for initiating action under Section 147/148 of the Act nor can those Explanations be read as empowering the AO to improve upon, supplement or supplant the reasons which formed the bedrock for initiation of action under the aforenoted provisions. 33. The writ petitions are accordingly allowed and the impugned notices and orders in each of the above-captioned writ petitions are quashed. The impugned orders under Section 148A(d) dated 31.07.2022 [W.P.(C) 3807/2023], 23.07.2022 [W.P.(C) 3804/2023], and 29.07.2022 [W.P. (C) 3808/2023], respectively as well as the notices under Section 148 dated 31.07.2022 [W.P.(C) 3807/2023], 23.07.2022 [W.P.(C) 3804/2023], and 29.07.2022 [W.P.(C) 3808/2023], respectively are hereby quashed.” 11. Even Hon’ble High Court of Calcutta in the case of CIT(Exemption) v B. P. Poddar Foundation For Education [2023] 148 taxmann.com 125 (Calcutta) exactly on similar facts where addition was deleted by Ld.CIT(A) on the reasons recorded and other additions were sustained, the Hon’ble High Court has quashed the assessment by observing in para 13 & 14 as under:- 13. “The decisions in Jet Airways (I) Ltd. (supra) and Ranbaxy Laboratories Ltd. (supra) were also followed and the appeal in favour of the assessee was allowed in the case of Tractors & Farm Equipment Ltd. (supra) The decision in N. Govindaraju (supra) was considered in Anil Nagpal (supra) and it was held that if Printed from counselvise.com 8 ITA NO.2650/DEL/2024 (A.Y.2012-13) the notice issued under section 148 is invalid the assessing officer cannot reopen the assessment. Further it was held that even if the reasons recorded do not refer to a particular issue, the assessing officer would be entitled to assess the income or reassess the computation of income with regard thereto, if the same comes to his notice during the course of the proceedings for reassessment, however this can be done provided there is a valid notice under section 148 that the assessing officer the jurisdiction to adopt proceedings under section 147 of the Act and the notice is illegal, the reassessment proceedings are invalid. 14. While on this issue, we should bear in mind the decision in the case of GKN Driveshafts (India) Ltd. (supra) wherein it was held that the assessing officer is bound to furnish reasons within a reasonable time and the notice is entitled to file their objection to such notice and the assessing officer is bound to dispose of the same by passing a speaking order. Though the Explanation 3 inserted by the amendment empowers the assessing officer to assess the income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in the course of the proceedings under section 147 notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section 2 of section 148, the prerequisite is there should be a valid notice Admittedly, in the case on hand, the notice was held to be not sustainable. If that be so, the assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The foundation of a reassessment proceeding is a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse.” 12. We noted that in the present case before us, the reasons recorded for taxing the LTCG and the AO treated the sale of shares of bogus transactions and assessed the same u/s 68 of the Act. The Ld.CIT(A) deleted this addition but sustained other additions that is addition of cash and cheque deposited in bank account as unexplained u/s 68 of the Act amounting to Rs.15.48 lakhs and another addition of purchase of property added u/s 68 of the Act amounting to Rs.20,62,375/-. We noted that very basis of reasons recorded for issuance notice for re-opening of assessment u/s 147 r.w.s 148 of the Act does not survive, the re-opening is bad in law in terms of Printed from counselvise.com 9 ITA NO.2650/DEL/2024 (A.Y.2012-13) decision of Hon’ble Delhi High Court in the case of ATS Infrastructure Ltd. Vs ACIT (supra). Even this issue is considered by the Hon’ble Bombay High Court in the case of CIT vsJet Airways (I) Ltd. [2011] 331 ITR 236 (Bombay) wherein it is held :- “Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the 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 or 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 does so, he can also assess or reassess any other income 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 reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, afresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee.” 13. In view of the above proposition of law and ratio laid by Hon’ble Delhi High Court in the case of ATS Infrastructure Ltd. Vs ACIT (supra), we quash this re-opening and allow this appeal of the assessee. 14. As regards to other legal grounds and the grounds on merits, we refrain ourselves from adjudicating the same for the reasons that we have already quashed the re-opening. Hence, all these grounds have become academic. 15. In the result, the appeal of the assessee is allowed. PER BRAJESH KUMAR SINGH, AM, I am unable to persuade myself with the findings of my Learned Vice President, regarding his decision in quashing the reopening in this case and Printed from counselvise.com 10 ITA NO.2650/DEL/2024 (A.Y.2012-13) allowing the appeal of the assessee. My Learned Vice President quashed the reopening by allowing the additional ground no.3 of the appeal filed by the assessee vide letter dated 18.09.2024. The additional ground no.3 of the appeal filed by the assessee is as under:- “3. That the reassessment order passed u/s 147 of the Act is further not tenable under the law because the additions made on the basis of reasons recorded for reopening were deleted by Ld. CIT(A) and thus, no additions on the basis of reasons recorded for reopening survives in case of assessee.” 2. The assessee was a government employee during the year earning salary income from Municipal Corporation of Delhi. The assessee had filed his return of income for AY 2012-13 on 18.06.2012 declaring income at Rs.2,07,380/-, which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’). According to the AO, no regular assessment u/s 143(3) of the Act was made in this case. The assessment in this case was reopened by the AO vide notice u/s 148 of the Act dated 28.03.2019. 2.1. As per the facts mentioned by the AO in para no.2 and 2.1 of the assessment order, the AO had received information from ITO(Inv.) Unit-7, New Delhi, about the assessee having received accommodation entries amounting to Rs.9,60,000/- on different dates during FY 2011-12 pertaining to AY 2012-13 in the form of Long Term Capital Gains(hereinafter referred as ‘LTCG’) on which exemption u/s 10(38) of the Act was claimed. The AO further noted that during investigations, it was found that the assessee was one of the beneficiaries of accommodation entries received in the form of LTCG through Printed from counselvise.com 11 ITA NO.2650/DEL/2024 (A.Y.2012-13) an entry operator, who was involved in manipulation of prices of various scrips by rigging them and laundering money in the garb of LTCG. The AO further noted that on examination of the return of income filed by the assessee, it was found that the assessee had not shown the amount of LTCG of Rs.9,60,000/- at all and thus the AO concluded that the assessee had concealed the particulars of his income. Accordingly, the AO held that the same being found undisclosed/unexplained and therefore he issued a notice u/s 148 of the Act dated 28.03.2019 after obtaining prior approval of the competent authority. The assessment order in this case was passed on 25.11.2019. 3. During the assessment proceedings, the AO issued a show cause notice dated 20.11.2019 to the assessee asking him to show cause why the LTCG should not be treated as not genuine and why it should not be treated as undisclosed and unexplained income of the assessee. The AO noted that no compliance was made by the assessee and after discussing the facts of the case and certain case laws he added the sum of Rs.9,60,000/- u/s 68 of the Act. 3.1. The AO noted that further detailed analysis of evidences available on record i.e. bank statements and statement of affairs filed by the assessee revealed that the assessee had deposited cash amounting to Rs.1,48,000/- and cheques from businessmen amounting to Rs.14 lakhs and further that the assessee had purchased property amounting to Rs.20,62,375/-. The AO asked the assessee to produce the intimation/prior intimation given by him to his employer being the government in respect of the above transactions which Printed from counselvise.com 12 ITA NO.2650/DEL/2024 (A.Y.2012-13) according to the AO was not provided. The AO in view of this fact and in view of the facts mentioned in the assessment order, added a sum of Rs.15,48,000/- (Rs.1,48,000/- + Rs.14,00,000/-) and Rs.20,62,375/- u/s 68 and u/s 69 of the Act respectively. The relevant discussion by the AO in para no.11 and 12 of the assessment order is reproduced as under:- “11. Further, detailed analysis of evidences available on record i.e. bank statements and statement of affair filed it reveals that the assessee has deposited cash amounting to Rs.1,48,000/- and cheques from businessmen amounting to Rs.14,00,000/-. No source of income from cash or cheque has been explained. He was also asked to produce the intimation given by him to his employer being the Govt. employee he has to give prior intimation to the head of department under CCS conduct Rules which was not provided. Moreover assessee has not provided logical reason alongwith confirmation with documentary evidence in the light of section 68 of 11 let 1961 from the concerned person, hence remains unexplained and added back to the income of the assessee u/s 68 of the IT Act 1901. Penalty proceedings u/s 271(1)(e) are being initiated separately for furnishing inaccurate particulars and thereby concealment of income. 12. Further detailed analysis of evidences available on record i.e. bank statements and statement of affair filed it reveals that the assessee has purchased property for Rs.20,62,375/-. Again being the Govt. employee he has to give prior intimation to the head of department under CCS conduct Rules which was not provided hence remains unexplained. Moreover on perusal of ITR filed it is noticed that he is showing his annual income below Rs.3 lakhs so investment in property remains unexplained and added back to the income of the assessee as unexplained expenditure u/s 69 of the IT Act 1961. Penalty proceedings us 271(1(c) are being initiated separately for furnishing inaccurate particulars and thereby concealment of income.” 3.2. Against the above order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) unit-3, Coimbatore, deleted the addition made by the AO under section 68 of the Act in respect of LTCG claimed exempt by the Printed from counselvise.com 13 ITA NO.2650/DEL/2024 (A.Y.2012-13) assessee which as discussed earlier was the basis of reopening of the assessment in this case. The relevant finding of the Ld. CIT(A) are reproduced once again for ready reference:- “a. The shares were never purchased in the year 2009-10 or any earlier year as claimed. The contract notes furnished are fabricated and bogus. The shares are received in the demat account of the beneficiary by way of off market transfer from conduit accounts. In the conduit account, shares were received from another conduit account by way of off market transaction. In this second or end conduit account, these shares were received by way of purchase through current stock market transaction. This clearly establishes that the shares were actually acquired immediately (very few days) before the day as it has been shown to be credited in the demat account of beneficiary and not long back (years) earlier as claimed by the subject. Unaccounted money, in cash, was utilized for these arranged purchase of shares from market. These shares were transferred through one or a series of layers to the demat account of the beneficiary assessee. The beneficiary assessee sold the shares market paying STT and received sales consideration through banking channel. The entry providers arranged/furnished bogus contract notes, showing the purchases long time back on a fictitious date. The sales consideration was reduced by concerned cost of acquisition and the gains claimed as exempt. In case of loss, such loss is set off against the taxable profits. Thus unaccounted money was brought into the books by fictitious and sham transactions and evading due taxes. This argument of the assessee cannot be accepted in toto. Because the STATEMENT OF ACCOUNTS is filed. A cheque of Rs 1145491 is received and an STT of Rs 1435 is paid and other charges of Rs 115 is also paid. Since these details are clearly there the credit for the share transaction has to be given. This is treated as genuine transaction and the addition on account of Rs 1145490 is deleted.” 3.3. On perusal of the above order of the ld. CIT(A), it is seen that his findings are a little abrupt with respect to the discussion made by him in the order while dealing with this issue and the conclusion reached by him in deleting the Printed from counselvise.com 14 ITA NO.2650/DEL/2024 (A.Y.2012-13) addition of the claim of LTCG u/s 68 of the Act. Be that as may be, the fact is that the addition of claim of LTCG u/s 68 of the Act which was the basis for the reopening of the assessment in the case of the assessee was deleted by the Ld. CIT(A). In view of this deletion, my Learned Vice President has held that since the very basis of reasons recorded for issuance notice for reopening of assessment u/s 147 r.w.s. 148 of the Act does not survive and therefore the reopening was bad in law and quashed the reopening and allowed the appeal of the assessee. For this decision, my Learned Vice President has relied upon the following decisions. i. ATS Infrastructure Ltd. vs ACIT (2024)166 taxmann.com 61(Del.) ii. CIT(Exemption) vs B.P. Poddar Foundation For Education [2023] 148 taxmann.com 125 (Calcutta) iii. CIT vs Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom.) 3.4. On perusal of the above decisions, it is seen that in the case of CIT(Exemption) vs B.P. Poddar Foundation For Education (Supra), the facts are identical in as much as that in this cited case also the only reason recorded by the AO for issuing the notice u/s 148 of the Act dated 22.03.2016 for AY 2009- 10 was that income amounting to Rs.59,42,709/- had escaped assessment on the ground that the assessee had deposited money with M/s Nissan Developers and Properties Ltd. which was a specified person of the assessee and was hit by both the sections 13(1)(c)(ii) and 13(1)(d) of the Act. The same was added by the AO in the assessment order dated 28.12.2016 u/s 1417 r.w.s. 143(3) of the Act. Printed from counselvise.com 15 ITA NO.2650/DEL/2024 (A.Y.2012-13) 3.5. On appeal by the assessee, the ld. CIT(A) deleted the addition of Rs.59,42,709/-. However, the Ld. CIT(A) had confirmed the following additions made by AO, which were not part of the reasons recorded by the Assessing Officer. (i) An amount of Rs.3,64,97,000/- invested with Poddar Projects Ltd. (ii) Fee amounting to Rs.37,50,000/- received from students in cash. (iii)Corpus Fund Rs.9,95,000/- (iv)Development Fund Rs.1,07,74,500/- 3.6. In the cited case, the Co-ordinate Bench of Kolkata Tribunal, vide its order dated 13.11.2019 in ITA No.1863/Kol/2019 for AY 2009-10had quashed the reassessment proceedings on the ground that since the addition of Rs.59,42,709/-, which was the basis for reopening of the case, was deleted by the Ld. CIT(A) and that the AO had not issued a fresh notice u/s 148 of the Act to reassess the other income the reassessment proceeding had become null & void in the eyes of law. The relevant finding of the Tribunal in para no.13 in this case is reproduced as under:- “We note that in the assessee`s case under consideration, the assessment for A.Y. 2009-10 was completed u/s. 143(3)/11 of the Act on 01/03/2011. A notice under section 148 of the Act was issued on 22.03.2016 to reopen the assessment u/s. 147 of the Act. The only reason for issuing the said 148 notice as per Reasons Recorded dated 17.08.2016 was that income of Rs.59,42,709/- has escaped assessment for having deposited money with the specified person M/s. Nissan Developers &Properties Pvt. Ltd. We note that addition of Rs. 59,42,709/- was deleted by ld CIT(A) and since AO has not issued a fresh notice under section 148 of the Act to reassess the other income therefore, the reassessment proceedings Printed from counselvise.com 16 ITA NO.2650/DEL/2024 (A.Y.2012-13) initiated by the assessing officer to reassess other income (as noted by us above) is null and void in the eye of law, hence we quash the reassessment proceedings under section 147/148 of the Act.” 3.7. In reaching the above conclusion, the Kolkata Tribunal relied upon the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (2011) 336 ITR 136(Del), where it discussed that the AO may assess or reassess the income 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; however, if after issuing a notice under section 148 of the Act, the AO accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, but as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. The relevant discussion of the Tribunal in para no.12 and 13 of its order is reproduced as under:- 12. We note that it is abundantly clear that the addition of Rs.59,42,709/- made in the assessment order u/s. 143(3)/l47 of the Act dated 28.12.2016,on the basis of the above reasons recorded was deleted by the Ld. C.I.T.(A), vide order dated 30.07.2019. In that view of the matter, the other additions made in the said reassessment order which were not part of the reasons recorded for reopening the assessment are not sustainable in the eyes of law even after insertion of Explanation 3 to section 147 of the Act by Finance Act, 2009. We note that AO may assess or reassess the income 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; however, if after issuing a notice under section 148 of Printed from counselvise.com 17 ITA NO.2650/DEL/2024 (A.Y.2012-13) the Act, the AO accepted the contention of the assessee and holds that the income 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 independently to assess some other income, for that we rely on the judgment of Hon`ble Bombay High Court in the case of Jet Airways (I) limited 331 ITR 236 (Bom), wherein it was held as follows: “21. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment 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 make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold 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 fulfilling the conditions set out in the substantive part of s. 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Sec. 147 has 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 income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under s. 148, he accepted the contention of the assessee and holds that the income 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 independently to assess some other income. If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee.” 13. This view has also been ventilated by the Hon`ble Delhi High Court in the case of Ranbaxy Laboratories Ltd,336 ITR 136 (Del), wherein it was held as follows: “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)]. Printed from counselvise.com 18 ITA NO.2650/DEL/2024 (A.Y.2012-13) We may also note that the heading of s. 147 is \"Income escaping assessment\" and that of s. 148 \"Issue of notice where income escaped assessment\". Sec. 148 is supplementary and complimentary to s. 147. Subs. (2) of s. 148 mandates reasons for issuance of notice by the AO and sub-s. (1) thereof mandates service of notice to the assessee before the AO proceeds to assess, reassess or recompute escaped 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 income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature 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 inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before AO during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under s. 148.” 3.8. The discussion about the order of the Hon’ble Calcutta High Court confirming the relief granted to the assessee by the Tribunal in the cited case is discussed later in this order wherein it is discussed that the decision of the Hon’ble Calcutta High Court in agreeing with the findings of the Tribunal is distinguishable with the facts of the present case. 3.9. In the case of ATS Infrastructure Ltd. vs ACIT(Supra), the facts are distinguishable from the case of the assessee in as much as that in the said case, the AO had issued notice u/s 148A(b) of the Act on the basis of information that assessee had received loan from its 100% subsidiary and the Printed from counselvise.com 19 ITA NO.2650/DEL/2024 (A.Y.2012-13) said issue was not examined during assessment proceedings. In response, the assessee submitted that it had received no loans during the year rather repayment had been made of advance received earlier. The AO passed an order u/s 148A(b) of the Act holding that the reply of the assessee was not tenable and observed that assessee had not provided any evidence with regard to the source of fund utilized for making payment of loan and thus treated loan repayment amount as income and made addition to the income of the assessee. The Hon’ble Court held that repayments of the loan were clearly not the edifice on which notice u/s 148A(b) of the Act was based and the AO could not supplement or improve upon reason, which formed the basis for initiating action u/s 148A and therefore held that since foundational material alone would be relevant for purposes of evaluating whether reassessment powers were justifiably invoked and since it was not and therefore, the reassessment proceedings were quashed and set-aside. However, in the case of the present assessee, the AO had disallowed the claim of the assessee of LTCG of Rs.9,60,000/- being claimed as exempt u/s 10(38) of the Act on the basis of which the assessment was reopened and was added u/s 68 of the Act unlike the case relied upon in which no addition was made by the AO in respect of the loan received by the assessee from its 100% subsidiary, which was the basis of reopening of the assessment. 3.10. Similarly, in the case of CIT vs Jet Airways (I) Ltd.(supra), Hon’ble Bombay High Court had framed the following substantial question of law. Printed from counselvise.com 20 ITA NO.2650/DEL/2024 (A.Y.2012-13) “Where upon the issuance of a notice under section 148 of the Income Tax Act, 1961 read with section 147, the Assessing Officer does not assess or, as the case may be, reassess the income which he has reason to believe had escaped assessment and which formed the basis of a notice under section 148, is it open to the Assessing Officer to assess or reassess independently any other income, which does not form the subject matter of the notice.” 3.11. On perusal of the above substantial question of law, it emerges that the AO had not made addition on the issue in this case on which the assessment was reopened and had made additions of other issues not mentioned in the reasons recorded. This is further evident from the findings of the order of the Hon’ble Bombay High Court in para no.21 and 22 in this case and therefore the facts of the said case are distinguishable in the case of the present assessee in as much as in the case of the present assessee the AO had disallowed the claim of the assessee of LTCG of Rs.9,60,000/- being claimed as exempt u/s 10(38) of the Act on the basis of which the assessment was reopened and was added u/s 68 of the Act. The relevant extract of the decision of the Hon’ble Bombay High Court in para no.21 and 22 are reproduced as under:- “21. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment of reassessment on grounds other than those on the basis of which a notice was issued under section148. 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 Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance (No. 2) Act of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to Printed from counselvise.com 21 ITA NO.2650/DEL/2024 (A.Y.2012-13) explain its contents and cannot be construed to override it or render the substance and 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 does so, he can also assess or reassess any other income 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 reason to believe had escaped assessment, has as a matter of fact not escaped assessment. it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147 and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147 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 Assessing Officer may assess or reassess such income \"and also\" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words \"and also\" are used in a cumulative and conjunctive sense. To read these words as being in in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion to Explanation 3 to section 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, (2008] 306 ITR 343. Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147 as they stood after the amendment of April 1, 1989, continue to hold the field. 22. In that view of the matter and for the reasons that 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 Printed from counselvise.com 22 ITA NO.2650/DEL/2024 (A.Y.2012-13) favourof the assessee. The appeal is accordingly dismissed. There shall be no order as to costs.” (emphasis supplied by me) 4. On perusal of the facts in the case of the present assessee and the facts and the decision in the case of ATS Infrastructure Ltd. vs ACIT(supra) and CIT vs Jet Airways (I) Ltd.(supra), it emerges that there is a very thin line of difference but a very vital and critical difference, wherein a case the AO accepts the explanation of the assessee on the issue on which he had reopened the assessment and does not make an addition on the said issue but makes addition of other items and a situation where the AO does not accept the explanation of the assessee on the issue on which the assessment was reopened and makes addition of the same [which was however subsequently deleted in appellate proceedings, which in the present case, the addition of Rs.9,60,000/-, the basis of reopening was deleted by the ld. CIT(A)] and also make additions in respect of other items, which comes to his notice subsequently during the course of reassessment proceedings. This difference is very vital in deciding the present case. To appreciate this difference, the decision of the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT [2011] 336 ITR 136(Del.) is discussed. In this case, the AO had issued notice u/s 148 in respect of items of club fees, gifts and present etc. but the same was not added by the AO in the reassessment order but the AO had reduced the claim of deduction u/s 80HH and 80I of the Act. The Hon’ble Delhi High Court in this case held that it was not permissible. The Hon’ble Court however held that had the AO proceeded to make disallowance in respect Printed from counselvise.com 23 ITA NO.2650/DEL/2024 (A.Y.2012-13) of the items of club fees, gifts and present etc. then in view of the discussion made by the Hon’ble Court in its order, the AO would have been justified as per Explanation-3 of section 147 of the Act to reduce the claim of deduction u/s 80HH and 80I of the Act as well. The substantial question of law and the relevant extract/discussion by the Hon’ble Court in para no.17 to 21are reproduced as under:- \"Whether on facts the Tribunal was right in law in holding that the Assessing Officer had jurisdiction to re-assess issues other than the issues in respect of which proceedings were initiated especially when the reasons for the latter ceased to survive?\" 17. Now, coming back to the interpretation which was given by the Bombay High Court to Sections 147 and 148 in view of the precedent on the subject. The Court held as under:- \"11. ... Interpreting the provision as it stands and without adding or deducting from the words used by Parliament, it is clear that upon the formation of a reason to believe under Section 147 and following the issuance of a notice under Section 148, the Assessing 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 provision should not result in diluting the effect of these words or rendering any part of the language used by Parliament otiose. Parliament having used the words \"assess or reassess such income and also any other income chargeable to tax which has escaped assessment\", the words \"and also\" cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Printed from counselvise.com 24 ITA NO.2650/DEL/2024 (A.Y.2012-13) Parliament has not used the word \"or\". The Legislature did not rest content by merely using the word \"and\". The words \"and\" as well as \"also\" have been used together and in conjunction.\" ... Evidently, therefore, what Parliament intends by use of the words \"and also\" is that the Assessing Officer, upon the formation of a reason to believe Under Section 147 and the issuance of a notice under Section 148(2) must assess or reassess: (i). 'such income'; and also (ii) any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. The words 'such income' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequently during the course of the proceedings as having escaped assessment. If the income, the escapement of which was the basis of the formation of the reason to believe is not assessed or reassessed, it would not be open to the Assessing Officer to independently assess only that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing 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 income under some other issue independently. Parliament when it enacted the provisions of Section 147 with effect from 1st April 1989 clearly stipulated that the Assessing Officer has to assessee or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment the former, he cannot independently assess the latter.\" 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 Printed from counselvise.com 25 ITA NO.2650/DEL/2024 (A.Y.2012-13) and if he does so, he can also assess or reassess any other income 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 reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under Section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 18. We are in complete agreement with the reasoning of the Division Bench of Bombay High Court in the case of Jaganmohan Rao (supra). We may also note that the heading of Section 147 is \"income escaping assessment\" and that of Section 148 \"issue of notice where income escaped assessment\". Sections 148 is supplementary and complimentary to Section 147. Sub-section (2) of Section 148 mandates reasons for issuance of notice by the Assessing Officer and sub-section (1) thereof mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax has escaped assessment. All these conditions are required to be fulfilled to assess or reassess the escaped income chargeable to tax. As per explanation (3) if during the course of these proceedings the Assessing Officer comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under Section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. Printed from counselvise.com 26 ITA NO.2650/DEL/2024 (A.Y.2012-13) 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under Section 80HH and 80- I and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80 HH and 80-I which as per our discussion was not permissible. Had the Assessing Officer proceeded to make dis- allowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per explanation 3 to reduce the claim of deduction under Section 80 HH and 80-I as well. 21. In view of our above discussions, the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. Consequently, we answer the first part of question in affirmative in favour of Revenue and the second part of the question against the Revenue.” (emphasis supplied by me) 4.1. As discussed above, in the case of the present assessee the AO disallowed the claim of the assessee of LTCG of Rs.9,60,000/- claimed as exempt u/s 10(38) of the Act on the basis of which the assessment was reopened and was added u/s 68 of the Act and had also made other additions u/s 68 of the Act in respect of unexplained money andcheque deposit amounting to Rs.15,48,000/-and u/s 69 of the Act in respect of unexplained Printed from counselvise.com 27 ITA NO.2650/DEL/2024 (A.Y.2012-13) purchase of property amounting to Rs.20,62,375/-. Therefore, relying upon the decision of the Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT(supra), it is held that the AO was justified in making additions in respect of the other items being unexplained which he came across during the reassessment proceedings and for this no separate notice u/s 148 of the Act was required to reassess the said other income being unexplained because he had made the addition in respect of the item, on which, he had reopened the assessment. In my humble opinion, the observation of the Hon’ble Court in para no.21 of this order stating that the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive was in the context, wherein, the AO had accepted the explanation of the assessee in respect of the issue on which the assessment was reopened and where no addition was made by the AO in respect of the said issue and not in a situation where the AO had made addition in respect of the issue on which the assessment was reopened but was subsequently deleted in appellate proceedings. Even, when the addition in respect of the issue on which the assessment was reopened but was subsequently deleted in appellate proceedings will not obliterate the validity of the reasons recorded by the AO for the reopening of the assessment and the valid assumption of jurisdiction by the AO for reassessment proceedings u/s 147/148 of the Act. The assumption of jurisdiction by the AO for reassessment proceedings u/s 147/148 of the Act Printed from counselvise.com 28 ITA NO.2650/DEL/2024 (A.Y.2012-13) is on the basis of validity of the reasons recorded by the AO on a particular issue and is not decided by the subsequent deletion of the said issue in appellate proceedings. So, once, the assumption of jurisdiction, on the reasons recorded by the AO are valid, then the consequential reassessment proceedings are also valid and the merits of the addition in respect of items other than on which the assessment was reopened has to be decided on merits notwithstanding the fact that the issue on which the assessment was reopened was subsequently deleted in the appellate proceeding. 4.2 Therefore, in view of the above discussion, the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of ATS Infrastructure Ltd. vs ACIT (supra) will not be applicable to the facts of the present case. 5. Further, the decision of the Hon’ble Calcutta High Court in the case of CIT(Exemption) vs B.P. Poddar Foundation For Education(supra) has also been carefully perused. The substantial questions of law raised by the Revenue before the Hon’ble High Court was as under:- (i) Whether on the facts and circumstances as well as in law the Income Tax Appellate Tribunal was correct in law in holding that the other additions made in the order under Section 147/ 143(3) of the Income Tax act, 1961, which were not part of the reasons recorded for reopening the assessment were not sustainable in the eyes of law even after insertion of Explanation 3 to Section 147 of the Act by Finance Act, 2009 when addition was made by the Assessing Officer on the ground of reopening? (ii) Whether on the facts and circumstances of the case the Learned Income Tax Appellate Tribunal correctly interpret the decision Printed from counselvise.com 29 ITA NO.2650/DEL/2024 (A.Y.2012-13) reported in the case of Jet Airways (1) Limited reported 331 ITR 236 (Bom) and Ranbaxy Laboratories Ltd. reported in 336 ITR 136 (Del) on facts in the instant case? 5.1. As discussed earlier in para no.3.6 of this order, the Kolkata Tribunal had granted relief to the assessee by quashing the reassessment proceedings u/s 147/148 of the Act on the ground that the issue on which reopening was done was deleted by the ld. CIT(A) and the AO had not issued separate notices u/s 148 of the Act in respect of the issues, which according to the AO had escaped assessment during the course of reassessment proceedings and which were added by the AO in the reassessment proceedings. The Hon’ble Calcutta High Court in para-15 of its order held that for all the reasons discussed in its order, the Hon’ble Court was of the considered view that the Tribunal was right in granting relief to the assessee. 5.2. However, on perusal of para-4 of this order, it is noted by the Hon’ble Calcutta High Court that the assessee had contended before the Kolkata Tribunal that the CIT(A) failed to take note of the material irregularity committed by the Assessing Officer while initiating proceedings under Section 148 of the Act for reopening of the assessment under Section 147 without noting the vital fact that the basis of issuing notice under Section 148 was on a wrong assumption of fact that the assessee had invested money with its specified persons. It was contended before the Ld. CIT(A) that there was no failure on the part of the assessee to disclose material facts necessary for completing the assessment and initiating proceedings u/s 147 of the Act was illegal and Printed from counselvise.com 30 ITA NO.2650/DEL/2024 (A.Y.2012-13) unjustified. It was further contended that the notice u/s 148 of the Act was issued after a lapse of five years and further that the assessee had filed detailed objections to the reasons for reopening which was never disposed by the AO as per the law laid down by the Hon’ble Supreme Court in GKN Driveshaft (I) Ltd. vs ITO (2002) 125 taxman 963(SC). It was further submitted that in the original assessment u/s 143(3) of the Act which was completed on 01.03.2011, the AO issued notice to the assessee and called for documents and details, which were furnished and the AO had recorded his satisfaction in the assessment order dated 01.03.2011. It was therefore contended that on the very same facts, the reopening could not be done and the reassessment proceedings was a case of change of opinion in view of the decision of the Hon’ble Supreme Court in the case of CIT vs Kelvinator India Ltd. (2010) 187 taxman 312(SC). 5.3. Further, it was contended that the solitary reason recorded by the Assessing Officer for reopening of the assessment was deleted by the CIT(A) and in such circumstances, the assessment under the other heads done by the Assessing Officer which were not shown as reasons for reopening ought to have been held to be illegal. 5.4. On perusal of this order, it is seen that the Hon’ble High Court decided the appeal in favour of the assessee on the ground that there was no valid notice u/s 148 of the Act in this case. This is evident from the observation of the Hon’ble Court in para no.13 and 14 of its order. The para no.13 and 14 of the said order are reproduced as under:- Printed from counselvise.com 31 ITA NO.2650/DEL/2024 (A.Y.2012-13) “13. The decisions in Jet Airways and Ranbaxy Laboratories were also followed and the appeal in favour of the assessee was allowed in the case of M/s. Tractors and Farm Equipment Limited. The decision in N.Govindaraju was considered in Anil Nagpal and it was held that if the notice issued under Section 148 is invalid the assessing officer cannot reopen the assessment. Further it was held that even if the reasons recorded do not refer to a particular issue, the assessing officer would be entitled to assess the income or reassess the computation of income with regard thereto, if the same comes to his notice during the course of the proceedings for reassessment, however this can be done provided there is a valid notice under Section 148 that the assessing officer the jurisdiction to adopt proceedings under Section 147 of the Act and if the notice is illegal, the reassessment proceedings are invalid. 14. While on this issue, we should bear in mind the decision in the case of GKN Driveshafts (India) Limited wherein it was held that the assessing officer is bound to furnish reasons within a reasonable time and the noticee is entitled to file their objection to such notice and the assessing officer is bound to dispose of the same by passing a speaking order. Though the Explanation 3 inserted by the amendment empowers the assessing officer to assess the income in respect of any issue which has escaped assessment when such issue comes to his notice subsequently in the course of the proceedings under Section 147 notwithstanding that the reasons for such issue have not been included in the reasons recorded under Sub-Section 2 of Section 148, the prerequisite is there should be a valid notice. Admittedly, in the case on hand, the notice was held to be not sustainable. If that be so, the assessing officer cannot be stated to be empowered to make a roving enquiry into other issues which according to him came to his notice during the reassessment proceedings. The foundation of a reassessment proceedingis a valid notice and if this notice is held to be invalid the entire edifice sought to be raised on such foundation has to collapse. (emphasis supplied by me) 5.5. Further, the Hon’ble Court in para no.12 of its order held that the different judicial pronouncements and the explanatory memorandum for introduction of Explanation-3 to Section 147 of the Act rules in favour of the Printed from counselvise.com 32 ITA NO.2650/DEL/2024 (A.Y.2012-13) assesseeand was affirmed by the Hon’ble Court in para no.15 of its order. The relevant extract of para 12 and 15are reproduced as under:- “12. xxxxxx As already noted, except for the Punjab and Haryana High Court in the case of Majinder Singh Kang Versus CIT [2012] 344 ITR 358 (P & H) all courts have uniformly taken a view that Explanation 3 to Section 147 of the Act does not change the situation in so far as the present controversy is concerned. The leading decision of the Bombay High Court in the case of CIT Versus Jet Airways (I) Ltd. Has been followed by different High Courts. In the case of CIT Versus Jet Airways (I) Ltd., the High Court, in its elaborate decision considering the statutory provisions, different judicial pronouncements and the explanatory memorandum for introduction of Explanation 3 to Section 147 of the Act, rules in favour of the assessee. The Punjab and Haryana High Court in the case of Majinder Singh Kang Versus CIT [2012] 344 ITR 358 (P & H) of course has sounded a different note. We may, however, notice that the explanatory memorandum to Explanation 3 to Section 147 of the Act was not brought to the notice of the High Court in the said decision. The High Court gave considerable importance on such Explanation 3 to section 147 of the Act and the language used therein. xxxxxxxxx 15. Thus, for all the above reasons, we are of the considered view that the Tribunal was right in granting relief to the assessee.” (Emphasis supplied by me) 5.6. From the above discussion, it is seen that the Hon’ble Calcutta High Court in allowing relief to the assessee relied upon the decision of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra). However, the facts in the present case are distinguishable from the case of CIT vs Jet Printed from counselvise.com 33 ITA NO.2650/DEL/2024 (A.Y.2012-13) Airways (I) Limited, where the AO had not made addition on the issue on which the assessment was reopened whereas in the present case the AO had disallowed the claim of the assessee of LTCG of Rs.9,60,000/- being claimed as exempt u/s 10(38) of the Act on the basis of which the assessment was reopened and was added u/s 68 of the Act and had also made additionsof Rs.15,48,000/- (Rs.1,48,000/-+Rs.14,00,000/-) and Rs.20,62,375/- u/s 68 and u/s 69 of the Act respectively. 5.7. Further, as discussed above, the reliance placed by the Kolkata Tribunal upon the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra) to hold that once the addition which was the basis of reopening of the assessment has been deleted in appeal and no separate notice u/s 148 of the Act is issued to reopen and assess the new issue, which came across the reassessment proceedings, then the reassessment proceedings would become null and void in the eyes of law is not acceptable because the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra) was on not on the said proposition but was on the proposition that if the AO accepts or does not make any addition in respect of the issue on which the assessment is reopened then he is precluded from making additions in respect of other items, which comes to his notice during the reassessment proceedings, unless the AO has issued a Printed from counselvise.com 34 ITA NO.2650/DEL/2024 (A.Y.2012-13) separate notice u/s 148 of the Act to assess each of the said new issue coming to the notice of the AO during the reassessment proceedings. 5.8. However, as discussed above, in the present case, the AO had made addition in respect of the issue on which the assessment was reopened and also in respect of two other issues which came to his notice during the assessment proceedings on the basis of materials available on record. In the present case, it is not the case that the AO did not make the addition on the issue on which the assessment was reopened u/s 148 of the Act but the said addition was deleted by the Ld. CIT(A). Therefore, the reliance placed by the Kolkata Tribunal on the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra) to hold that if the addition on the basis of which the reassessment was made was deleted in appeal, then the AO could not make addition in respect of other issues which came to his notice during the reassessment proceedings, unless the AO has issued a separate notice u/s 148 of the Act to assess each of the said new issue coming to the notice of the AO during the reassessment proceedings is not acceptable because no such proposition was laid down in the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra). 5.9. In the decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Printed from counselvise.com 35 ITA NO.2650/DEL/2024 (A.Y.2012-13) Ranbaxy Laboratories Ltd. vs CIT (supra), it was the AO who had accepted the explanation of the assessee and did not make the addition on the issue on which the assessment was reopened and it was not a case in which the Ld. CIT(A) had deleted the addition on the issue which was the basis of reopening the assessment. Therefore, in the said decisions of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd.(supra) and of Hon’ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra), the issue was not what will the fate of the other additions, which was made by the AO in the reassessment order and its survival in further appellate proceedings, when the issue which was the basis of reopening of the assessment was added by the AO in the reassessment proceedings but which was subsequently deleted by the Ld. CIT(A). 5.10. Therefore, in view of the above discussion, the decision of the Tribunal and affirmed by the Hon’ble Calcutta High Court in the aforesaid case is not applicable to the facts of the present case. 6. As seen from the assessment order and as discussed above in para no.3.1 of this order the AO had made addition of Rs.15,48,000/- (Rs.1,48,000/-+Rs.14,00,000/-) and Rs.20,62,375/- u/s 68 and u/s 69 of the Act respectively on the basis of evidences available on record and not on the basis of any roving enquiry. 7. Therefore, in view of the above discussion, I do not agree with the finding given by my Learned Vice President that reopening is bad in law in this case Printed from counselvise.com 36 ITA NO.2650/DEL/2024 (A.Y.2012-13) and consequently in quashing the re-opening proceedings. In my view, the assessment was validly reopened and the AO made addition on the issue which was the basis of the reopening. Therefore, it is held that once the AO assumed the jurisdiction u/s 147/148 of the Act as per law and completed the reassessment as per law, then the reassessment order is a valid assessment order and the surviving additions in appeal has to be adjudicated on merits notwithstanding the fact that the issue on which the proceedings u/s 147/148 of the Act was initiated and added in the reassessment order was deleted by the Ld. CIT(A) as in the case of the present assessee. 8. In view of the above discussion, I therefore, dismiss the additional ground no.3 of the appeal of the assessee and hold that the reopening notice dated 28.03.2019 and the assessment order dated 25.11.2019 are valid in this case on the basis of facts available and arguments made in this case. In view of this, the other grounds raised in the appeal on merits of the addition do not remain academic and needs to be deliberated upon and decided on its merits and may be fixed for hearing for adjudication. PER: JUSTICE (RETD.) C.V. BHADANG, PRESIDENT AS THIRD MEMBER: This reference under Section 255(4) of the Income Tax Act, 1961 (‘Act’ for short) arises on account of difference of opinion between two learned Members of the Division Bench. By an order dated 14.02.2025, the following question has been formulated for being decided by the Third Member : Printed from counselvise.com 37 ITA NO.2650/DEL/2024 (A.Y.2012-13) \"Whether, in the given facts and circumstances of the case, the reopening under Section 147 read with Section 148 of the Act is valid or not where the Assessing Officer made addition independently of other income which does not form the subject matter of reopening and where addition made by the Assessing Officer on the basis of reasons recorded for reopening were deleted by the CIT(A) and no addition of that income on the basis of reasons recorded survives which has reason to believe had escaped assessment and which formed the basis of reopening.\" 2. The brief facts are that the assessee was an employee with the Municipal Corporation of Delhi and, inter alia, had salary income. The assessee filed his Return of Income (RoI) for assessment year 2012-13 on 18.06.2012 declaring an income of Rs.2,07,380/-, which was processed under Section 143(1) of the Act. There was no regular assessment under Section 143(3) of the Act made in this case. It appears that the assessment was reopened by the Assessing Officer vide notice dated 28.03.2019 under Section 148 of the Act. The assessment was reopened presumably on account of information received from the Investigation Wing about the assessee having received accommodation entries amounting to Rs.9,60,000/- in financial year relevant to assessment year 2012-13. The Assessing Officer found that the assessee had claimed exemption under Section 10(38) of the Act on the Long Term Capital Gains (LTCG). It was found that the assessee was one of the beneficiaries of the accommodation entries received through an entry operator who was involved in the manipulation of prices of various scrips. The Assessing Officer found that the assessee had concealed the particulars of income. The Assessing Officer completed the assessment on 25.11.2019 and made the following additions :- i) Rs.9,60,000/- under Section 68 of the Act on account of bogus LTCG; ii) Rs.15,48,000/- (Rs.1,48,000/- cash deposit and Rs.14,00,000/- received by cheque) as unexplained cash credit under Section 68 of the Act; and, Printed from counselvise.com 38 ITA NO.2650/DEL/2024 (A.Y.2012-13) iii) Rs.20,62,375/- under Section 69 of the Act being unexplained expenditure as assessee was found to have purchased property for the said sum. It appears that during the assessment proceedings, the Assessing Officer had called upon the assessee to produce the copy of intimation/prior intimation about the purchase of property given by him to the employer, which was not produced. 3. Be that as it may, the assessee, feeling aggrieved, challenged the same before the learned CIT(A). The learned CIT(A) by an order dated 30.03.2024 has partly allowed the appeal to the extent of deleting the addition towards alleged bogus share transaction. The rest of the additions have been confirmed. It is this order which is the subject matter of challenge in the appeal. 4. In this appeal, the assessee had raised additional Ground no. 3 as under :- “3. That the reassessment order passed u/s 147 of the Act is further not tenable under the law because the additions made on the basis of reasons recorded for reopening were deleted by Ld. CIT(A) and thus, no additions on the basis of reasons recorded for reopening survives in case of assessee.” The difference of opinion between the learned Members has arisen in the context of the aforesaid ground. 5. The learned Vice President (Judicial Member) placing reliance on the decision of Bombay High Court in CIT vs Jet Airways (I) Ltd., 331 ITR 236 (Bom) and jurisdictional Delhi High Court decision in ATS Infrastructure Ltd. vs ACIT, 473 ITR 595 (Delhi) has found that once the addition made on account of original reasons recorded (in this case, the addition on account of alleged bogus LTCG is deleted, the other two additions, which were not part of original reasons recorded, cannot be sustained. The learned Printed from counselvise.com 39 ITA NO.2650/DEL/2024 (A.Y.2012-13) Accountant Member, by his dissenting order, has found that the decision in Jet Airways (I) Ltd. (supra) and ATS Infrastructure Ltd. (supra) are distinguishable on facts and cannot be called into aid to delete the balance additions. 6. It is submitted by the learned counsel for assessee that once the addition made by the Assessing Officer relying on the reasons recorded is deleted, no other addition can be sustained as held by the Bombay High Court in Jet Airways (I) Ltd. (supra) and Delhi High Court in ATS Infrastructure Ltd. (supra) and Ranbaxy Laboratories Ltd. vs CIT, 336 ITR 136 (Delhi). It is submitted that the Kolkata Bench of the Tribunal has also taken a similar view in B.P. Poddar Foundation for Education vs ACIT (ITA No. 1863/Kol/2019 decided on 13.11.2019) which has been confirmed by the Calcutta High Court by order dated 13.09.2022 reported in 448 ITR 695 (Calcutta). It is submitted that the learned Accountant Member was not justified in distinguishing these decisions on the ground that in these cases the Assessing Officer had accepted the explanation and had not made any addition. It is submitted that a situation where the Assessing Officer does not make any addition on the basis of the reasons recorded and a situation where such addition is made alongwith some others and the addition made on the basis of the reasons recorded is deleted by the learned CIT(A) cannot be distinguished as the net result is the same. 7. The learned DR has submitted that the learned Accountant Member has considered the factual situation obtaining in each of the cases which have been relied upon by the assessee as also the learned Judicial Member and then has rightly come to the conclusion that the present case is distinguishable inasmuch as in the present case the Assessing Officer had made an addition under Section 68 of the Act of Rs.9,60,000/-, which has been subsequently deleted by the ld. CIT(A). It is submitted that, in such a Printed from counselvise.com 40 ITA NO.2650/DEL/2024 (A.Y.2012-13) case, the assumption of jurisdiction by the Assessing Officer in the reopening of assessment cannot be said to be illegal. 8. I have carefully considered the rival circumstances and the submissions made and I am inclined to agree with the findings recorded by the learned Judicial Member that the reassessment deservers to be quashed and consequently, the appeal is required to be allowed. Here are the reasons. 9. The facts, apart from being matters of record, are not in dispute. In this case, there was no regular assessment under Section 143(3) of the Act. The assessment was sought to be reopened by notice dated 28.03.2019 only on the ground of escapement of income pertaining to exemption of LTCG under Section 10(38) of the Act. In the course of assessment proceedings, the Assessing Officer made two other additions – Rs.15,40,000/- under Section 68 of the Act on account of deposit of cash/cheques which went unexplained and Rs.20,62,375/- being unexplained expenditure on purchase of property under Section 69 of the Act. The learned CIT(A) has deleted the addition on account of the alleged bogus LTCG which was the original basis of the reopening. However, the learned CIT(A) has sustained the other two additions. The question is whether the reassessment can be sustained in such circumstances. 10. I have carefully gone through the differing orders passed by the learned Members of the Bench. While the learned Judicial Member has placed reliance on the decision, viz. ATS Infrastructure Ltd. (supra), B.P. Poddar Foundation for Education (supra) and Jet Airways (I) Ltd. (supra), the learned Accountant Member has found that the decisions in the case of ATS Infrastructure Ltd. (supra) and Jet Airways (I) Ltd. (supra) are distinguishable on the ground that in those cases the Assessing Officer himself had not made any addition on the basis of the reasons recorded for reopening. In other Printed from counselvise.com 41 ITA NO.2650/DEL/2024 (A.Y.2012-13) words, the learned Accountant Member has made a distinction between the cases where the Assessing Officer did not make any addition on the basis of original reasons recorded, but made certain other additions and a case where the Assessing Officer indeed makes addition on the basis of original reasons recorded alongwith other additions and the addition made on the basis of the original reasons recorded is deleted by the learned CIT(A). I am of the considered view that such a distinction could not have been made for the reason that the appellate proceedings before the CIT(A) are a continuation of the original assessment proceedings. Thus, no distinction as sought to be carved out by the learned Accountant Member can be accepted. 11. In Jet Airways (I) Ltd. (supra), following was the substantial question of law posed before the Bombay High Court :- “Where upon the issuance of a notice under section 148 of the Income-tax Act, 1961 read with section 147, the Assessing Officer does not assess or, as the case may be reassess the income which he has reason to believe had escaped assessment and which formed the basis of a notice under section 148, is it open to the Assessing Officer to assess or reassess independently any other income, which does not form the subject- matter of the notice?” 12. The Bombay High Court in the context of Explanation 3 to Section 147 of the Act added by the Finance (No. 2) Act, 2009 held as under :- \"Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the 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 or 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 does so, he can also assess or reassess any other income 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 Printed from counselvise.com 42 ITA NO.2650/DEL/2024 (A.Y.2012-13) initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, afresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee.” 13. Thus, the distinction sought to be made out by the learned Accountant Member, in my considered opinion, cannot be accepted. 14. The learned Accountant Member in para 3.4 of his order has found that the case of B.P. Poddar Foundation for Education (supra) decided by the Kolkata Bench involves identical facts. Incidentally, the decision in the said case has been confirmed by the Calcutta High Court. This aspect has been considered by the learned Accountant Member in para 5 onwards of his order. Before the Calcutta High Court, the Revenue had raised the following substantial question of law :- (i) Whether on the facts and circumstances as well as in law the Income-tax Appellate Tribunal was correct in law in holding that the other additions made in the order under section 147/143(3) of the Income-tax act, 1961, which were not part of the reasons recorded for reopening the assessment were not sustainable in the eyes of law even after insertion of Explanation 3 to section 147 of the Act by Finance Act, 2009 when addition was made by the Assessing Officer on the ground of reopening? (ii) Whether on the facts and circumstances of the case the Learned Income-tax Appellate Tribunal correctly interpret the decision reported in the case of Jet Airways (I) Limited reported 331 ITR 236 (Bom) and Ranbaxy Laboratories Ltd. reported in 336 ITR 136 (Del) on facts in the instant case?” 15. The Calcutta High Court, inter alia, relying upon the decision of Bombay High Court in the case of Jet Airways (I) Ltd. (supra) and that of Delhi High Court in Ranbaxy Laboratories Ltd. (supra) had found that the Tribunal was justified in finding that the reopening was bad in law. However, here again, the learned Accountant Member in para 5.8 of the order has found that the reliance placed by the Kolkata Tribunal on the Printed from counselvise.com 43 ITA NO.2650/DEL/2024 (A.Y.2012-13) decision of Bombay High Court in Jet Airways (I) Ltd. (supra) and the Delhi High Court in Ranbaxy Laboratories Ltd. (supra) “is not acceptable” because no such proposition was laid down in these decisions. The following observations in para 5.8 of his order are relevant :- “5.8 However, as discussed above, in the present case, the AO had made addition in respect of the issue on which the assessment was reopened and also in respect of two other issues which came to his notice during the assessment proceedings on the basis of materials available on record. In the present case, it is not the case that the AO did not make the addition on the issue on which the assessment was reopened u/s 148 of the Act but the said addition was deleted by the Ld. CIT(A). Therefore, the reliance placed by the Kolkata Tribunal on the decisions of Hon'ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra) and of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra) to hold that if the addition on the basis of which the reassessment was made was deleted in appeal, then the AO could not make addition in respect of other issues which came to his notice during the reassessment proceedings, unless the AO has issued a separate notice u/s 148 of the Act to assess each of the said new issue coming to the notice of the AO during the reassessment proceedings is not acceptable because no such proposition was laid down in the decisions of Hon'ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd. (supra) and of Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT (supra).” 16. In my considered view, once the learned Accountant Member had found that the facts in the case of B.P. Poddar Foundation for Education (supra) were identical, it was not open to express any contrary view. That being an order of the co-ordinate Bench was binding. 17. The learned Accountant Member has also reproduced in para 3.2 of the order the observations of learned CIT(A) while deleting the addition in respect to bogus LTCG. The learned Accountant Member found that the findings are “a little abrupt”. Although the reasons given by the learned CIT(A) could have been more specific and clear, the said Printed from counselvise.com 44 ITA NO.2650/DEL/2024 (A.Y.2012-13) aspect cannot be gone into for the reason that ultimately the learned CIT(A) has partly allowed the appeal and deleted the addition and that order has not been challenged by the Revenue and has thus attained finality. 18. In the result, Ground no. 3 as raised by the assessee deserves to be allowed and the impugned addition cannot be sustained. The question as referred to is answered accordingly, holding that the reopening u/s 147 r.w.s 148 of the Act, in this case, is not valid. The appeal, therefore, deserves to be allowed as proposed by the learned Vice President (Judicial Member). PER MAHAVIR SINGH, VP : This appeal was fixed for giving effect to the order of the Ld. Third Member in which the Ld. Third Member concurred with the view of Ld. Vice President (Judicial Member) with regard to the following question framed :- “Whether, in the given facts and circumstances of the case, the reopening under Section 147 read with Section 148 of the Act is valid or not where the Assessing Officer made addition independently of other income which does not form the subject matter of reopening and where addition made by the Assessing Officer on the basis of reasons recorded for reopening were deleted by the CIT(A) and no addition of that income on the basis of reasons recorded survives which has reason to believe had escaped assessment and which formed the basis of reopening.” Printed from counselvise.com 45 ITA NO.2650/DEL/2024 (A.Y.2012-13) 2. The Ld. Third Member has answered the above question vide para no. 18 of his order dated 22.07.2025, which reads as under: - “18. In the result, Ground no. 3 as raised by the assessee deserves to be allowed and the impugned addition cannot be sustained. The question as referred to is answered accordingly, holding that the reopening u/s 147 r.w.s 148 of the Act, in this case, is not valid. The appeal, therefore, deserves to be allowed as proposed by the learned Vice President (Judicial Member).” 3. Since, the Ld. Third Member concurred with the view of Ld. Vice President (Judicial Member) by holding that reopening u/s. 147 r.w.s. 148 of the Act, in this case, is not valid. Accordingly, consequent to the opinion of Ld. Third Member, appeal of the Assessee stands allowed. Order pronounced in the open court on 06th August, 2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT Dated 06/08/2025 Copy of the Order forwarded to : 1. Appellant 2. Respondent. 3. PCIT/CIT(A) 4. DR, ITAT, Delhi 5. Guard file. (Asstt.Registrar)ITAT, DELHI Printed from counselvise.com "