The Bombay High Court held that a fresh Reassessment Notice to be issued for assessing additional income was not part of the original assessment.
The Petitioner, received a notice dated 16th March, 2019 under Section 148 of the Income Tax Act, 1961 for A.Y. 2012-13. According to respondents they had reasons to believe that petitioner’s income chargeable to tax for A.Y. 2012-13 has escaped assessment. The reasons indicate that respondents have information that the petitioner has deposited Rs.13,40,000/- in cash during F.Y. 2011-12. Notwithstanding that petitioner has not filed a return of income for A.Y. 2012-13. Therefore, the income chargeable to tax has escaped assessment due to failure on the part of the petitioner to disclose fully and truly all material facts for his assessment.
Mr. Sham V. Walve submitted that as per explanation 3 to Section 147 of the Act, the Assessing Officer may assess or re-assess the income in respect of any issue which has escaped assessment even if such issue comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under Sub Section 2 of the Section 148 of the Act.
The division bench of Justice K.R.Shriram and Justice R.N.Ladha also considered a bank statement which does not show any cash deposit of Rs.13,40,000/-. It only shows cash deposits of Rs.18,000/-. In the order dated 6th November, 2019 disposing the objections, respondents admit and accept that there were cash deposits of only Rs.18,000/- and not Rs.13,40,000/- as alleged in the reasons for re-opening. But according to respondents there were deposits/credits to petitioner account other than in the form of cash, i.e., total credits of Rs.18,81,092/- (cash and non cash) and therefore as no return of income was filed to show such credits it remained unexplained.
“Though, there cannot be any dispute on this statement of Mr.Walve, explanation 3 presupposes that the notice which has been issued was a valid notice. As per explanation 3 it empowers the Assessing Officer to assess or re-assess the income in respect of any issue that comes to his notice subsequently in the course of the proceedings under Section 147 of the Act but if the proceedings under Section 148 of the Act itself has been initiated wrongly, the question of any new issue that would come to his notice subsequently during the course of proceedings under Section 147 of the Act would not arise. 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 which comes to his notice subsequently during the course of the any other income 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,” the court noted.
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