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2025 Supreme(Gau) 301
THE HIGH COURT OF GAUHATI (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
VIJAY BISHNOI, CJ, KAUSHIK GOSWAMI, J
Deputy Commissioner Of Income Tax, Circle Jorhat - Appellant
Versus
Toor Finanace Company Limited - Respondent
ITA 9 / 2023
Decided On : 30-01-2025
For the Appellants : Mr. S.C. Keyal, Standing Counsel, Income Tax Department.
For the Respondent(s): None appears
IMPORTANT POINT
The Assessing Officer can assess any income that escapes taxation, even if not specified in the reopening order, as clarified by Explanation-3 of Section 147.
Headnote:
(A) Income Tax Act, 1961 - Sections 147, 148, and Explanation-3 - Reassessment of income - The court addressed whether the Assessing Officer can add income not specified in the reopening order if no addition was made on the original issue. The Tribunal held that such additions are impermissible, which was contested by the Revenue. (Paras 2 , 6 , 12 , 16 )
(B) Legal interpretation - The court clarified that the phrase 'and also' in Section 147 is disjunctive, allowing for the assessment of 'any other income' independently of the original issue. (Paras 13 , 14 )
Facts of the case:
The respondent filed a return declaring an income of Rs.57,652/-, which was later reassessed to Rs.9,21,96,300/- with significant additions for unexplained credits and commission. The Commissioner deleted these additions, leading to the Revenue's appeal.
Findings of Court:
The court concurred with the Tribunal's dismissal of the Revenue's appeal, emphasizing the need for jurisdiction in making additions.
Issues: The main issue was whether the Assessing Officer could add income not specified in the reopening order.
Ratio Decidendi: The court ruled that the Assessing Officer can assess any other income that comes to notice during reassessment, independent of the original issue.
Result: Appeal allowed; matter remanded to the Tribunal for fresh consideration.
JUDGMENT :
(Vijay Bishnoi, CJ.)
This Income Tax Appeal is preferred on behalf of the Revenue being aggrieved with the order dated 20.09.2022 passed by the Income Tax Appellate Tribunal (ITAT), Guwahati Bench, Kolkata (hereinafter to be referred as “the Tribunal”) in I.T.A. No.305/GAU/2018 for the Assessment Year 2010-11 in respect of the sole respondent herein. The Revenue has also assailed the validity of the order dated 31.08.2018 passed by the Commissioner of Income Tax (Appeals), Jorhat for the assessment year 2010-11 in respect of the sole respondent herein.
2. This Court, on 16.02.2024, while admitting the appeal has framed the following substantial question of law:
“Whether the findings recorded by the Hon’ble ITAT is contrary to the provisions of Explanation-3 of Section 147 of the Income Tax Act, 1961 that if no addition is made on the issue which was mentioned for reopening of the case, the Assessment Officer cannot reassess in a case of escaped assessment?”
3. The brief facts relevant foradjudication of the matterare that the respondent assessee filed its return of income on 27.012.2010 declaring a total income of Rs.57,652/-. The said return was processed under Section 143(1) of the Income Tax Act, 1961 (hereinafter to be referred as “the Income Tax Act”) and the Assessing Officer re-opened the assessment under Section 148 of the Income Tax Act while disclosing the reasons for re-opening contending that he had reason to believe that an amount of Rs.18,00,000/-, which was chargeable to tax,had escaped assessment for the year under consideration and the same needed to be brought under the ambit of taxation and action was being initiated under Sections 147 and 148 of the Income Tax Act.
4. The Assessing Officer concluded the assessment under Section 143 of the Income Tax Act determining the total income of the respondent assessee at Rs.9,21,96,300/-. The Assessing Officer made two additions, namely, Rs.8,94,55,000/- as unexplained credits under Section 68 of the Income Tax Act and Rs.26,83,650/- under Section 69 of the Income Tax Act being commission paid by the assessee for arranging this bogus accommodation entry of unexplained credit amounting to Rs.8,94,55,000/-.The Assessing Officer calculated the commission at the rate of 3% and accordingly determined the taxable income of the assessee at Rs.9,21,96,300/-
5. The assessment order in the matter was passed on 11.12.2017.The respondent assessee challenged the same by preferring an appeal before the Commissioner of Income Tax (Appeals), Jorhat [hereinafter referred to be as “the Commissioner”] and the said appeal was allowed by the Commissioner vide order dated 31.08.2018 concluding that the addition made were liable to be deleted, more so, when no addition has been made in regard to the reasons on the basis of which the reassessment was initiated. The Commissioner also examined the aggregate addition of Rs.9,21,38,650/- (i.e. Rs.8,94,55,000 + Rs.26,83,650/-) on merits and concluded that the same cannot be sustained and therefore, were liable to be deleted.
6. Being aggrieved with the order dated 31.08.2013 passed by the Commissioner, Revenue preferred an appeal before the Tribunal. However, the said appeal came to be dismissed by the Tribunal while holding that the Assessing Officer could not have made addition of any other item which was detected during the reassessment of the escaped income, which has not been specified in the reopening order. While concurring with the findings of the Commissioner on this point, that the Tribunal did not examine on merit the question of addition of Rs.9,21,38,650/- in the income of the assessee.
The operative portion of the order passed by the Tribunal is reproduced hereunder:
“12. The second question posed to us, is whether the ld. Assessing Officer can make addition of any other item which was detected during the reassessment proceed
