By Ashok Dhere, Jagdish D. Shah, Chartered Accountants
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26 ITO v. Smt. Darshan Kaur
w/o S. Adesh Singh
ITAT Amritsar Bench, Amritsar (SMC)
Before Sh. Joginder Pall (AM)
ITA No. 282/ASR/2007
A.Y. : 2001-02. Decided on : 16-11-2007
Counsel for revenue/assessee : M. S. Minhas/
P. N. Arora
S. 147 — Reassessment — When no addition is made on the
ground for which reassessment was initiated, can the AO assess any other income
which comes to his notice in the course of such proceedings — Held, No.
Facts :
The assessee filed return of income for A.Y. 2001-02,
declaring total income of Rs.32,180, which was processed u/s.143(1)(a) of the
Act. Subsequently, based on tax evasion petition, the Assessing Officer
initiated proceedings u/s.147 allegedly on the ground that the assessee had
purchased ½ share of land with one room, on 15-11-2000, for a consideration of
Rs.1,19,250 from undisclosed income. Thus, reassessment proceedings were
initiated to bring to tax unexplained investment in property. In response to
notice u/s.147, the assessee filed return of income declaring total income to be
the same as that shown in his original return. Along with this return of income,
he filed copy of capital account indicating opening capital of Rs.4,56,298. The
assessee had shown withdrawals of Rs.1,25,000 from the said opening capital as
being invested in purchase of property. The assessee explained the source of
opening capital to be accumulated savings of the past. The Assessing Officer
observed that income earned in the past must have been utilised for purchase of
property from which rental income is being shown in the returns. Thus, the
Assessing Officer allowed credit of Rs.1,00,000 of past savings and made an
addition of Rs.3,56,298 on account of opening capital shown in the return. No
addition on account of unexplained investment in purchase of property for which
proceedings were initiated u/s.147 was made. The CIT(A) quashed the order passed
by the Assessing Officer on the ground that no addition in respect of ground for
which proceedings u/s.147 were initiated has been made by the Assessing Officer.
Aggrieved by the order of CIT(A), the Revenue preferred an appeal to the
Tribunal.
Held :
The Tribunal dismissed the appeal filed by the Revenue on the
ground that since the Assessing Officer has not made any addition, in respect of
which proceedings were initiated, he was not competent to bring to tax the
opening capital during the course of completing the reassessment. The Tribunal
observed as under :
(a) No doubt, the amended provisions of S. 147 empower the
AO to assess or reassess the income chargeable to tax, which has escaped
assessment and also any other income chargeable to tax, which has escaped
assessment which comes to his notice subsequently during the proceedings
u/s.147. However, the question of bringing to tax any other income chargeable
to tax, which comes to his notice subsequently during the course of
reassessment proceedings would arise only if the ground for which proceedings
u/s.147 were initiated was found valid.
(b) Since in this case, the AO has not made any addition in
respect of ground for which proceedings were initiated, he was not competent
to bring to tax the opening capital during the course of completing the
reassessment. The AO was competent to initiate separate proceedings u/s.147 to
bring to tax the unexplained capital by dropping the proceedings already
initiated, provided such action was within the time allowed.
