|CORAM:||Annapurna Mehrotra (AM), Bhavnesh Saini (JM)|
|COUNSEL:||Dipendra Mohan, Prathna Jalan|
|DATE:||April 5, 2016 (Date of pronouncement)|
|DATE:||April 15, 2016 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 147/ 148: Law laid down in Jet Airways India 331 ITR 236 and Ranbaxy 336 ITR 136 that if AO does not make any addition for the reason stated for reopening, he cannot add any other income holds good even for years when Explanation 3 to s. 147 is operative|
(i) The argument of the Ld. DR that the ratio propounded in Jet Airways India vs. CIT 331 ITR 236 and Ranbaxy Laboratories Ltd. vs. CIT(2011) 336 ITR 136 does not apply since those cases related to assessment years when Explanation 3 to section 147 was not on the statute, we find has not merit since in the above mentioned decisions the Court has interpreted the provision of section 147 on first principle to hold that only if addition are made on account of income which the AO had reason to believe had escaped assessment that any other addition can be made. It is not Explanation 3 which had been interpreted in favour of the assessee in these cases. In fact we find that Explanation 3 empowers AO’s to make assessment on any matter which comes to their notice during assessment proceedings. But the same alongwith section 147 has been interpreted as stated above. Therefore, the presence or absence of Explanation 3 to section 147 does not nullify the interpretation given by the courts in the above stated judgments. Further the argument of the Ld. DR that the reason is not rendered invalid merely because no addition has been made on account of incomes which the AO had reason to believe had escaped assessment, is also of no consequence, since as is evident from the order cited above, the courts have not held the reasons to be invalid in such cases and quashed the proceedings. The validity of the reasons had not been in issue in these cases, but the courts have interpreted the provisions of section 147 on first principles and held that the AO had no power to assess any other income to tax unless addition is made of income which he had reason to believe had escaped assessment.
(ii) Respectfully following the above judgments, we hold that in the absence of any addition having been made on incomes which the AO had reason to believe had escaped assessment, no addition of any other income could have been made and that the AO had exceeded his jurisdiction in passing the impugned order u/s 147. The same is liable to be quashed. We quash accordingly.