The Commissioner Of Income Taxkarnal v. Vivek Gupta

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ---- Income tax Appeal No. 485 of 2005Date of decision: 8.11.2010 The Commissioner of Income TaxKarnal --- Appellant Versus Vivek Gupta --- Respondent ---- CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL ---- PRESENT:Mr. Yogesh Putney, Advocatefor the appellant. Mr. Avneesh Jhingan, advocatefor the respondent. ---- AJAY KUMAR MITTAL, J. This order will dispose of Income-Tax Appeal Nos. 485and 486 of 2005 as the question of law involved therein is common.The facts have been taken from Income Tax Appeal No. 485 of 2005. This appeal under Section 260A of the Income-tax Act,1961 (for short “the Act’”) has been filed by the Revenue against theorder dated 28.3.2005, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh, (in short “the Tribunal”) in ITANo. 793/Chandi/2004 relating to the assessment year 1994-95. The Revenue’s appeal was admitted on 23.10.2006 fordetermination of the following substantial question of law by thisCourt: “Whether on the facts and in the circumstances of thecase, the Hon’ble ITAT was right in law in cancelling theorder of the CIT(A) in sustaining the action of theAssessing Officer u/s 143(3)/147 as the ratio of judgmentof the Hon’ble Supreme Court of India in the case of V.Jagmohan Rao Vs. CIT (1970) 75 ITR 373, 380 (SC) liesin favour of the Revenue?” Briefly, the facts necessary for adjudication as narrated in the appeal are that the Revenue having come to know that therespondent-assessee had made payment of certain amount to theHaryana Urban Development Authority and the said amount was notaccounted for in his books of accounts, initiated proceedings againsthim, under Section 148 of the Act. The assessing officer framedassessment under Section 143(3) at total income of Rs. 1,07,120/-as against the returned income of Rs. 39,000/- by making theaddition of disallowance under Section 40A(3), disallowance of salestax liability, low withdrawals and unexplained credits etc. ,(AnnexureA-1). The assessee filed appeal before the Commissioner ofIncome Tax (Appeals), [hereinafter referred to as “CIT(A)”] againstthe order of the assessing officer. The CIT(A) confirmed the order,Annexure A-1, and dismissed the assessee’s appeal, vide order dated 22.4.2004, Annexure A-2. The respondent-assesseethereafter moved an application under Section 154 of the Act forrectification of the mistake in the order, Annexure A-2. Theapplication was also dismissed, vide order dated 30.6.2004,Annexure A-3. The respondent-assessee went in appeal before theTribunal. The Tribunal, by order under appeal, cancelled the order ofthe CIT(A), observing that the issue raised before it was squarelycovered by the decision of the jurisdictional High Court in the case ofShri Vipin Khanna vs. CIT reported in 255 ITR 220 wherein it washeld that initiation of proceedings u/s 147 of the Act could be madeonly in respect of items of under assessment and finality of otherissue in such proceedings were not affected. We have heard learned counsel for the parties and haveperused the record. This Court in Income-tax Appeal No. 421 of 2010,Manjinder Singh Kang Vs. Commissioner of Income-tax,Amritsar and another, decided on 13.9.2010, while dealing with thesimilar issue had held that after insertion of Explanation 3 to Section147 of the Act, by Finance (No.2) Act, 2009 retrospectively, w.e.f.1.4.1989, the assessing officer has power to make additions even onthe ground on which reassessment notice might not have beenissued in case during the reassessment proceedings, he reaches aconclusion that there had been escapement of some other incomewhich comes to his notice during those reassessment proceedings. In view of the above, the substantial question of law isanswered in favour of the Revenue. The appeals are consequently This Court in Income-tax Appeal No. 421 of 2010,Manjinder Singh Kang Vs. Commissioner of Income-tax,Amritsar and another, decided on 13.9.2010, while dealing with thesimilar issue had held that after insertion of Explanation 3 to Section147 of the Act, by Finance (No.2) Act, 2009 retrospectively, w.e.f.1.4.1989, the assessing officer has power to make additions even onthe ground on which reassessment notice might not have beenissued in case during the reassessment proceedings, he reaches aconclusion that there had been escapement of some other incomewhich comes to his notice during those reassessment proceedings. In view of the above, the substantial question of law isanswered in favour of the Revenue. The appeals are consequently allowed. Since the Tribunal had not decided other grounds raised by the assessee, the matter is remanded to the Tribunal for decidingother issues in accordance with law. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 8, 2010 JUDGE *rkmalik*