· The assessee challenged the impugned order passed u/s 147 / 143(3) of the Act on the ground that the order proceeded to tax the sums received in the form of share application amount, which was transferred to ‘share forfeiture account’, under the head of PGBP, whereas, the notice u/s 148 was issued on a different ground, which ultimately did not form part of the impugned order.
· The Hon’ble Court was of the view that a careful reading of Section 147 of the Act would show that it empowers an AO to reopen the assessment if he has reason to believe that any income chargeable to tax has escaped assessment for the relevant year, and also bring to tax any other income which may attract assessment, though, it is brought to his notice subsequently during the course of reassessment proceedings.
· The Court further concluded that the purported income discovered subsequently during the course of reassessment proceedings can be brought to tax, only if the escaped income, which caused the issuance of notice under Section 148 of the Act, is assessed to tax. In other words, if notice for reopening of assessment was issued on one aspect, and in course of reassessment proceedings another aspect was discovered, the reassessment order would be valid, only if, the aspect, which led to the reopening of assessment, continues to form part of the reassessed income.
For further reading, refer the attachment.
Further Reading