Case Law Details
M/s JDC Traders Pvt. Ltd. Vs DCIT (ITAT Delhi)
A careful reading of Section 147 clearly shows that it empowers the learned AO to assess or re-assess the income in respect of any issue which had escaped the assessment irrespective of the fact that whether such aspect was adverted to in respect of the reasons recorded u/s 147 of the Act. Had the learned AO assessed to re-assessed the issue relating to the closing stock in the proceedings u/s 147, the assessee could not have agitated anything against the same stating that it is beyond the jurisdiction of the learned AO to deal with such an issue. As we have stated earlier in the entire proceedings u/s 147, there was no whisper as to the closing stock. In such an event, we find it difficult to accept the argument of the learned DR that even after conclusion of the proceedings u/s 147 of the Act, the ld. AO can take the aid of Explanation 3 to Section 147 of the Act to make any addition. The difficulty here is that it is not under Explanation 3 to Section 147, ld. AO dealt with the issue of closing stock, but the ld. AO dealt with this issue u/s 154 of the Act. In any case, it is not the case of the Ld. AO that Section 154 is being invoked with respect to the original assessment, finalized under section 143(3) of the Act. If we accept the argument of the learned DR that u/s 154 of the Act, ld. AO is empowered to deal with the escapement of income in respect of which the reasons were not recorded even after the assessment reopened under section 147 of the Act is completed, it would empower the ld. AO to go on making one addition after the other by taking shelter of Explanation 3 to Section 147 endlessly. Such a course is not permissible. Power that is available to the ld.AO under Explanation 3 to Section 147 of the Act, in our considered opinion, is not available to him u/s 154 of the Act, which obviously came to be exercised by the ld. AO after the conclusion of the proceedings u/s 147 of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
Challenging the order dated 24.8.2015 in Appeal No. Del/CIT(A)- 0240/2013-14 passed by the learned Commissioner of Income-tax (Appeals)-5, New Delhi {“CIT(A)}, assessee preferred this appeal.
2. Brief facts of the case are that the assessee is a company engaged in the business of trading, export and printing. For the Asstt. year 2007-08, they have filed their return of income on 30.10.2007 declaring a total income of Rs.65,33,380/- and the same was processed u/s 143(1) of the Income-tax Act, 1961 (“the Act”). Subsequently, by notice dated 8.8.2011 u/s 148 of the Act, learned AO sought to reopen the proceedings by recording reasons on two aspects, namely, in respect of the escapement of income under the head “travelling expenses” on account of purchase of foreign exchange to the tune of Rs.4,78,030/- and claim of the assessee to the tune of Rs.6,58,736/- which was disallowed in the preceding year u/s 40A(ia) of the Act. Learned AO by order dated 14.11.2012 u/s 147/143(3) of the Act made addition of Rs.4,78,030/-under the head “travelling expenses” on account of purchase of foreign exchange by disallowing the same.
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