CIT-5 Vs Jet Airways (I) Ltd. (Bombay High Court)
Bombay High Court in CIT-5 vs. Jet Airways (I) Ltd. addressed the scope of reassessment under Section 147 of the Income-tax Act, 1961. The primary question before the court was whether an Assessing Officer (AO), after reopening an assessment under Section 148, could assess income other than what was initially cited in the reassessment notice, even if the originally mentioned escaped income was not reassessed. The case involved two assessment years, 1994-95 and 1995-96, and the Tribunal had previously ruled in favor of the assessee for the 1997-98 assessment year.
Section 147 allows reassessment if the AO has a “reason to believe” that income has escaped assessment. The Finance (No. 2) Act of 2009 inserted Explanation 3 to Section 147, clarifying that the AO could assess other escaped income discovered during the reassessment proceedings, even if not initially recorded in the reassessment notice. However, the Bombay High Court ruled that the AO must first assess the originally cited escaped income before assessing any other escaped income. The court emphasized that the words “and also” in Section 147 meant that additional escaped income could be assessed only if the initially cited income was also reassessed.
