Income escaping assessment u/s 147

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CA Vap Patel (Querist)
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02 November 2014 One of our client serve with notice u/s 148.The reason for such notice is improper deduction under house property. This notice is valid as there was mistake in claiming house property deduction due to which there is some income which has escaped. Now if AO go for 147 proceeding then he will scrutinize other heads of income also like capital gain, other sources etc. But my client does not have proper record of capital gain. So will AO have right to add those incomes also on the basis of lack of record ????

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 November 2014 AO cannot use a 148 proceeding to open up other aspects of the return. only that portion which is covered under the notice shall looked into.

CA Vap Patel

CA Vap Patel (Querist)
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04 November 2014 But Nikhil,
It is clearly written in Explanation 3 to section 147, which read as follows
"For the purpose of assessment or reassessment under this section, the AO may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reason for such issue have not been included in the reasons recorded under subsection(2) of section 148.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 November 2014 Dear Vap,

my partial mistake...

in your case, the explanation will hold good given that the initial ground of reassessment holds good (error in house property income).

Had that ground been rejected, then the AO wont have been able to look into other incomes...refer Bombay High court judgment in Jet Airways case ( ITA No.1714 of 2009 with ITA No.1426 of 2008)

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