Can the AO reassess issues other than the issues in respect of which proceedings were initiated u/s 147 when the original "reason to believe" on basis of which the notice was issued ceased to exist?
No. (As per the judgement on Ranbaxy Labs/Jet Airways)
However, Explanation 3 to Sec 147 states that
-for the purpose of assessment/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 reasons for such issue have not been included in the reasons recorded u/s 148.
The provision and the Case laws seem to be in disagreement with each other. Can anybody please explain?
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Ranbaxy Labs Ltd. (Delhi)/ Jet Airways (I) Ltd. (Bombay) Vs. Explanation 3 to Sec 147
Replies (2)
The provision states that AO can assess or reassess any issue which has escaped income whether such issue has been included in the notice u/s 148 or not.
However, where the original reasons to believe cease to exist then the notice u/s 148 is not valid.
Therefore in the case of Ranbaxy/Jet Airways, the court held that new notice u/s 148 needs to be issued in case the original reasons to believe cease to exist.
There is no contradiction between the case law and the provision.
However, where the original reasons to believe cease to exist then the notice u/s 148 is not valid.
Therefore in the case of Ranbaxy/Jet Airways, the court held that new notice u/s 148 needs to be issued in case the original reasons to believe cease to exist.
There is no contradiction between the case law and the provision.
1. Accept with Mr. Akash. Once notice u/s 148 is issued believing the assessee has income escaping assessment and such incomes are the basis in which notice u/s 148 is issued stating "reasons to believe".
2. With respect to Ranbaxy Labs case law, they have stated once the "reasons to believe" is quashed the order cannot be further proceeded and will not hold valid. However, if the AO during the pendency of proceedings or during the course of proceedings has "reasons to believe" that some other income (income other than the one specified u/s 148 above) has escaped assessment he can again issue a notice u/s 148 for income escaping assessment u/s 147. However this "reasons to believe" can be challenged by the assessee.
3. As stated by Mr. Akash there is no contradiction with case law and provision.
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