A fresh notice u/s 148 is required if AO wants to assessee any other income other than as per reasons recorded.
In a recent judgment, the Hon’ble Delhi High Court has reiterated that a fresh reopening notice u/s 148 is required if AO wants to assessee any other income other than as per reasons recorded.
ABCAUS Case Law Citation:
4523 (2025) (04) abcaus.in HC
Ina recent judgment, Hon’ble High Court had an occasion to address the issue as to whether the additions made by the AO are sustainable if the reasons for which the reassessment proceedings had been initiated are not sustained.
The Hon’ble High Court observed that the said question is squarely covered by the several decisions of the court.
It was observed that the High Court had construed the expression “and also any other income chargeable to tax” as occurring in Section 147 of the Act to mean that other income could also be brought to tax provided an addition was made for the reasons that had led to initiation of assessment proceedings.
In the said case, the Hon’ble High Court interpreted the provision as it stands and without adding or deducting from the words used by Parliament and came to the conclusion that the Parliament having used the words ‘assess or reassess such income and also any other income chargeable to tax which has escaped assessment’, the words ‘and also’ cannot be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word ‘or’. The Legislature did not rest content by merely using the word ‘and’. The words ‘and’ as well as ‘also’ have been used together and in conjunction.
The Hon’ble High Court held that if after issuing a notice under section 148, the AO accepted the contention of the assessee and holds that the income which he had initially formed a reason to believe had escaped assessment, had as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee.
In coming to the aforesaid conclusion, the High Court expressed complete agreement with the reasoning of the Division Bench of the Bombay High Court and Rajasthan High Court. The High Court further observed that in another case, it had examined catena of decisions and reiterated the same view.
The High Court had held that the position in law which emerges from the aforesaid discussion is that while it is true that the AO would have to establish that reassessment is warranted on account of information in its possession which appears to indicate that income chargeable to tax had escaped assessment, once the assessment itself is reopened it would not be confined to those subjects only. This would, however, be subject only to one additional rider and that being if, in the course of reassessment, the AO ultimately comes to conclude that no additions or modifications are warranted under those heads, it would not be entitled to make any additions in respect of other items forming part of the original return.
Though the Revenue, contended that the said decisions require reconsideration, however conceded that the issue involved is squarely covered by the aforementioned decisions of the High Court.
As a result, the question of law framed was answered in favour of the Assessee and against the Revenue. The appeal was allowed and the additions made by the AO in the impugned assessment order as sustained by the ITAT were set aside.
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