Income Tax Appellate Tribunal - Rajkot
Shri Akolvadi Seva Sahkari Mandli ... vs Income Tax Officer , Jnd-Veraval on 19 March, 2026
आयकर अपीलीय अिधकरण,राजकोट यायपीठ, राजकोट।
IN THE INCOME TAX APPELLATE TRIBUNAL, "SMC"
RAJKOT BENCH, RAJKOT
BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER
आयकरअपीलसं./ITA No. 871 & 902/RJT/2025
नधारणवष/Assessment Year: (2018-19 & 2019-20)
Shri Akolvadi Seva Sahkari Vs. Income Tax Officer, wd-4,
Mandali Ltd. IT Office, Veraval-352265
Village-Akolvadi, Taluka-Talala,
Dist-Junagadh - 362140
थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAGAS4865E
(Appellant) (Respondent)
आयकरअपीलसं./ITA No. 873/RJT/2025
नधारणवष/Assessment Year: (2019-20)
Ghusiya Seva Sahkari Mandali Vs. ITO, wd-4,
Ltd., Yogeshwar Bhuvan, Opp. S.T.Bus-
Village Ghusiya(GIR), Taluko- Stand, Veraval-362265
Talala, Dist.-Junagadh-362150
थायीलेखासं./जीआइआरसं./PAN/GIR No.: AACAG1526A
(Appellant) (Respondent)
Appellant by : Shri R. D. Lalchandani, Ld. AR
Respondent by : Shri Gopi Nath Chaubey Ld. Sr. DR
Date of Hearing : 24/12/2025
Date of Pronouncement : 19/03/2026
आदे श / ORDER
Per, Dr. Arjun Lal Saini, AM ;
Captioned three appeals filed by the different assessees, pertaining to different Assessment Years 2018-19 & 2019-20, are directed against the separate orders passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") by National Faceless Appeal Centre (NFAC), ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
Delhi/Commissioner of Income-tax (Appeals), which in turn arise out of separate orders passed by the Assessing Officer, u/s 147 r.w.s. 144 of the Income Tax Act, 1961.
2. Since, the issue involved in these three appeals are identical and similar, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as grounds narrated in ITA 871/Rjt/2025 for AY 2018-19 have been taken into consideration for deciding these three appeals en masse.
3. When the matter was called for hearing, the learned AR for the assessee at the outset submitted that the appeal in ITA No.873/RJT/2025, for assessment year 2019-20, has been filed by the assessee belatedly. The learned AR adverted my attention to the affidavit filed in this regard citing reasons for condonation of delay and urged for a benign view and sought condonation of delay of 100 days in filing the appeal before the Tribunal. A perusal of the affidavit gives me an impression of existence of mitigating circumstances to enable me to exercise my discretion in favour of the assessee. Accordingly, the delay is condoned
4. Grounds of appeal raised by the assessee in lead case in ITA 871/Rjt/2025 for AY 2018-19, are as follows:
1. The Commissioner of Income Tax (Appeals) erred in dismissing the appeal. The CIT(A) erred in holding that since the Appellant had not filed their return of income in time, the delayed return is Non Est return & no cognizance can be take on the return.
2. Without prejudice to ground no 1, the CIT(A) erred in not disposing the following grounds of the appellant.
1. The learned Assessing Officer erred in reopening the assessment under section 148 of the Income tax Act. The reopening of the assessment is neither justified on facts nor justified in law.
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2. Without prejudice to ground no.1, the learned Assessing Officer erred in passing the order under section 144 of the Income tax Act.
3. Without prejudice to ground no.1 and 2, addition of other income is not justified in law where no addition is made on the basis of which the assessment has been reopened under section 148 of the Act.
4. Without prejudice to ground no.1,2 and 3, the assessment of the co-operative society at the total income of Rs.20,72,127/- and computation of tax at Rs. 13,86,518/- is unwarranted and unjustified.
5. The relevant material facts, as culled out from the material on record, are as follows. An information has been received in category of non -filer management system (NMS) on insight portal that during the period under review, the assessee had entered into significant financial transaction with the Junagadh Jilla Sahkari Bank Limited as per following details:-
Sr. No. Type of Transaction Source Amount
1. Cash withdrawals (including The Junagadh Jilla Rs. 3,35,000/-
through bearer's cheque) in current Sahkari Bank Limited
account
2. Cash deposits (including through The Junagadh Jilla Rs. 2,54,06,850/
bearer's cheque) in current account Sahkari Bank Limited
Total Rs. 2,57,41,850/-
Further, as the assessee failed to furnish its return of income within the time allowed under section 139 of the Income tax Act, 1961, therefore, after following the procedure laid down under section 148 of the Income tax Act, 1961, a query letter cum show cause notice under clause (b) of section 148A was issued to the assessee. Since, no compliance was made by the assessee, therefore, the raised query in the show cause notice u/s 148A(b) remained unverified and unexplained, therefore, necessary order u/s 148A(d) passed in the instant case with prior approval of specified authority as per section 151 of the I.T. Act, 1961. Further, a notice under section 148 of the Act, dated 26/03/2022 was issued along with order passed u/s 148A(d) to the assessee which was duly served upon the assessee. In response to the notice issued u/s. 148 of the I.T. Act, 1961, the assessee was required to file return of income for the period under review within the thirty days from the receipt of the notice u/s 148 of the Act. But the assessee did not file Page | 3 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
return of income in response to notice issued u/s 148 of the I.T. Act, 1961. Subsequently, the case was taken up by the National e-Assessment Centre, Delhi to finalize the assessment proceedings. Accordingly, vide following notice dated 02/02/2023, the assessee was requested to furnish requisite details w.r.t sources and nature of fund used to perform transaction in question. Instead of giving the reply the assesse sought adjournment vide its letter dated-08/02/2023. The same letter has been received in physical form. As per the request of the assesse the case was adjourned by the assessing officer and next hearing was re-fixed on 15/02/2023. Also, letter has been issued to the Junagadh Jilla Sahakari Bank Ltd, invoking section 133(6) of the I.T. Act, 1961 and called relevant details as uploaded in the data base of the department. The concerned bank furnished the reply account opening form and other relevant details of the assessee. Further, it has been observed from the information received that assessee was maintaining account with the Junagadh Jilla Sahakari Bank Ltd and substantial amount was deposited in cash.
6. Plain reading of the section 80AC clearly tells that no deduction is allowable under section specified, if no return of income filed as per provisions of section 139(1) of the I.T. Act, 1961. As, in the instant case no return of income has been fled by the assessee, hence, no deduction can be allowed to assessee as per section 80P of the I.T. Act, 1961. As per profit and loss account assessee earned net profit of Rs. 20,72,172/- which is considered as assessee total income for the period under review. Penalty U/s 270A also initiated for under reporting of Income.
7. Therefore, the assessing officer issued a show cause notice to the assessee to explain the cash deposited in the bank account.
8. In response to the notice of the assessing officer, the assessee has submitted reply before the assessing officer stating that members of the society are agriculturist and transactions are done in cash. Therefore, source of cash Page | 4 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
deposited and cash withdrawn, during the year, is very regular activity of the society.
9. However, the assessing officer rejected the above contention of the assessee and made the addition on different footing/ on different item, which is not mentioned in the reasons recorded.
10. The main issues in the reasons recorded u/s 147 of the Act, were the case, withdrawal, and cash deposit in the bank account, for which reassessment proceedings were initiated, by the assessing officer. However, assessing officer did not make the addition on the basis of the reasons recorded u/s 147, but made the addition on different footing/ different item, by making the disallowance of deduction under section 80P of the Act. The findings of the assessing officer, is reproduced below:
"4.1. Further, on perusal of Trading account and profit & loss account it is observed that the assessee earned net profit of Rs. 20,72,127/- on its business activity. Though assessee earned profit still it did not filed return of income as per provisions of section 139(1) of the I.T. Act, 1961.
Conclusion:
(i) Firstly, as per the registration certificate furnished by the assessee on 17/03/2023, it is noticed that the its certificate under Gujarat State Society Act. Further, it seems that the assessee is not properly registered as a society under the respective society's Act, since the details furnished throughout the scrutiny proceedings in this regard are misleading.
(ii) Secondly, even if the above registration certificate furnished by the assessee seems to be acceptable or accepted, the assessee has not furnished the required details as called for vide notices in respect of 80P deductions claimed such as nature of interest / income received, interest payment details, details of deduction claimed against income, members list, whether interest paid / received from members, bifurcation of interest receipts (viz) received from banks, cooperative society, members, non-members and MOU, bye-laws, member list, classification of members, type / eligibility of members, details viz. purchase ledger, sales ledger, customers details & amount etc. of selling of agriculture items, etc. Hence, interest income received on agricultural finances sale of fertilizers (if any) from these concerns are either not related to the assessee or is not allowable as deduction as per the provisions of Section 80P of IT Act, as the assessee has not furnished any break-up or details towards its claims.
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(iii) Thirdly, the assessee did not file return of income as per provisions of section (1) of 139 of the I.T. Act, 1961. Even in response to notice issued u/s 148 no return of income has been filed by the assessee till the date. Moreover, reference is also invited towards section 80AC of the I.T. Act, 1961 which is reproduced herein under:-
"80AC. Deduction not to be allowed unless return furnished- Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after-
(i) the 1st day of April, 2006 but before the 1st day of April, 2018, any deduction is admissible under section 80-1A or section 80-1AB or section 80-1B or section 80-IC or section 80-ID or section 80-IE;
(i) the 1st day of April, 2018, any deduction is admissible under the heading provision of this Chapter under the "C-Deductions in respect of certain incomes no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section
139."
11. Considering the above provisions of the Act, the assessing officer, disallowed the deduction under section 80P of the Act, to the tune of Rs.20,72,127/-.
12. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has confirmed the addition/ disallowance of deduction under section 80P of the Act, made by the assessing officer, observing as follows:
"7. Decision and reasoning for AY 2019-12 for NFAC/2017-18/10340040- It is found that assessing officer has acted upon credible information in possession of the officer and issued notice under section 148 of the IT Act on 25/03/2023 and the assessee was directed to file return of income on or before 30/04/2023. However, the assessee has not submitted or filed any return of income within prescribed time limit as per notice under section 148 dated 25.03.2023.
7.1 It may be appreciated that the assessing officer [with respect to the filing of return of income] has noted as under-
"The reply of the assessee during assessment proceedings is acceptable in respect of cash deposit. However, as per Return of Income filed against u/s148, it is seen that the assessee has claimed deduction u/s 80P amounting to Rs. 20,86,080/- for the A.Y 2019-20. While the assessee has not filed original Return of Income for the A.Y 2019-20 under the 139(1) of the Act. Therefore, the deduction of Rs 20,86,080/- claimed by the assessee in his filed return u/s 148 Page | 6 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
is not accepted and proposed to be disallowed and added to the total income of the assessee under the Head of Business Income"
7.2 Therefore, considering the above-mentioned factual finding, it may be appreciated that the assessee was non-filer and did not file the original return of income under section 139 (1) of the IT Act. The assessee was rendered an opportunity of filing return of income in response to notice under section 148 of the IT Act. However, the assessee did not find any return of income within prescribed time limit of notice under section 148 of the IT Act. Therefore, whatever return filed by the assessee after elapsing time limit prescribed by the assessing officer to file return of income vide notice under section 148 as mentioned (supra) is non-est return of income and no cognizance of such return can be taken for the purpose of Income Tax Act.
7.3 Therefore, considering the facts and circumstance of the case, submission of the assessee, material available on record and following the reasoning and analogy as discussed in para 5 to para 6.12 while deciding the grounds of appeal is with respect to assessment year 2018- 19 pertaining to appeal number NFAC/2017- 18/10238392, the grounds of appeal is contested by the assessee at serial No. 1, 2 and 3 with respect to the assessment year 2019 20 bearing appeal number NFAC/2017-18/10340040 are also dismissed.
8. In the result, appeals of the assessee or assessment year 2018-19 bearing appeal number NFAC/2017-18/10238392 and assessment year 2019 -20 bearing appeal number NFAC/2017-18/10340040 are dismissed."
13. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.
14. Shri R. D. Lalchandani, Learned Counsel for the assessee, argued that reasons recorded by the assessing officer were on the issue of cash deposited in the bank account and cash withdrawal from the bank account. However, assessing officer did not make addition on the basis of the reasons recorded but made the addition on different item, which is not acceptable. The ld. Counsel took me through the reasons recorded by the assessing officer, which are reproduced below, for ready reference;
"In the instant case, asessee did not file return of income for A.Y. 2018-19. Further, as per the information available in the database of department for the period under consideration, it is observed that assesee carried significant financial transaction during F.Y. 2017-18 relevant A.Y. 2018-19. Considering the nature and volume of the transaction, necessary clarification in the form of show cause sought from the assesse pursuing section 148 A(b) of the I.T. Act, vide this office letter dated:-16/03/2022, having DIN & Notice No: ITBA/AST/F/148A(SCN)/2021-22/1040887079(1), the operating part of the show cause is as under:-
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"As per the information received in category of Non filer Management system (NMS) on Insight Portal of the department, it is noticed that, you entered into significant financial transactions mentioned hereunder:-
Sr. Type of transactions Source Amount
No.
1. Cash withdrawals (including through The Junagadh Jilla Rs. 3,35,000/-
bearer's cheque) in current account Sahakari Bank
Limited
2. Cash deposit(including through bearer's The Junagadh Jilla Rs. 2,54,06,850/-
cheque) in current account Sahakari Bank
Limited
Total Rs. 2,57,41,850/-
Though you have carried out significant financial transactions which is exceeding prescribed taxable limit, still, you did not truly and correctly disclose the quantum of transactions performed during the year under consideration. Moreover, making inquiry from database of the department, it is seen that you did not file return of income for the period under consideration. In absence of return of income for the period under consideration i.e. A.Y. 2018-19, the source of entering such huge transactions is not conclusively proved. Hence, an amount to the tune of Rs. 2,57,41,850/- remained unexplained and unverified. Thus, you are hereby show caused as to why a notice U/s.148 of the Act should not be issued on the basis of the information which suggests that income of Rs. 2,57,41,850/- chargeable to tax has escaped assessment in your case for A. Y.2018-19."
As per above show cause the assesse was required to submit its explanation by 23/03/2022. However, on the date of hearing neither any reply nor any submission either received or uploaded by the assesse. Since, no reply received from the assesse hence, query raised vide above referred show cause remained unexplained and unverified. In absence of any reply or explanation this office left with no option otherwise to finalize the proceedings in the instant case on merits and facts available on records. Further, assesse did not file return of income for A.Y. 2018-19 which itself support the fact the assessee did not account for these referred transactions Le Rs. 2,57,41,850/- in his/its books for the period under consideration. Since no reply has been received from the assessee, therefore it is presumed that the assessee has nothing to say in the matter & has no objection to the re-opening of proceedings u/s 147. Accordingly, it is a fit case for issuance of notice u/s 148 of the I.T. Act, 1961."
15. Therefore, the Ld. Counsel for the assessee, submitted that reasons were recorded on account of cash deposited/ cash withdrawal from the bank account, however, the assessing officer did not make addition on account of cash deposited/withdrawal from the bank account, but the addition was made by the assessing officer on different footing, on account of deduction u/s. 80AC of the Page | 8 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
Act, which is mentioned in para 4.2 of the assessment order, wherein deduction under section 80P of the Act was disallowed, as the assessee did not file the return of income on or before the due date of filing the return of income under section 139 of the Act. Hence, it is an addition on different footing/ different item, which is not mentioned in the reasons recorded by the assessing officer, therefore re- assessment order u/s 147 of the Act, should be quashed.
16. On the other hand, the Ld. DR for the revenue submitted that the assessment proceedings were initiated by issuing valid notice under section 148 of the Act, after taking permission from the authorized Income Tax Officer. The assessment was reopened under the new regime, therefore case law, pertaining to old regime would not be applicable to the assessee, under consideration. Besides the assessee has not submitted its reply during the re-assessment proceedings, and did not file the return of income, in response to notice, under section 148 of the Act. Apart from this, the order was passed by the assessing officer u/s. 144 of the Act, hence, the matter may be restored back to the file of the assessing officer for fresh adjudication.
17. I have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. I note that the re-assessment proceedings were initiated by the assessing officer under section 147 of the Act and assessing officer had recorded reasons and issued notice u/s. 148 of the Act, wherein the issue pertain to cash deposited/cash withdrawal from the bank account was noted, however, the assessing officer did not make the addition on account of cash deposited/cash withdrawal from the bank, and made the addition on different footing/different item, by way of disallowance of deduction under Page | 9 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
section 80P of the Act. Therefore, I note that the issue is squarely covered in favour of assessee, by the judgement of Hon'ble Bombay High Court in the case of Jet Airways (I) Ltd in tax appeal No. 1526/2008 vide order dated 12.04.2010, wherein it was held as follows:
"12. In CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297, the Supreme Court dealt with the following question of law in the course of its judgment:-
"Where an item unconnected with the escapement of income has been concluded finally against the assessee, how far in reassessment on an escaped item of income is it open to the assessee to seek a review of the concluded item for the purpose of computation of the escaped income?"
The issue which arose before the Supreme Court was whether, in the course of a reassessment on an escaped item of income could an assessee seek a review in respect dealt with the provisions of section 147, as they stood prior to the amendment on of an item which stood concluded in the original order of assessment. The Supreme Court 1- 4-1989. The Supreme Court held that the expression "escaped assessment" includes both "non-assessment" as well as "under assessment". Income is said to have escaped assessment within the meaning of the section when it has not been charged in the hands of an assessee during the relevant assessment year. The expression "assess" refers to a situation where the assessment of the assessee for a particular year is, for the first time, made by resorting to the provisions of section 147. The expression "reassess" refers to a situation where an assessment has already been made but the Assessing Officer has reason to believe that there is under assessment on account of the existence of any of the grounds contemplated by Explanation 1 to section 147. The Supreme Court adverted to the Judgment in V. Jaganmohan Rao v. CIT [1970] 75 ITR 373, which held that once an assessment is validly reopened, the previous under assessment is set aside and the Income-tax Officer has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. The Court held that the object of section 147 enures to the benefit of the revenue and it is not open to the assessee to convert the reassessment proceedings as an appeal or revision and thereby seek relief in respect of items which were rejected earlier or in respect of items not claimed during the course of the original assessment proceedings.
The judgment in V. Jaganmohan Rao's case (supra) dealt with the language of sections 22(2) and 34 of the Act of 1922 while the judgment in Sun Engg. Works (P.) Ltd.'s case (supra) interprets the provisions of section 147 as they stood prior to the amendment on 1-4-1989.
13. The effect of the amended provisions came to be considered in two distinct lines of precedent on the subject. The first line of authority, to which a reference has already been made earlier, adopted the principle that where the Assessing Officer has formed a reason to believe that income has escaped assessment and has issued a notice under section 148 on certain specific issues, it was not open to him during the course of the Page | 10 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
proceedings for assessment or reassessment to assess or reassess any other income, which may have escaped assessment but which did not form the subject-matter of the notice under section 148. This view was adopted in the Judgment of the Punjab and Haryana High Court in Vipan Khanna's case (supra) and in the judgment of the Kerala High Court in Travancore Cements Ltd.'s case (supra). This line of authority would now cease to reflect the correct position in law, by virtue of the amendment which has been brought in by the insertion of Explanation 3 to section 147 by Finance (No. 2) Act of 2009. The effect of the Explanation is that once an Assessing Officer has formed a reason to believe that income chargeable to tax has escaped assessment and has proceeded to issue a notice under section 148, it is open to him to assess or reassess income in respect of any other issue though the reasons for such issue had not been included in the reasons recorded under section 148(2).
14. The second line of precedent is reflected in a judgment of the Rajasthan High Court in CIT v. Shri Ram Singh [2008] 306 ITR 343. The Rajasthan High Court construed the words used by Parliament in section 147 particularly the words that the Assessing Officer 'may assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings' under section 147. The Rajasthan High Court held as follows:
"... if is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then, only in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under section 147.
To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the Assessing Officer were to come to the conclusion, that any income chargeable to tax, which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact that the Assessing Officer entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under section
147."
15. Parliament, when it enacted the Explanation (3) to section 147 by the Finance (No.
2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Explanation 3 to section 147, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain courts that the Assessing Officer has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment. The corrective exercise embarked upon by "Parliament in the form of Explanation 3 consequently provides that the Assessing Officer may assess or reassess Page | 11 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
the income in respect of any issue which comes to his notice subsequently in the course of the proceedings though the reasons for such issues were not included in the notice under section 148(2). The decisions of the Kerala High Court in Travancore Cements Ltd.'s case (supra) and of the Punjab & Haryana High Court in Vipan Khanna's case (supra) would, therefore, no longer hold the field. However, insofar as the second line of authority is concerned, which is reflected in the judgment of the Rajasthan High Court in Shri Ram Singh's case (supra), Explanation 3 as inserted by Parliament would not take away the basis of that decision. The view which was taken by the Rajasthan High Court was also taken in another judgment of the Punjab & Haryana High Court in CIT v. Atlas Cycle Industries [1989] 180 ITR 319. The decision in Atlas Cycle Industries' case (supra) held that the Assessing Officer did not have jurisdiction to proceed with the reassessment, once he found that the two grounds mentioned in the notice under section 148 were incorrect or non-existent. The decisions of the Punjab & Haryana High Court in Atlas Cycle Industries' case (supra) and of the Rajasthan High Court in Shri Ram Singh's case (supra) would not be affected by the amendment brought in by the insertion of Explanation 3 to section 147.
16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has 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.
17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147(1) and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income "and also" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words "and Page | 12 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
also" are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the plenitude of its legislative powers to do so, the provisions of section 147(1) as they stood after the amendment of 1-4-1989 continue to hold the field.
18. In that view of the matter and for the reasons that we have indicated, we do not regard the decision of the Tribunal in the present case as being in error. The question of law shall, accordingly, stand answered against the revenue and in favour of the assessee. The appeal is, accordingly, dismissed. There shall be no order as to costs."
18. Therefore, at the cost of repetition, I retreated the facts of the case that reasons were recorded on account of cash deposited/ cash withdrawal from the bank account, however, the assessing officer did not make addition on account of cash deposited/withdrawal from the bank account, but the addition was made by the assessing officer on different footing, on account of deduction u/s. 80AC of the Act, which is mentioned in para 4.2 of the assessment order, wherein deduction under section 80P of the Act was disallowed, as the assessee did not file the return of income on or before the due date of filing the return of income under section 139 of the Act. Since, the issue is squarely covered in favour of the assessee by the judgement of the Hon'ble Bombay High Court in the case of Jet Airways (I) Ltd(supra), therefore, I allow the appeal of the assessee.
19. The facts and issues involved in all these three appeals are analogous and similar to ITA No. 871/RJT/2025 for AY 2018-19, therefore, my observations made in ITA No. 871/RJT/2025 for AY 2018-19, shall apply mutatis mutandis to other appeals of assessee, namely, ITA No.902/RJT/2025 and ITA No.873/RJT/2025. For the parity of reasons, I allow abovementioned appeals of the assessee, in terms of directions noted in ITA No. 871/RJT/2025 for AY 2018-
19. Page | 13 ITA NO. 871 and 902 and 873/ R J T / 2 0 2 5 Akolvdi Sev Sahkari Mandali Ltd.
20. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.
21. In the combined result, these three appeals of different assessees' are allowed.
Order pronounced in the open court on 19/03/ 2026.
Sd/-
(Dr. Arjun Lal Saini) लेखा सद /Accountant Member Rajkot दनांक/ Date: 19/03/2026 Copy of the Order forwarded to
1. The Assessee
2. The Respondent
3. The CIT(A)
4. Pr. CIT
5. DR/AR, ITAT, Rajkot
6. Guard File By Order //True Copy// Assistant Registrar/Sr. PS/PS ITAT, Rajkot Page | 14