IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 29TH DAY OF NOVEMBER 2011/8TH AGRAHAYANA 1933 ITA.No. 323 of 2010 ( ) -------------------------------- (ITA.NO.1015/COCH/2008 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN) ------------------------------- APPELLANT/RESPONDENT IN ITA: -------------------------------------------------- POPULAR VEHICLES & SERVICES LTD., MAMANGALAM, ERNAKULAM, COCHIN-25. BY ADVS.SRI.K.SRIKUMAR SRI.K.MANOJ CHANDRAN SRI.P.R.AJITHKUMAR RESPONDENT/APPELLANT IN ITA ------------------------------------------------ 1. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1 (3), ERNAKULAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 29-11-2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts I.T.A.NO.323/2010 APPENDIX PETITIONER'S ANNEXURES: ANNEX 1 COPY OF THE NOTICE DATED 23/07/2007. ANNEX 2 COPY OF THE ASSESSMENT ORDER DATED 27/12/07. ANNEX 3 COPY OF THE APPELLATE ORDER DATED 26/9/2008. ANNEX 4 COPY OF THE TRIBUNAL ORDER DATED 13/4/2010. RESPONDENT'S ANNEXURES: NIL /TRUE COPY/ P.S.TO.JUDGE sts C.N. RAMACHANDRAN NAIR & K. VINOD CHANDRAN,JJ ============================== I.T.A. NO. 323 OF 2010 ============================ Dated this the 29th day of November 2011 JUDGMENT C.N.Ramachandran Nair, J. Heard the learned counsel for the appellant Shri K. Sreekumar and the learned Senior Counsel Shri P.K.R. Menon appearing for the respondent. The question raised is whether the assessing officer, in an income escaping assessment completed under Section 147 of the Income-tax Act, can proceed to assess any income other than those items in respect of which he has recorded reasons under Section 148(2) of the Income- tax Act, before issuing notice. Admittedly, by virtue of Explanation No. 3 to Section 147 of the Income-tax Act introduced by Finance Act No.2 of 2009, with retrospective effect from 1/4/1989, in the course of re- assessment, any escaped income other than the items recorded under Section ITA 323.2010 2 148(2) also could be assessed. In this case even though the assessment involved is for the year 2002-03 and Explanation (3) introduced in 2009 with retrospective effect is applicable, is the contention of the appellant's counsel otherwise. 2.The learned Senior Counsel appearing for the respondent brought to our notice a Full Bench decision of this Court in C.I.T. v. Best Wood Industries And Saw Mills [ (2011)331 I.T.R. 63] where the Full Bench held that in the operative portion of Section 147 itself the assessing officer is given authority to assess not only the escaped income for the assessment of which assessment is reopened, but any other income that comes to the notice of the assessing officer in the course of reassessment also could be brought to tax in an income escaping assessment. Going by the decision of the Full Bench, even without Explanation 3, the assessment made in the case of the appellant/assessee is valid. Further, since the explanation is introduced with retrospective effect, it has effect in validating the re-assessment completed under Section 147 of the Act on items of income which have not been included in the proceedings recorded by the assessment officer under Section ITA 323.2010 3 148(2) of the Act. Consequently, we dismiss the appeal. Further by virtue of the judgment of the Full Bench of this Court, explanation No.3 is only clarificatory in nature. Therefore, appellant's contention that retrospective operation of the provision is harsh and arbitrary also is not correct. Sd/- C.N.RAMACHANDRAN NAIR JUDGE Sd/- K. VINOD CHANDRAN JUDGE ks. True copy P.S.To Judge ITA 323.2010 4