TMI Blog2019 (9) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER Assessee by: Shri S. Ananthan, C.A., Revenue by: Shri Pradeep Kumar, CIT ORDER PER PAVAN KUMAR GADALE, J.M : These are the cross-appeals filed by the Assessee and the Revenue for the assessment years against different orders of the Commissioner of Income Tax (Appeals) passed u/s.147 r.w.s. 143(3) of the Income Tax Act [ the Act ]. Since these appeals are inter-connected and the facts are similar, they are clubbed heard together and passed by this consolidated order. 2. For the sake of convenience, we shall take assessee s appeal in ITA No. 1836/Bang/2018 for the AY. 2007-08 and the facts narrated therein. The assessee has raised the following grounds of appeal: 1. The order of the learned Commissioner (Appeals) is bad in law and against the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the re-opening of assessment u/s 147. 2.1 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2013 at Page Nos 2 3. Subsequently, notice u/s. 143(2) of the Act was issued. The assessee filed objections on the reasons for re-assessment and the AO has disposed-of the reasons by proceedings dt. 05-11-2013 and confirmed the validity of issue of notice and re-assessment. 3.1. The main objection of the assessee-bank is that the re-opening of assessment is based on the existing material and it is merely a change of opinion and the assessee filed the information and the AO has referred at Page Nos. 4 to 6 of the order and finally the assessment was completed by the AO by disallowing the claim under section 36(1)(viia) of the Act for ₹ 120,87,72,242/- and disallowance of deduction u/s. 36(1)(vii) of the Act of ₹ 91,86,24,875/- and other additions and further the AO has held that the provisions u/s 115JB of the Act are applicable and passed order u/s 147 r.w.s. 143(3) dated 16-01-2014. 3.2. Aggrieved by the order of AO, assessee preferred an appeal before the CIT(A). 4. Ld.CIT(A) considered the submissions of assessee and the findings of AO and observed that claim u/s. 36(1)(vii) of the Act has to be allowed to the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hern Technologies Ltd., Vs. JCIT (2010) [187 Taxman 346] (SC), wherein it was held as under: Section 36(1)(vii) of the Income-tax Act, 1961, read with the NBFCs Prudential Norms (Reserve Bank) Directions, 1998 - Bad debts - Whether 1998 Directions deal only with presentation of NPA provisions in balance sheet of a NBFC and they have nothing to do with computation or taxability of provisions for NPAs under Income-tax Act - Held, yes - Whether provision for NPAs in terms of 1998 Directions constitutes expense on basis of which deduction can be claimed by NBFCs under section 36(1)(vii) - Held, no - Whether even applying theory of real income, a debit, which is expressly disallowed by Explanation to section 36(1)(vii), if claimed, has got to be added back to total income of assessee, because Act seeks to tax 'real income' which is income computed according to ordinary commercial principles but subject to provisions of Act - Held, yes Section 36(1)(vii), read with section 43D, of the Income-tax Act, 1961 - Bad debts - Whether sections 36(1)(vii) and 43D are violative of articles 14 and 19 of Constitution - Held, no Section 37(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns and also at the time of hearing the assessee, as well as evidence which the Assessing Officer required him to produce. The Assessing Officer having come to know, since it was made known in the return of income that its business of distribution of electricity is taken over by the Karnataka Electricity Board, under Indian Electricity Act, there was an obligation on the part of the Assessing Officer to have enquired with the assessee whether he has made any claim for payment of compensation, since he was passing an order under section 143(3) of the Act 7.1. Ld.AR referred to the reasons for reopening of assessment provided by the AO at Page No. 19 of the Paper Book, where the assessment for the AY. 2006-07 was re-opened because the assessee has claimed deduction u/s. 36(1)(viia) of the Act calculated on the basis of 10% of average aggregate rural advances. But whereas in the scrutiny proceedings of assessment year 2010-11, the assessee-bank has claimed similar deduction and as per the provisions of Section 36(1)(viia) of the Act, the average aggregate advances of the rural branches shall be taken into consideration for calculating deduction available u/s. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Office, Local Head Office, Training Centre, Clearing Cell, Service Branch, Asset Recovery Branch, Divisional Office, etc. 7. Population groups of the banked centres presented in this Volume are based on the 2001 census. The population groups are defined as under: a) 'Rural' group includes all centres with population of less than 10,000. b) 'Semi-urban group includes centres with population of 10,000 and above but less than I lakh. c) 'Urban' group includes centres with population of 1 lakh and above but less than 10 lakh. d) 'Metropolitan' group Includes centres with population of 10 lakh and more. 8. Commercial Banks refer to both scheduled and non-scheduled commercial banks which are regulated by Banking Regulation Act, 1949. I. Scheduled Commercial Banks are grouped under following categories: i) Public Sector Banks a. SBI and its' 6 Associates 19 Nationalised Banks Other Public Sector Banks (IDBI Ltd.) ii) Regional Rural Banks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, we are of the view that initiation of reassessment proceeding has been merely on the basis of change of opinion and in view of the law laid down by the Hon'ble Supreme Court in the case of Kelvinator of India Ltd., (supra) initiation of reassessment proceedings has to be held as not proper .. 4. As such, whether it was a case of change of opinion or the non-disclosure and correct facts, if considered in light of the report, one may say that such may fall in the arena of question of fact which may include the consideration of the earlier proceedings of the assessment. the Tribunal having found that the relevant material including that of transfer by the assessee to PEPL was on record and therefore it was not a case where there was non-disclosure of true and correct facts. The aforesaid finding, in our view, could be said to be rather pertaining to the question of fact to be examined on the basis of the material on record which would fall outside the judicial scrutiny in the present appeal. ii. Karnataka Bank (2014) [52 taxmann.com 526] (Karnataka); 5 .It is a case where facts were fully and truly set out in the returns a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r revision, which is chargeable to tax and has escaped assessment. Thus by virtue of the second proviso to section 147 of the Act, income involving matters which are subject matters of any appeal, reference or revision has expressly been taken out of the purview of the said section. In the circumstances, insofar as the income stated to have escaped assessment under the second ground is concerned, the same having been subject matter of appeal would not fall within the ambit of section 147 of the Act and as such the Assessing Officer lacks jurisdiction to reopen the assessment on the said ground. v. Jhankit Chandulal Prajapati 2019 (3) TMI 813 Gujarat High Court; Thus, the third proviso to section 147 of the Act permits the Assessing Officer to assess or re-assess only such income which was not subject matter of appeal, reference or revision. In the present case, the Assessing Officer seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the Commissioner(Appeals). The reopening of assessment by the impugned notice under section 148 of the Act is, therefore, also hit by the third proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen the assessment and recomputed the assessment, cannot be exercised merely because one officer finds fault with the previous one. Hence, we do not find any justification to entertain the appeal. Therefore, it is dismissed. No costs . 7.3. The Ld.DR has vehemently argued and filed written submission. We, considering the facts and circumstances and materials filed and submissions and legal position and also there is no violation on the part of the assessee to fully disclose material facts, are of the substantive opinion that the re-assessment u/s 147 is bad in law as the assessee bank has substantiated with evidence and judicial decisions on full and fair disclosure of material. Further, the assessee-bank has discharged its duty by disclosing all material facts fully and truly and if the information submitted is untrue or on account of omission or failure to discharge fully and truly, the provisions of section 147(a) shall not apply. We also support our view and rely on the decision of the Hon ble Karnataka High Court in the case of Infosys Ltd. (Formerly known as Infosys Technologies Ltd.) vs. Deputy Commissioner of Income-tax [2019] (6) TMI 1261(Kar.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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