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2018 (9) TMI 533 - AT - Income TaxChallenging the validity of notice u/s 148 - Disallowance of provision for bad and doubtful debts u/s 36(1)(viia) - Disallowance of excess provision for non performing of assets - Disallowance of amortization of expenses for government securities - Held that:- Crux of the submissions made by the Ld. Counsel for the assessee is that all the details in connection with the deduction claimed by the assessee u/s 36(1)(viia) were very much available with the Assessing Officer during the assessment u/s 143(3) of the Act and the assessments were concluded after examining the relevant details filed by the assessee. No new facts came up before the assessing authority and therefore the reopening was merely based on account of change of opinion. Relying on various judgments, it is contended that reopening of assessments for mere change of opinion are not valid. For assessment year 2008-09 the assessee duly filed return of income and assessment completed u/s 143(3) of the Act and has submitted all material facts necessary for the assessment. All these facts shows that the first proviso to section 147 is squarely applicable on the given facts for A. Y. 2008-09 and the reopening is beyond four years from the end of relevant assessment year and thus cannot be held to be valid. We therefore find force in the contentions of the Ld. Counsel for the issue of reopening raised for A. Y. 2008-09 and accordingly quash the reassessment proceedings u/s 147 for Assessment Year 2008- 09 and allow the relevant ground for assessment year 2008-09 in favour of the assessee. Assessee claimed deduction u/s 136(1)(viia) only in the computation of income and no such provision was actually made in the profit and loss account. It is true that the details of the deduction claim u/s 136(1)(viia) was available on record but the legal angle of examining this claim was not discussed at length during the course of assessment u/s 143(3). The claim of the assessee were based on certain judicial pronouncements which the Assessing Officer later on found to be favouring the revenue. This change of legality of the issue triggered the issuance of notice u/s 148 of the Act. It is not disputed that the notice issued u/s 148 of the Act for Assessment Year 2009-10 and 2010-11 are within the period of four years from the end of relevant assessment years. The reasons have duly been recorded and the need of issuance of notice was due to the alleged excess provisions claimed for provisions for bad and doubtful debts u/s 36(1)(viia). Disallowance of amortization of expenses for government securities - Held that:- Both the lower authorities erred in confirming the addition and the assessee has rightly claimed the amortization of loss in the value of government securities and the same is liable to be treated as business expenditure. In the result this common issue is decided in favour of the assessee Disallowance of alleged excess provision for NPA - Held that:- RBI guidelines are for the purpose of maintaining the balance sheet and financial statements for the stake holders so as to give true and fair view of the financials of the bank. Claiming of deduction for bad and doubtful debts as well as provision for bad and doubtful debts for the borrowers involved in Debt Relief Scheme, 2008 needs to be examined in the light of provisions of Income Tax Act applicable to the assessee. We find that the observations of AO are also not very clear and only the auditors remarks have been discussed and similarly Ld. CIT)(A) has also not given clear finding on this issue. In our considered view this issue needs to be set aside to the file of Ld. CIT(A) for fresh adjudication. Needless to mention that proper opportunity being heard to be provided to the assessee and also direct the assessee to bring necessary details for calculating the provisions of bad and doubtful debts as well as the details of over due debts from the borrowers involved in debt relief scheme of 2008 so that the issue can be decided on merit under the relevant provisions of law.
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