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TMI Blog2012 (8) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... and the validity of assessment made in pursuant to Sec. 148. Let us see the facts as they were at the time of the original assessment and re-assessment proceedings. 3. The facts show that return of income for the year under consideration was filed on 24.10.2005 declaring total income of Rs. 83,34,184/-. The return was selected for scrutiny assessment and statutory notices were issued and served on the assessee. With notice u/s. 142(1) of the Act, a questionnaire was sent to the assessee. The assessee was asked to explain 19 points raised by the said questionnaire. We are concerned with Q.19 which is as follows: "Q.19. Justify Bad debts claimed in format below: Debtor Party Name & address Amount Outstanding Since Year in which income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the omission has resulted in under assessment of income of Rs. 1,35,00,000/-. In response to the said notice, the assessee has objected to the reopening of the assessment as all particulars and details which are the subject matter of the reopening were already on the record of the Income Tax department and further more these have been duly considered while completing the assessment u/s. 143(3) of the Act. Without prejudice to the question of the validity of the notice u/s. 148 on the facts , the assessee submitted that as its principal business included money lending and income from such lending was duly assessed as business income. The loan given to M/s. La Cream Finance Ltd was in the ordinary course of its business which is also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the completion of the original assessment, the AO sought to rectify the assessment by notice dt. 24.11.2009. The Counsel further submitted that till date , outcome of the said notice is not known. The reasons for reopening of the assessment are same as the reasons which were given for the rectification of the assessment which clearly establishes that the AO himself is not certain whether the issue involved relates to rectification of error or escapement of income. This is nothing but mere change of opinion on the part of the AO and on that basis assessment cannot be reopened. The Counsel relied upon the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs Kelvinator of India Ltd. (2010) 320 ITR 561 (SC). The Counsel fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on principle identical with the reasons given for the reopening of the assessment which shows that AO himself was not certain as to under which section he should proceed while framing the assessment u/s. 147. We find that no tangible material has been brought on record, the AO has simply disallowed the claim of write off on the facts and circumstances which were available before him while framing the original assessment. This approach clearly show that the AO has merely changed his opinion in relation to the allowability of the said write off which is in contravention to the ratio laid down by the Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (supra) wherein the Hon'ble Supreme Court held that "....... " The concept of " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that effect has been sent to the assessee. Therefore under these circumstances, it cannot be said that assessment proceedings were completed as the order passed u/s. 154 is also an order which can be subject to appeal and revision and as the proceedings are not been completed on record, it cannot be said that any income has escaped assessment. 11. After considering the facts and submissions in totality and the judicial pronouncements, we hold that the assessment order passed u/s. 147 is bad in law and is accordingly cancelled. The Ld. Counsel supported his case by arguing that the said loan amount was given in the ordinary course of business and therefore it should be allowed as bad debt u/s. 36(2) of the Act. The Ld. DR has s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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