TMI Blog2013 (5) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... off. Therefore, it is not as if the AO had lost sight of the issue of bad debts/advances. In fact, he had specifically raised queries in this regard towards the fag end of the assessment proceedings and therefore it must be presumed that he was very much alive to the issue. Also in the reasons recorded for reopening AO does not says that he missed it as it revealed that AO in the second round was of the view that the addition should have been made in respect of bad debts/advances amounting to Rs. 40 lakhs because of the fact that it was on the capital account. Had the assessing officer felt that this point had been missed out in the first round he would have been stated so. The reasons as recorded also belie the contention raised by the respondent. Thus the notice u/s 148 is invalid - In favour of assessee. - W.P.(C) 8562/2007 & CM Nos. 16150/2007 & 17153/2007 - - - Dated:- 13-5-2013 - Badar Durrez Ahmed And Vibhu Bakhru,JJ. For the Petitioner : Mr S. Ganesh, Sr. Adv. with Mr S. Sukumaran, Mr Anand Sukumar Mr Bhupesh Kumar Pathak, Advs. For the Respondent : Mr N. P. Sahni, Adv. JUDGMENT Badar Durrez Ahmed, J (Oral) 1. This writ petition is directed again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 40 Lacs. Sales return ac no. 445001,445002, 445201,445202. How the sales return has been taken care vis a vis stock. How it is considered in stock valuation. (underlining added) It will be evident from the above extract that one of the queries raised was with regard to Bad debts advance written off: Rs. 40 lacs. In response to the said query, the petitioner submitted a letter dated 29.03.2006 to the assessing officer wherein it was indicated that the details of bad debts written off were as enclosed as per Annexure C . Annexure C was as under:- MARUTI UDYOG LIMITED Assessment Year 2003-04 Details of Bad Debits/Advance written off. Annexure- C Voucher No. Voucher Date Amout (Rs. ) Particulars 99271287 30-Sep-02 1,034,012 Simultaneously offered in Miscellaneous Income as submitted vide submission dated 18.02.2005 99269896 30-Sep-02 1,421,800 This is on account of damages for late delivery of vehicles sold to Director General of Ordinance services, MGO Branch, Army Hqrs. New Delhi 99292760 31-Dec-02 831,986 Provision made for non-recovery of amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be charged to the capital A/C. If a loan taken on capital account becomes irrecoverable, the loss incurred is capital loss. Consequently, amount of Rs. 40 lacs claimed by the assessee in the P L A/c needs to disallowed and added back to the income of the assessee. On the basis of above, I have reason to believe that the income for A.Y. 2003-04 has escaped assessment. Notice u/s 148 of the I.T. Act issued to the assessee. (ANU KRISHNA) Dy. Commissioner of Income-tax, Circle-6(1), New Delhi. It will be apparent that the only reason indicated therein for reopening the assessment was the issue of bad debts written off which amounted to Rs. 40 lakhs. The issue that was sought to be raised in the reasons was with regard to the said amount being liable to be disallowed on account of being it deemed to be on the capital account. 6. Thereafter, as mentioned above, the petitioner filed its objections on 10.10.2007 to the proposed reopening of the assessment which had been completed on 30.03.2006. In paragraph 2.4 of the said objections the petitioner had submitted that the only issue for reopening of the case was with regard to the bad debts/ advance of Rs. 40 lakhs which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. (underlining added) Particular emphasis was laid on point No. (3) mentioned above. In the facts of the present case it was submitted that a specific query had been raised and had been answered by the petitioner in the course of the original assessment proceedings and the assessing officer did not make any addition in respect of that issue in the assessment order. Therefore, in light of the position indicated in Usha International Ltd. (supra), it was contended by the learned counsel for the petitioner that the position should be accepted that the issue had been examained by the assessing officer but he did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni on the observation contained in paragraph 23 would be of no avail to the respondent in the factual matrix of this case. A reference had also been made by Mr Sahni to the various decisions discussed in Usha International Ltd. (supra) and, in particular, to the decision in the case of Kalyanji Mavji and Co. v. CIT: 102 ITR 287 (SC) and A.L.A. Firm v. CIT: 189 ITR 285 (SC). A reference was also made to the Supreme Court decision in the case of Indian and Eastern Newspaper Society v. CIT: 119 ITR 996 (SC). We find after examining these decisions and certain other decisions, the majority opinion in Usha International Ltd. (supra) concluded as under:- 36. The aforesaid observations are complete answer to the submission that if a particular subject-matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred. It is obvious that when a claim for deduction is not at all examined by the assessing officer, it could never be a case of change of opinion. However, where a claim or deduction has in fact been examined by the assessing officer it would amount to formation of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings and had formed an opinion by not making any addition in respect thereof. Thus, the reopening of the assessment which had been concluded on 13.03.2006, would be nothing but a mere change of opinion. 11. Mr Sahni appearing on behalf of the revenue had also submitted that the point of bad debts written off may have been missed by the assessing officer inasmuch as the present case was a complicated matter and even the assessment order framed on 13.03.2006 ran into 34 pages. He submitted that there was every possibility of some aspects being missed out by the assessing officer. And, such aspects which had been inadvertently missed by the assessing officer cannot be regarded as those on which the assessing officer had formed an opinion. For this proposition, Mr Sahni relied on the decision of the Supreme Court in the case of A.L.A. Firm (supra). However, we do not agree with this submission because in the present case, the factual positon is different. Whether it was a complicated matter or not is not what is relevant here. In the present matter the assessing officer had finally raised only 4 issues, one of them being the issue of bad debt/advances written off. Therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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