TMI Blog2015 (2) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... dent : Mr Satish Mody Ms Aasifa Khan ORDER P.C. 1. This appeal by the Revenue under Section 260A of the Income Tax Act,1961 (Act) challenges the order dated 22.6.2012 passed by the Income Tax Appellate Tribunal (Tribunal). 2. This appeal relates to Assessment Year 2005-06. The following questions of law have been proposed by the Appellant-Revenue for our consideration:- (A) Whether, on the facts and the circumstances of the case, the Tribunal was justified in cancelling the re-assessment order passed under Section 147 and holding the same as bad in law ? (B) Whether, on the facts and the circumstances of the case, the Tribunal was justified in holding that it was a case of change of opinion when the Assessing Officer had not expressed any opinion during the regular assessment proceeding ? (C) Whether, on the facts and the circumstances of the case, the Tribunal was justified in holding that the issue of notice under Section 148 after the issue of under Section 154 is bad in law ? 3. The respondent - Assessee had filed a return of income for Assessment Year 2005-06 declaring total income of ₹ 83.34 lakhs. The Assessing Officer during the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06. Proceedings u/s.147 is initiated by issuing of notice u/s.148. 6. The respondent objected to the reopening notice under Section 148 of the Act. However, without prejudice the respondent also submitted on merits that as they were principally in money lending business, they were entitled to write off of the loan of ₹ 1.35 crores. The Assessing Officer did not accept the respondent's objection both on reopening as well as on merits and passed order under Section 143 read with Section 147 of the Act on 21.12.2010 and assessing the petitioner to an income of ₹ 2.47 crores. 7. In appeal, the Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer both on the reopening notice under Section 148 of the Act as well as addition of ₹ 1.35 crores by treating the same as capital loss and not as bad debts. On further appeal, the Tribunal by the impugned order allowed the respondent - Assessee's appeal on the following grounds:- (a) At the time of original assessment proceedings a specific query was raised by the Assessing Officer with regard to the claim for bad debts as the same was responded to by the respondent. The Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the findings of the Tribunal that there is no tangible material mentioned in the reasons recorded by the Revenue which would warrant a different opinion being taken then which was taken when the original order of assessment was passed. It is a settled position in law that a reopening notice can be sustained only on the basis of grounds mentioned in the reasons recorded. It is not open to the Revenue to add and/or supplement later the reasons recorded at the time of issuing reopening notice. 10. Mr.Chhotaray, learned Counsel for the Revenue urged on merits of the Revenue's case to charge ₹ 1.34 crores allowed as bad debts, has to be appropriately brought to tax as capital loss. We pointed out to Mr.Chhotaray, learned Counsel for the Revenue that the scope of the present proceedings is only with regard to reopening notice under Section 148 of the Act and we are not dealing with the merits of the assessibility of the income alleged to have escaped assessment. On this Mr.Chhotaray submitted that the issue which he seeks to urge is that merely because the Assessing Officer has been careless in bringing to tax a particular amount which is chargeable to tax, the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this Court in Maharaj Kumar Kamal Singh V. CIT (1959) 35 ITR 1 (SC), CIT V. A.Raman and Co. (1968) 67 ITR 11 (SC) and Bankipur Club Ltd. V. CIT (1971) 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji Co. V. CIT (1976) 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law. (emphasis supplied) 12. The aforesaid view on the above proportion has been reiterated by the Apex Court in A.L.A.Firm vs Commissioner of Income Tax 183 ITR 285 wherein the Court held that change of opinion where opinion was formed earlier does not give the Assessing Officer jurisdiction to reopen an assessment. The Apex Court interalia on the above issue held as under: Even making allowances for this limitation placed on the observations in Kalyanji Mavji (1976) 102 ITR 287 (SC) the position as summarised by the High Court in the following words represents, in our view the correct position in law (at p.620 of 102 ITR): Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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