9911796707
TMI Blog2016 (9) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... y of audit report under Section 44AB. 3. The petitioner was, during the assessment proceedings, asked to furnish detail particulars by way of issuing notice under Section 142(1) on 29.01.2007 inter alia asking the petitioner to clarify 17 points enumerated in the said notice. One of the points which was a center of controversy was pertaining to the details regarding bad debts written off and its justification which is reflected on Item No. (xi) in the said communication. 4. The petitioner has submitted various replies on each of the points and one of such explanation in the form of reply was dated 17.09.2007 which was made a part of the record of the petition. Having considered the reply submitted by the petitioner and having satisfied, the Assessing Officer did not disallow it by adding it back in the computation of income and has passed assessment order under Section 143(3) on 29.10.2007. The said scrutiny assessment has considered the issue pertaining to bad debts written off and its justification. The Assistant Commissioner of Income Tax, Circle IV then became the Assessing Officer of the petitioner and had issued notice under Section 148 on 16.12.2009 under the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioner in the objection that the Assessing Officer has also allowed bad debts and therefore, now if the said issue is allowed to be opened, it would nothing but mere a change of opinion which is not permitted. While canvassing the point in the objection, it has also been relied upon a decision in case of Commissioner of Income Tax vs. Kelvinator of India Ltd. reported in 320 ITR 561 and after considering the ratio laid down by the said decision, the petitioner had raised an objection that the impugned action is impermissible. 6. The petitioner has pointed out that the said objections which have been raised have not been properly considered and vide order dated 06.08.2010, by giving brief reasons, the objections have been rejected. It is against that order as also against the impugned notice under Section 148 of the Act, the petitioner has brought the present petition before this Court challenging the legality and validity of the same. 7. Before narrating the brief contentions raised by the respective parties, it appears that the reasons which have been supplied to the petitioner are worth to be stated herein to examine the contentions in the context of those reasons. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account. Therefore, sum of Rs. 31,573 (out of Rs. 51,549 of bad debt claimed to have been written off of Rs. 51,549) is also inadmissible. Hence, total bad debt of Rs. 7,04,745 (Rs. 6,73,172+Rs. 31,573) is inadmissible u/s. 36(1)(vii)." 8. In the context of aforesaid reasons and the background of facts, Mr. M.J.Shah learned counsel appearing on behalf of the petitioner has submitted before the Court that the main action on part of respondent authority is not only unjust and arbitrary but impermissible in view of settled position of law on the issue. It was contended by the counsel that in scrutiny assessment, while dealing with an issue of bad debts written off thorough examination has taken place. It is only thereafter, the assessment order came to be passed and therefore, to permit the petitioner to reopen that issue would be nothing but merely on the basis of change of opinion which is impermissible in view of series of decisions. 9. Counsel for the petitioner further drawn attention of the Court contending that, in the original return, an issue pertaining to bad debt is already a part of the said examination. While contending this, the counsel had drawn ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that simply because the issue has not been incorporated in detail, it cannot be presumed that it has not been dealtwith at all. While contending this, counsel for the petitioner has relied upon the affidavit filed by the Deputy Commissioner of Income Tax in the form of additional affidavit dated 25.10.2010 wherein in para 1 it has clearly stated that on account of paucity of time and heavy workload, the Assessing Officer could not incorporate the details of bad debt written off furnished by the petitioner. This clearly indicate according to the counsel for the petitioner that all full particulars have been provided in response to the query raised by the Assessing Officer. And it is only after satisfying the explanation, the issue has been allowed by Assessing Officer. Therefore, after scrutiny of assessment having submitted full particulars as and when demanded, it is not justified now at this stage to reopen the assessment under Section 148 of the Act even if it is within a period of four years. Reliance which has been placed on specific paragraph contained in additional affidavit is reproduced hereafter: "1. I was working as Deputy Commissioner of Income Tax, Circle-4, Barod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Authority to come to the conclusion and form a belief that there is escapement of income from the assessment and therefore, counsel submitted that it is thoroughly justified on the part of the respondent authority to reopen the assessment. Learned counsel for the Revenue has contended that no doubt the Assessing Officer could have set right an issue during the course of original assessment but the issue is whether the assessee can make a claim to which it was not entitled to? Since this issue was not dealt with about entitlement of the petitioner, the reopening is perfectly justified in the eye of law and considering these submissions, counsel for the revenue requested the Court to dismiss the petition. 11. Having heard learned counsel appearing on behalf of the respective parties and having gone through the record of the petition in detail, we are of the opinion that before examining the contention and before giving our anxious thought for considering the proposition of law laid down by some of the decisions is worth to be taken note of. Hence, the same is reproduced for immediate reference. 12. Both the sides have submitted on the issue of amendment to Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on a mere change of opinion. 14. While further considering the Hon'ble Apex Court judgements it was observed that after scrutinizing the claim minutely during the Assessment proceedings if the Assessing Officer does not reject such a claim but choses not to give any reasons, such a course of action that he adopts had hardly be stated that he did not form the opinion on such a claim. Therefore, when the Assessing Officer during scrutiny assessment notices a claim of exemption deduction for such like made by the assessee having some prima facie doubt raises queries asking the assessee to satisfy him with respect to such a claim thereafter, does not make any addition in the financial year of assessment. It can be stated to have form an opinion whether or not in the financial year he give his reason for making addition and after forming an opinion on the issue, the Court further held that any such reopening would be based on a mere change of opinion cannot be reopened simply because the Assessing Officer did not record reasons for making no disallowance on such claim of exemption would be of a no consequence. The relevant extracts of the said decision which are referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any reasons for such a course of action that he adopts, it can hardly be stated that he did not form an opinion on such a claim. It is not unknown that assessments of larger corporations in the modern day, involve large number of complex claims, voluminous material, numerous exemptions and deductions. If the Assessing Officer is burdened with the responsibility of giving reasons for several claims so made and accepted by him, it would even otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own for reasons best known to him, chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the revenue that the Assessing Officer can not be seen to have formed any opinion on such a claim. Such a contention, in our opinion, would be devoid of merits. If a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only thereafter this scrutiny assessment came to be passed. To arrive at such conclusion, we have also gone through the stand taken by the respondent-revenue authority. We have taken note of the contents stated by the deponent on behalf of the revenue contained in additional affidavit submitted before the Court. It was categorically stated by the deponent on additional affidavit that on account of workload and pressure of various files getting time barred asessement of various assessees and on account of corporate assessees being under jurisdiction of that Assessing Officer he had categorically deposed that he could not incorporate the details of bad debts written off furnished by the petitioner assessee. This would clearly indicate that the details have already disclosed before the Assessing Officer and while framing the assesment, the Assessing Officer has considered the same. It is only because of pressure of work he could not incorporate the details in an order under Section 143(3) of the Act and therefore, considering this overall view of the matter we are of the opinion that if the records speak like this it would not be permissible for respondent-authority to reopen the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced reliance upon a decision of the jurisdictional Tribunal, under the circumstances, the view adopted by the Assessing Officer cannot be said to be erroneous. Moreover, assuming that the Assessing Officer made a mistake, section 147 of the Act cannot be availed of for the purpose of correcting a mistake. In effect and substance, therefore, the present Assessing Officer wants to sit in appeal over the decision of his predecessor Assessing Officer, who has examined the claim and allowed the claim of deduction of Rs. 81,00,000/- under section 54EC of the Act, on the ground that the assessee was eligible for deduction only to the extent of Rs. 50,00,000/- for the year under consideration. Thus, the reopening of assessment is not sustainable on either of the two grounds. The assumption of jurisdiction on the part of the Assessing Officer by issuance of the impugned notice under section 148 of the Act is, therefore, without authority of law and consequently, the impugned notice cannot be sustained." 16. Considering this overall set of circumstances coupled with the fact that there is no other tangible material available to justify the reopening more particularly when the issue has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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