TMI Blog2016 (9) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... davit 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 assessment otherwise the same would be based on change of opinion There is no tangible material available to justify the reopening more particularly when the issue has been gone into in detail during the course of regular scrutiny assessment, it is hardly justify for the revenue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 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 Act stating that he has reason to believe that income chargeable to tax has escaped assessment and thereby required the petitioner to submit the return. In turn, the petitioner submitted a reply on 21.12.2009 stating inter alia that earlier return, which has been filed on 31.10.2005, be considered as a return in response to the notice under Section 148. Later on, under the communication dated 22.12.2009, the petitioner has requested th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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. Hence, the same is reproduced herein: It is noted that the assessee had written off bad debt at ₹ 7,24,721 in its profit and loss account. Perusal of the details, it was noted as under:- Provision made for bad debt ₹ 26,03,738 Add: Various accounts written off (Rs. 4387+Rs.15588+Rs.27033+Rs.450) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Baroda People's co.op Bank 27033 Rs.165122 (O/D A/c. Facility) as on 1.4.2004 receipt ₹ 16,500 (1.4.2004) (Rs. 2.00 lakh F.D.a/c. Dated 31.3.2005). Interest paid ₹ 24,314 (29.5.2004) loan amount not passed through profit and loss account. Therefore, sum of ₹ 31,573 (out of ₹ 51,549 of bad debt claimed to have been written off of ₹ 51,549) is also inadmissible. Hence, total bad debt of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vinator of India Ltd. counsel submitted that the order of rejection of objection is not in consonance with the proposition of law laid down by the series of decisions including the decision of Commissioner of Income Tax vs. Kelvinator of India Ltd . Counsel for the petitioner further drawn the attention 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 justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment which took place under Section 147 w.e.f. 01.04.1989 much power is entrusted to the assessing authority. The assessing authority has certainly the power of reopening after the amendment which has taken place. Counsel for the revenue further submitted that there is a tangible material available before 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 opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minutely para 5 of the said decision is reproduced hereafter: 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax vs. Kelvinator of India Ltd (supra) delivered by the Apex Court also and after considering various other decisions, the Court has come to the conclusion that the reopening of assessment within a period of four years from the end of relevant assessment year after 01.04.1989 could be made as long as the same is not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceedings, does not reject such a claim, but chooses not to give 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant of the petitioner did attend the hearing. The case was discussed at length and submitted by the detailed information as called for from time to time and therefore, considering this material which is available on record, it appears to this Court that the issue pertaining to provision for bad and doubtful debt has been gone into and 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 Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer who had framed the assessment under section 143(3) of the Act had made a mistake in allowing deduction in excess of ₹ 50,00,000/- and now wants to correct the mistake. From the facts as emerging from the record, it appears that the Assessing Officer while allowing deduction in excess of ₹ 50,00,000/- under section 54EC of the Act has placed 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 ₹ 81,00,000/- under section 54EC of the Act, on the ground that the assessee was eligible for deduction only to the extent of ₹ 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 ..... 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