TMI Blog2017 (2) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... ot correct. The assessee has furnished all the information and a detailed submission along with case law in its support for its claim for deduction of waiver of loan by Banks on OTS. We also find that there is nothing on record to suggest that the revenue has got tangible material in its possession after completion of assessment suggesting escapement of income. Thus reopening of assessment u/s 147 is only on mere change of opinion by the assessing officer on some set of facts which were already available on record before him while completing the original assessment u/s 143(3) of the Act. Thus, following the decision of Hon’ble Supreme Court in the case of Kelvinator India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] we hold that reassessment made u/s 143 r.w.s. 147 is bad in law. Hence we quash the reassessment order passed by the assessing officer. - Decided in favour of assessee. - ITA No. 3210/MUM/2016 - - - Dated:- 10-2-2017 - Shri Rajendra, Accountant Member And Shri CN Prasad, Judicial Member Appellant by : Shri Dinkle H Hariya Revenue by : Shri PR Ghosh ORDER Per C. N. Prasad ( J. M. ) This appeal is filed by the assessee against the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Counsel submits that after considering the submissions of the assessee, assessment was completed u/s 143(3) by the assessing officer accepting the submissions of the assessee that the principal amount waived by the banks on one time settlement is not liable to be taxed u/s 41(1)/28 (iv) of the Act. Ld. Counsel submits that detailed reply furnished in the course of assessment proceedings is placed at page no.120 of the paper book. The Ld. Counsel for the assessee submits that since the assessee has furnished all the necessary details, in the course of assessment proceedings and there were no tangible materials came on record subsequent to completion of assessment suggesting that there is escapement of income by the assessee, the Ld. Counsel submits that it is mere change of opinion by the assessing officer to bring to tax the principal amount waived by the banks under one time settlement which is bad in law. The Ld. Counsel referring to page 143 of the Paper Book which contains the reasons for reopening the reassessment, submits that the reasons recorded by the assessing officer does not suggest that any new information has come on record suggesting escapement of income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is attached in Paper Book at Pg.243. The Ld. Counsel for the assessee submitted that the company has offered waiver of interest as per provision of section 41(1) of IT Act, 1961 and waiver of principal amount credited to profit and loss account have not been considered as income u/s 41(1) and or u/s 28 of IT Act, 1961. 6. The Ld. Counsel for the assessee further submitted that the Company has raised the fund by issue of debenture in the year 1994-95. The amount so borrowed had been utilized for acquisition of fixed assets. The investment in acquisition of fixed assets was made in the year 1994-95 and 1995-96. He submits that the Certificate received from the Chartered Accountants to establish this fact has been placed in paper book at Pg.243A to 243D. The Ld. Counsel for the assessee submitted that the loans from bank were taken against the hypothecation of stocks and book debts and the same has also been utilized for the purpose of fixed assets from time to time. The Ld. Counsel for the assessee submitted that court have time and again held that when the amount borrowed have been utilized for the purpose of fixed assets, it does not result in a revenue receipts. For this pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first charge on mortgage of company's immoveable properties and plant and machineries present and future. 4. The banks have also sanctioned loan to the company for carrying on its business activities against the securities of immoveable properties and other assets. 5. The company made cash losses and failed to repay its principal and interest to banks and debenture holders. On 02/07/2001 BIFR declared the company as sick in terms of Section 3 (1) (o) of SICA. State Bank of India was appointed as the operating agency to carry out techno economic viability study, valuation of assets and to prepare Draft Rehabilitation Scheme (DRS). 6. As per the revival scheme as approved by Board of Industrial and Finance Corporation vide order dated 21st December 2006 the bank and debenture holders have agreed for OTS of their outstanding principal and interest. 7. The banks and debenture holders have agreed to settle the principal amount at ₹ 1000 lacs and ₹ 934 lacs respectively. The interest have been waived by the bank of ₹ 2469.93 lacs and debenture holders ₹ 824.82 lacs, aggregating to Re 3294.65 lacs . The waiver of interest have been offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment as under The assessee had claimed deduction of ₹ 30,07,71,569/- for waiver of loan on account of One Time Settlement (OTS) with banks and NCD holders. The amount was credited to the P L a/c as income but claimed as deduction in the statement of computation of income. The assessee had claimed deduction for depreciation on the assets acquired with the said loan, banks claimed the write-off of the loan on OTS as bad debts and the write back by assessee was to be treated as income. Therefore, I have reasons to believe that income to the extent of ₹ 30.07 crores has escaped assessment within the meaning of Section 147 of the Act. 11. On receiving the reasons for reopening, assessee by letter dated 01.01.2013 submitted its objections stating that there is no escapement of income by the assessee and it had furnished all the information in the course of assessment proceedings in respect of waiver of loan by the banks on one time settlement as required by the assessing officer and therefore reopening of assessment was merely a change of opinion and there were no tangible materials which came on record subsequent to completion of assessment to justify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reopen the proceedings without knowing further, it would amount to giving a premium to an authority to the assessing officer exercising quasi judicial function to take benefit of his own wrong. The Hon ble High Court held that the legislature has not conferred the power on the assessing officer to review his own order. The Hon ble High Court held that initiation of reassessment proceedings would amount to change of opinion of the assessing officer as it was merely a fresh application of mind by the assessing officer to the same set of facts. It was held by the High Court that since the assessing officer has failed to apply his mind to the relevant material while framing the assessment order, he would not take advantage of his own wrong. The legislature has not conferred power on the assessing officer to review his own order. While holding so, the Hon ble High Court also considered the Full Bench decision of the Delhi High Court in the case of CIT Vs Kelvinator of India Ltd [256 ITR 1] which was later affirmed by the Supreme Court, reported in [320 ITR 561] as CIT Vs Kelvinator of India Ltd. The Hon ble High Court while holding so held as under 7. We have heard the learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement with the view taken by the Full Bench of the Delhi High Court. 10. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under section 147 cannot be used to review the order. In the present case, though the Assessing Officer has used the phrase reason to believe , admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITR1 referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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