TMI Blog2019 (7) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... een made the subject of excessive relief under this Act ; or ( iv ) excessive loss or depreciation allowance or any other allowance under this Act has been computed; The plea of Ld. Counsel for revenue is acceptable to that extent. Keeping in mind the factual matrix of the case and above legal propositions, we hereinafter proceed to adjudicate each of the issues, on legal grounds as well as on merits. Deduction allowed u/s 36(1)(viia) not adjusted while computing bad debts u/s 36(1)(vii) - HELD THAT:- Factual matrix would lead us to conclude that an opinion was already formed by Ld. AO during regular assessment proceedings and the reassessment proceedings were triggered merely on the basis of Revenue Audit objections. The reopening was done on the same set of facts as available during original assessment proceedings. The ratio of decision of Hon ble Bombay High Court rendered in ICICI Home Finance Co. Ltd. [ 2012 (8) TMI 312 - BOMBAY HIGH COURT] would squarely apply to this issue. Therefore, we hold that that there was no independent application of mind by Ld. AO while triggering reassessment proceedings against the assessee and assessment proceedings was nothing but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llments of each of the 4 succeeding years. A combined reading of the above facts would lead us to a conclusion the only provisions under which the said deduction has been claimed as well as allowed to the assessee is Section 35DDA which provides for deduction only to the extent of 1/5th in the first year. The provisions of statute being expressly crystal clear, we hold that the assessee was entitled to claim deduction only to the extent of 1/5th only during impugned AY against aggregate payment of ₹ 191 Crores. The decision of Hon ble Bombay High Court rendered in Bhor Industries Limited [ 2003 (2) TMI 20 - BOMBAY HIGH COURT] , in our considered opinion, would not apply-firstly because admittedly the said decision is prior to introduction of Section 35DDA and secondly, no such disallowance u/s 43B was there and therefore, the said case is factually distinguishable. Therefore, we reverse the stand of Ld. first appellate authority, in this regard and restore the stand of Ld. AO. However, it is made very clear that our adjudication of the issue, on merits, would come into play only if our stand, on legal grounds, is subsequently reversed by any higher judicial author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. A specific query, in this regard, was raised by AO vide notice dated 17/10/2005 question no. 4 asking assessee to file the complete details / evidences in support of the said claim. The assessee, vide submissions dated 17/07/2006 submitted the requisite details as asked for by AO. Thereafter, the assessee s eligibility to claim the same was exhaustively dealt with by AO vide paragraph-5 (page nos. 2 to 7) while framing assessment order u/s 143(3) on 29/12/2006. In fact, an addition of ₹ 64.69 Crores was made by AO in the regular assessment proceedings which was subject matter of further appeal before first appellate authority. Therefore, the reconsideration of the stated issue on same set of facts would be nothing but mere change of opinion which is impermissible under law. This issue was duly considered by Ld. AO during regular assessment proceedings and therefore, the ratio of decision of Hon ble Apex Court rendered in CIT Vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] would apply to the facts of the case. Secondly, the argument of doctrine of merger as advanced by Ld. AR would also be applicable to the factual matrix. Therefore, we hold that L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of notice of hearing, has filed cross objections against the same. The memorandum of cross-objections read as under: - [ 1] On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) - XXVII, Mumbai [CIT(A)] erred in upholding the order of the Assessing Officer passed under section 143(3) r.w.s. 147 of the Act on the ground that the Assessing Officer had reasons to believe that the income chargeable to tax had escaped assessment. [ 2] The CIT(A) failed to appreciate that the claim of deduction of bad debts under section 36(1)(vii), exemption under section 10(23G), deduction under section 35DDA had been considered in the assessment order passed under section 143(3) dated December 29, 2006 and section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceedings upon a mere change of opinion as has been held by the Delhi High Court (FB) in the case of CIT v. Kelvinator of India (256 ITR 1) and affirmed by the Supreme Court in 320 ITR 561. 2.1 Facts in brief are that the assessee being resident corporate assessee stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Scheme as approved by RBI, the payment under ERO Scheme aggregated to ₹ 191 Crores, the break-up of which was as follows: - No. Nature of Payment Total (Rs.) 1. ERO: Cash Component 150,55,00,000 2. ERO: Annuity 15,45,00,000 3. SL Encashment 8,18,00,000 4. Proportionate LTA 62,00,000 5. Others 2,36,00,000 Total (A) 177,16,00,000 6. Leave encashment 1,75,00,000 7. Gratuity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the provisions were allowed in those years. The assessee submitted that partwise list of debtors was already provided to Ld. AO during regular assessment proceedings u/s 143(3) and the Ld. AO, after due examination, disallowed an amount of ₹ 1157.66 Crores and allowed the balance amount of ₹ 492.26 Crores. It was submitted that requisite details / information / evidences, in this regard, was already supplied by the assessee during regular assessment proceedings u/s 143(3). However, in the absence of any further information forthcoming from the assessee with respect to balance claim of ₹ 492.26 Crores, Ld. AO formed an opinion that the assessee failed to prove that the bad debts have been written-off in the books of accounts which was the basic requirement of Section 36(1)(vii). In fact, the non- furnishing of requisite information / details by the assessee during original assessment proceedings was one of reason which led to reopening of assessment proceedings against the assessee. Resultantly, the amount of ₹ 492.26 Crores was disallowed and added to the income of the assessee. 2.3.3 Exemption u/s 10(23G) It was noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be subject to change. The Ld. AO concurs with the deduction of ₹ 31.05 Crores as claimed by the assessee since it is as per regular assessment order u/s 143(3) dated 29/12/2006. Proceedings before Ld. first appellate authority 3.1 Before Ld. CIT(A), the assessee raised legal grounds by submitting that reopening was initiated on mere change of opinion by a succeeding officer on account of revenue audit objection on issues which were already considered in-depth in regular assessment u/s 143(3) and therefore, the reassessment was not valid in law. Reliance was placed on certain judicial decisions to fortify the said proposition. However, the said submissions could not convince Ld. first appellate authority who dismissed assessee s plea by observing as under: - 2.9 I have considered the facts of the case and I have also gone through the submissions and case laws relied upon by the Appellant. On reasonable consideration, I have noted that as regards bad debts of ₹ 1,649.92 crores the said issue has been discussed at length in the assessment order wherein the AO has disallowed bad debts to the extent of ₹ 1,157.66 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only payments made to an employee in connection with his voluntary retirement would come within the purview of the said section. Amounts paid by the Appellant in respect of leave encashment, gratuity and pension are not payments made in connection with the voluntary retirement as any employee who resigns/retires even in the ordinary course is entitled to receive leave encashment, gratuity and pension. However, as the same have been made to the employees who have opted for the ERO scheme, the Appellant has accounted for the same as payments made under the Early Retirement Option. Further this issue was raised by the A.O. during the course of assessment proceedings and the contention of the Appellant is presumed to have been accepted by him as no disallowance was made by him in the assessment order. 3.3 Regarding assessee s claim of bad debts u/s 36(1)(vii) for ₹ 492.26 Crores, it was submitted that the assessee fulfils conditions laid down u/s 36(2) of the act and the debts represent money lent in the ordinary course of assessee s business which has turned bad and therefore, the same has been written-off as per an elaborate system of identifying bad debts foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allowed. 3.5 The deduction u/s 10(23G) of the Act, as denied to the assessee by Ld. AO, was also allowed by following the decision of co-ordinate bench of Amritsar Tribunal rendered in J K Bank Ltd. V/s ACIT [114 TTJ 728]. Another reason to allow the same was the fact that similar deduction was being allowed to the assessee in all the earlier Assessment Years till AY 2004-05 and therefore, the rule of consistency was to be followed. 3.6 The stand of appellate authority has given rise to appeal by revenue and cross-objection by assessee. The revenue is contesting the deletion of addition on merits whereas the assessee has challenged the validity of reassessment proceedings as upheld by Ld. CIT(A). Submissions by Ld. Counsel for Assessee [AR] Legal Submissions on Validity of Reassessment Proceedings 4.1 The Ld. Authorized Representative for Assessee [AR], Ms. Aarti Vissanji , at the outset, contested the validity of reassessment proceedings. Our attention is drawn to the fact that assessment was reopened on following issues: - ( i) Deduction allowed u/s 36(1)(viia) amounting to ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stan Unilever Ltd. V/s DCIT [325 ITR 102] for the said submissions . 4.1.3 Regarding deduction u/s 35DDA, it has been submitted that the issue of deduction was duly examined by Ld. AO in the original assessment proceedings. No new tangible material came to the possession of Ld. AO which would justify triggering of reassessment proceedings and therefore, the reopening was based on mere change of opinion. The Ld. AR submitted that review of order is not permissible under laws in the light of the following judicial pronouncements: - No. Case Law Judicial Authority Citation 1. Kelvinator of India Ltd. Hon ble Supreme Court 320 ITR 561 2. Plus Paper Food PAC Ltd. vs. ITO Anr. Hon'ble Bombay High Court 374 ITR 485 25/03/2015 3. Pr.CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. Our attention is drawn to the decision of Hon ble Bombay High Court in assessee s own case for AY 2003-04 in Writ Petition No. 1765 of 2011 [242 CTR 292] wherein Hon ble Court held that Ld. AO could not have reopened the assessment on the matters which form subject matter of appeal before Ld. CIT(A). 4.1.6 Regarding eligibility to claim exemption u/s 10(23G), it has been submitted that stated issue was already examined in depth by Ld. AO during regular assessment proceedings u/s 143(3). The mere fact that the aforesaid exemption is denied to the assessee in subsequent AY 2005-06, could not be a ground to re-open the assessment for AY 2004-05 since it would amount to review. 4.1.7 Similar plea has been raised to the effect that the assessee s appeal, on this issue, was already pending before Ld. CIT(A) at the time of issuance of notice u/s 148. Therefore, Ld. AO was barred from reassessing the same in view of 2nd proviso to Section 147. On Merits 4.2.1 Regarding deduction u/s 35DDA, it has been submitted that leave encashment, gratuity and pension payments were statutory payments though paid at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crores has consciously been allowed by Ld. AO. Reliance has been placed on decision of Hon ble Supreme Court rendered in TRF Limited [323 ITR 397] and Vijaya Bank [323 ITR 166] for the submissions that now there is no requirement to prove that the debts have actually become bad. 4.2.3 For assessee s eligibility to claim deduction u/s 10(23G), our attention is drawn to the fact that stated issue stood squarely covered in assessee s favor by the decision of this Tribunal rendered in assessee s own case for AY 2005-06 vide ITA Nos.5276,3841/Mum/2013 order dated 03/11/2017 as well as by the decision of Delhi Tribunal in ACIT V/s Oriental Bank of Commerce [ITA No.I73/Del/2011]. Submissions by Ld. Sr. Counsel for Revenue [DR] 5.1 On the other hand, Ld. Counsel for Revenue [DR], Shri P. C. Chhotaray, vehemently contested the issues on legal ground as well as on merits by way of elaborate oral as well as written submissions. The same could be summarized in the following manner. Legal Submissions on Validity of Reassessment Proceedings 5.2.1 Our attention has been drawn to the fact that regular a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e could be no occasion to treat the same as mere change of opinion. 5.2.5. Reliance has been placed on the following judicial pronouncements for the arguments of change of opinion, reassessment proceedings based on revenue audit objections etc.: - No. Case Law Judicial Authority Citation 1. ACIT V/s Rajesh Jhaveri Stock Brokers Pvt. Ltd. Hon ble Supreme Court 291 ITR 500 2. Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT Ors. Hon'ble Bombay High Court 2013 350 ITR 651 3. ITO Ors. vs. Biju Patnaik Hon'ble Supreme Court [1991] 188 ITR 247 4. A.L.A. Firm vs. CIT Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year and therefore, it would be difficult to link the two. A plea has been raised to submit that it was quite possible that Ld. AO simply omitted to examine this issue particularly when there is no discussion on this issue in the assessment order. Hence, there is no change of opinion and the assessment was validly reopened on this issue. 5.2.7 Regarding excess allowance of deduction of bad debts for ₹ 492.26 Crores, it has been submitted that the assessee claimed bad debts to the tune of ₹ 1649.92 Crores in the Profit Loss account. After detailed discussion in the assessment order, the Assessing Officer had disallowed bad-debt claims to the extent of ₹ 1157.66 Crores thereby implying that the balance bad debts of ₹ 492.26 Crores were allowed. However, no details have been brought on record for the balance bad debts as allowed to the assessee. Even basic details like name of the parties against whom the debts are shown as bad debts and amounts of such bad debts etc. have not been furnished by the assessee. On this ground, the Ld. AO had reason to believe that income of ₹ 492.26 Crores escaped assessment. The Ld. Sr. Counsel countered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the aforesaid decision of Hon ble Bombay High Court would be distinguishable on facts since in that case the reopening was done beyond four years and the main issue was full and true disclosure by the assessee. The Judgment also referred to the proposition of law in the 2nd proviso to section 147 providing that reopening cannot be done on an issue which is the subject matter of appeal. The full facts of that case are not available. From the facts available in the order of the Hon ble Bombay High Court, in that case, the claim of bad debt was ₹ 1503 crores under section 36(1)(vii) including write-off on fees for ₹ 62.09 crores. Excluding the figure of ₹ 62.09 crores, the balance figure of bad debts was ₹ 1441 Crores. The assessee provided full details through several submissions. The Assessing Officer considered these submissions, disallowed the claim of bad debts to the extent of ₹ 769.75 Crores and allowed the claim to the extent of ₹ 672 crores. The CIT(A) partly allowed the appeal of the assessee. The Assessing Officer sought to reopen the assessment on the issue of the same bad debts examined by the AO against which appeal had been file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of addition alone were the subject matter of appeal before the CIT(A) in terms of the 2nd proviso to Section 147. The balance amount of ₹ 492.26 was not in contemplation of the Assessing Officer; admittedly no details were filed. It is not known how many items were contained in the balance aggregate amount of ₹ 492.26 crores and what were the individual amounts and names and addresses of the debtors. They could not be a homogenous lot. They would have different characteristics. In the absence of these primary details, it would not be possible to consider the allowability or disallowability of these individual items of purported bad debts. It follows that without these details in the record, these items could not be the subject matter of consideration before the CIT(A). Hence, the judgment of the Hon ble Bombay High Court in Writ Petition No. 1765 of 2011(supra) is not applicable to this case. That decision was confined to the facts of that case. It simply applied the 2nd proviso to section 147. In our case, the assessee did not file any writ petition against the reopening of the assessment and came through the regular channel of appeal. Since that writ petition was file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) deleting the addition of ₹ 1157.66 crores. It could not file appeal to ITAT in respect of the bad debt claim of ₹ 492.26 crores because that was not a subject matter of appeal before the CIT(A). The Hon ble ITAT in its combined order dated 03/11/2017 in ITA No.6137/ Mum/2008 for AY 2004-05 restored the matter to the file of Ld. Assessing Officer to examine the claim afresh in the light of the decisions of the Hon ble Supreme Court rendered in TRF Ltd. V/s CIT [2010 323 ITR 397] and Vijaya Bank Ltd. V/s CIT, [2010 323 ITR 166]. 5.2.12 Proceeding further, Ld. Counsel submitted that the above sequence of events would show the order of the Assessing Officer which merged with the order of the CIT(A) dated 31/07/2008 was in respect of disallowance of bad debts of ₹ 1157.66 crores only. The purported claim of bad debts was not the subject matter of appeal before the CIT(A). Therefore, when the Assessing Officer passed the reassessment order dated 25/02/2009 the CIT(A) had already passed the appellate order dated 31/07/2018. That order did not deal with the claim of balance bad debt of ₹ 492.26 Crores. Hence the re-assessment order did not reass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent assessment order for assessment year 2005-06 to the effect that the assessee is neither an infrastructure capital fund nor an infrastructure capital company. Hence, the exemption was wrongly allowed. The Ld. Sr. Counsel submitted that Ld. AO was well within his jurisdiction to reopen the assessment of impugned AY on the basis of finding given in another AY. Reliance has been placed on the decision of Hon ble Supreme Court rendered in Raymond Wollen Mills Ltd. v. ITO [236 ITR 34], Hon ble Bombay High Court in Rabo India Finance Ltd. v. DCIT 356 ITR 200 Multi Screen Media Private Ltd. v. UOI and Anr. 324 ITR 54. 5.2.15 It has further been submitted that If the reopening is held valid on one of the several reasons, then the entire reopening is held to be valid. It is submitted that Ld. AO had given five reasons for reopening the assessment and the reopening is valid on all the reasons. However, even if reopening is held to be valid even on one reason, the whole reopening would be valid. This has been explained, on the basis of case laws, by the learned author in Chaturvedi Pithisaria s Income Tax Law [6th Edition,2015, Volume 6, page 8989]. The relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Rowlatt J. in his classic statement (vide Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 cited with approval in ITO v. T.S. Devinatha Nadar [1968] 68 ITR 252 SC; AIR 1968 SC 623 (page 267 of [1968} 68 ITR):- In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be implied, One can only look fairly at the language used. Reliance has also been placed on the decision of Hon ble Madras High Court rendered in CIT v. Micromax Systems P. Ltd. [2005), 277 ITR 409(Mad) for the aforesaid principle of interpretation. 5.3.2 Proceeding further on the same lines, it has been the submissions that payments in respect of leave encashment, gratuity and pension, in the ordinary course, may be governed by different Rules and be subject to fulfilment of certain conditions like notice period, different clearances etc. which may not be applicable for this voluntary retirement scheme, which is a package. Hence it would be wrong to break this package into separate items and treat each item separately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on judicial pronouncements as already tabulated by us in para 4.1.3 to support the submissions. 5.4.2 Our attention is drawn to the fact that decision of Hon ble Apex Court rendered in ACIT V/s Rajesh Jhaveri Stock Brokers Pvt. Ltd. 291 ITR 500, as relied upon by Ld. Sr. Counsel for revenue, was rendered in a case where regular assessment was not framed but the return was processed u/s 143(1) and therefore, the claim of the assessee could not have been examined. Similarly, the decision of Hon ble Supreme Court rendered in ALA Firm V/s CIT [189 ITR 285] deal with the provisions of Section 147(b) contrary to the facts of the present case wherein Ld. AO has either allowed or partially allowed the claims after consideration of all the material with due application of mind. The case law of Hon ble Supreme Court in Biju Patnaik 188 ITR 247 deals with a situation wherein the reopening was upheld u/s 147(a) because there was failure to disclose the correct facts on the part of the assessee, which is not the allegation of revenue here. Our findings and conclusion 6.1.1 We have given thoughtful consideration to the rival submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2. - For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- ( a ) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; ( b ) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; ( c ) where an assessment has been made, but- ( i ) income chargeable to tax has been under assessed; or ( ii ) such income has been assessed at too low a rate; or ( iii ) such income has been made the subject of excessive reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the assessee. 6.1.6 Explanation-3 empower Ld. AO to assess / reassess income from issues which comes to the notice of Ld. AO in the course of proceedings under this section notwithstanding the fact that the reasons for such issues was not included in the reasons recorded under sub-section (2) of Section 148. This explanation would also not be applicable in the present case since the additions have been made only against those issues for which reasons were recorded by Ld. AO to reopen the assessment. 6.2 Proceeding further, we deem it fit to reproduce the reasons as recorded by Ld. AO on 26/06/2008 to reopen the assessment of the assessee, which read as under: - REASONS FOR REOPENING The above-mentioned case is reopened u/s. 147 of the Income-tax Act, 1961 for the following reasons. The assessee was allowed a deduction of ₹ 12912.59 lakhs as provision for doubtful debts u/s.36(1)(viia). Since the bad debts are allowable only after adjusting against the provision for bad and doubtful debts allowed u/s.36(1)(viia), there was excess allowance of bad debts leading to under assessment of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee. The Assessing Officer while completing the assessment for the assessment year 2005-06, again afforded an opportunity to the assessee to file complete details of bad debts allowed during 2004-05 and was requested to prove that the debts have actually become bad. The assessee could not furnish the required details (Ref: Order sheet entries dtd. 19.12.07 20.12.07). Moreover, it has been found that the bad debts have been claimed over and above the bad debts as per NPA return which is required to be examined and verified. Therefore, I have reason to believe that an amount of ₹ 492.26 crores has escaped assessment. 5. During the course of assessment proceedings in the A.Y. 2005-06, it was found that the assessee is not entitled to claim exemption u/s. 10(23G) of the I.T. act for the following reasons. Exemption u/s.10(23G) is available to Infrastructure Capital Company and Infrastructure Capital Fund established for the purpose of mobilizing resources for financing infrastructure facilities as per Finance Bill, 1996 and CBDT Circular No.762 dtd.18.02.98. While scrutiniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings bad. The same has been countered by Ld. Counsel for revenue that there was no such embargo under law that the reassessment proceeding could not be initiated on the basis of revenue audit objection provided the same were appreciated by Ld. AO with due application of mind to reach a prima-facie opinion that certain income escaped assessment in the hands of the assessee. We concur with the submissions of Ld. Counsel for revenue, in this regard, since as already noted by us in preceding paragraphs, the only requirement to reopen the reassessment proceedings against the assessee was that Ld. AO had reasons to believe that certain income escaped assessment in the hands of the assessee. So long as this satisfaction of Ld. AO emanates from the record, the reassessment proceedings would be perfectly valid in the eyes of law. The Hon ble Bombay High Court in the case of ICICI Home Finance Co. Ltd. V/s ACIT [25 Taxman.com 241] has held as under: - 6. The power to reopen a completed assessment under Section 147 of the Act has been bestowed on the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 157 (Bom.) has also held that even where reassessment is sought to be done within four years from the end of the relevant assessment year, there must be reason to believe that income has escaped assessment and such reason to believe should not be on account of mere change of opinion. Therefore, where facts have been viewed during the original proceeding and an assessment order has been passed then in such cases, reopening of an assessment on the same facts without anything more would be a review and not permitted under the garb of reassessment. This would be a mere change of opinion in the absence of any tangible material and is not sufficient to assume jurisdiction to issue the impugned notice. In fact, our court in the matter of Idea Cellular Ltd v. Dy. CIT [2008] 301 ITR 407 (Bom.) has held that once all the material with regard to particular issue is before the Assessing Officer and he chooses not to deal with the same, it cannot be said that he had not applied his mind to all the material before him. Further, as observed by the Full Bench of Delhi High Court in the matter of C.I.T. v. Kelvinator of India Ltd. [2002] 256 ITR 1/ 123 Taxman 433, when the entire material is place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ximum marginal rate and even if considered as business income, the tax effect would be the same. Consequently, there could be no reasonable basis to have a belief that there is any escapement of Income. 9. Therefore, in view of the above, we are of the view that the impugned notice is without jurisdiction and the impugned order dealing with the objection of the Petitioner is non speaking order in as much as it does not deal with any of the objections raised by the Petitioner in its objections. 10. In the circumstances, the impugned notice dated 24.03.2011 issued under Section 148 of the Act as well as the impugned order dated 07.12.2011 rejecting the objection to initiation of reopening the assessment for the assessment year 2006-2007 are quashed and set aside. 6.5 Another plea raised by Ld. Counsel for Assessee is that reassessment proceedings have been triggered on the basis of findings in succeeding AY i.e. 2005-06 and therefore, applying the same to impugned AY would amount to review of the order which is not permissible under law. We concur with this submission provided the issue was already examined by Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eview would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief . Similar view has been expressed by Hon ble Apex Court in CIT Vs. Foramer France [2003 264 ITR 566]. Similar view has been expressed by our jurisdictional Bombay High Court rendered in Asian Paints Ltd. Vs. DCIT [308 ITR 195] wherein it has been observed as under: - 9. It is clear from the observations made above that the Full Bench of the Delhi High Court has taken a view that in a situation where according to the Assessing Officer he failed to apply his mind to the relevant material in making the assessment order, he cannot take advantage of his own wrong and reopen the assessment by taking recourse to the provisions of Section 147. We find, ourself, in respectful agreement with the view taken by the Full Bench of the Delhi High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)]. 6.8 Proceeding further, Hon ble Bombay High Court in the case of Export Guarantee Corporation of India Ltd. V/s Addl. CIT [350 ITR 651] has held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable before Ld. AO during regular assessment proceedings. The computation has also been placed on page-5 of the Bank s paper-book. 7.1.2 Upon careful consideration, we concur with the aforesaid submissions of the assessee. The computation of bad-debts u/s 36(1)(vii) was very much available before Ld. AO. It is evident from computation of income as placed on record that the bad-debts figures were arrived ay after adjusting credit balance of provisions u/s 36(1)(viia) for AY 2003-04 for ₹ 21.80 Crores. In fact, this figure has been revised to ₹ 31.05 Crores in original assessment order dated 29/12/2006. A specific query was raised by Ld. AO vide notice dated 17/10/2005 question no. 35 requiring assessee to furnish detailed working for deduction u/s 36(1)(vii), special reserve u/s 36(1)(viii) and u/s 36(1)(viia) along with justification. The said facts would reveal that the stated issue was dealt with by Ld. AO with due application of mind. The Ld.AO was convinced with assessee s methodology of arriving at bad-debts claim and formed an opinion about assessee s claim. 7.1.3 Proceeding further, as already noted, this issue stem out of obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Merits, the addition of the same has been accepted by the assessee. The only plea raised by Ld. counsel for assessee is that this was a computational error and a rectifiable error u/s 154 and therefore, proceedings u/s 147 could not be resorted to by the revenue where the rectification was sufficient to correct the error. Upon perusal, we are not convinced with the said logic firstly because there was no bar under law to resort to reassessment proceedings in such cases of omissions. Rather, Explanation-2 creates a deeming fiction of escapement of income wherein there was an underassessment of income. Secondly, as evident from recorded reasons, this was not the only reason to trigger reassessment proceedings against the assessee. Thirdly, it was not a mere plain computational error rather an omission of such a nature which could not be termed as mistake apparent from record. It is also pertinent to note that no such adjustment was made by the assessee in its computation of income and Ld. AO had no occasion to consider the same and the said omission could not be said to be a fault on the part of Ld. AO. For the same reasons, the decision of Hon ble Bombay High Court in Hindustan Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Ld. AO. Thereafter, the assessee s claim was accepted and no adjustment was made on this account. On the basis of chronology of these events, we are of the considered opinion that the stated issue was duly considered by Ld. AO during regular assessment proceedings and reconsideration of the issue on same set of facts would be nothing but mere change of opinion and review of order which is impermissible under law. Therefore, we hold that Ld. AO had no jurisdiction to invoke reassessment proceedings on this issue. 7.3.3 Although after having reached such a conclusion, the adjudication of issue, on merits, would become merely academic in nature. However, for the sake of completeness, we delve into the same. The Ld. DR has raised a plea that Section 35DDA was a specific provision and the deduction was to be allowed in accordance with the provision of that section only. Pittied against the same is the argument of the Ld. AR that these three components were statutory payments and incorporated in the individual contracts of employment by virtue of which the employees were entitled to the said payment whenever they resign or retire. The same is sought to be fortified by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o amortize VRS expenditure only to the extent of 1/5th of the amount paid in connection with voluntary retirement scheme. The balance would be allowable in equal installments of each of the 4 succeeding years. 7.3.6 A combined reading of the above facts would lead us to a conclusion the only provisions under which the said deduction has been claimed as well as allowed to the assessee is Section 35DDA which provides for deduction only to the extent of 1/5th in the first year. The provisions of statute being expressly crystal clear, we hold that the assessee was entitled to claim deduction only to the extent of 1/5th only during impugned AY against aggregate payment of ₹ 191 Crores. The decision of Hon ble Bombay High Court rendered in Bhor Industries Limited 264 ITR 180, in our considered opinion, would not apply-firstly because admittedly the said decision is prior to introduction of Section 35DDA and secondly, no such disallowance u/s 43B was there and therefore, the said case is factually distinguishable. Therefore, we reverse the stand of Ld. first appellate authority, in this regard and restore the stand of Ld. AO. However, it is made ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-alia, submitted that the bad debts were allowable u/s 36(1)(vii) and the write-off fulfilled the conditions laid down u/s 36(2). It was submitted that bad debts were identified by the assessee bank by following an elaborate system of identifying bad cases. In further submissions dated 16/11/2006, the assessee furnished details of bad debts exceeding ₹ 5 Crores written-off during the year along with 3 box files containing documentary evidences in support of bad debts written off pertaining to 23 companies. It was submitted that all documents in respect of bad debts written-off over ₹ 10 Crores were furnished and further time was sought to furnish the evidences with respect to balance bad debts claim. In continuation of the same, the assessee vide submissions dated 20/12/2006 furnished one more box file containing bad debts documents in support of the claim. 7.4.4 The Ld. Assessing officer exhaustively dealt with the issue of bad debts claim in para-11 (from page nos. 31 to 80) of the quantum assessment order u/s 143(3) passed on 29/12/2006. After considering the legal position, Ld.AO categorized bad-debts under various heads and gave findings unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-17 Gayatri Suga Complex Ltd 12,61,88,068 A-18 Shree Digvijay Cement Co Ltd 15,00,00,000 A-19 GSL (INDIA) Ltd 60,43,28,255 A-20 IG Petrochemicals Ltd 40,19,32,175 A-21 Sudershan Drugs Intermediaries Ltd. (SDIL) 11,42,66,668 A-22 Suryavanshi Textiles Ltd 26,69,51,781 Total (A-1 to A-22) ₹ 841,47,92,332 11.1100 For the reasons discussed above, penalty proceedings are initiated u/s 271(1)(c) of the I.T.Act read with Explanation thereto for furnishing inaccurate particulars income of the assessee bank s income and concealment of income ( Addiiton S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue pleaded that this objection was never raised by the assessee. However, in our considered opinion, there could be no estoppel against law and any limitation imposed by law on the powers of Ld. AO could not be overcome by acquiescence of the assessee. In view of our finding that the matter was thoroughly examined by Ld. AO in regular assessment proceedings and assessee s appeal against the same was pending, the observation of Hon ble Bombay High Court in assessee s Writ Petition (for AY 2003-04) No. 1765 of 2011 dated 09/11/2011 would squarely apply to the facts of the case. The relevant observation of Hon ble Court could be extracted in the following manner: - 17. In this regard, it needs to be noticed that the second proviso to Section 147 stipulates that the Assessing Officer may assess or re-assess such income other than the income involving matters which are the subject matter of any Appeal, Reference or Revision, which is chargeable to tax and has escaped assessment. In the present case, it has emerged from the affidavit in reply of the Revenue that the Assessee had filed an Appeal to the CIT(Appeals) against the order of assessment. Paragraph 4( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion as well as on account of doctrine of merger. 7.4.6 Although after having decided the issue on legal grounds in assessee s favor, the adjudication of the same on merits would become merely academic in nature. However, for the sake of completeness, we delve into the same. We find that the assessee contested the issue of additions, as made by Ld. AO in regular assessment, with success before Ld. first appellate authority. The revenue preferred appeal against the same before this Tribunal vide ITA No. 6137/Mum/2018 order dated 03/11/2017 wherein the matter, vide para 34 of the order, was restored back to the file of Ld. AO with certain directions. Since a view has already been taken by the co-ordinate bench of the Tribunal on this issue, respectfully following the same, we deem it fit to restore the matter back to the file of Ld. AO on similar lines. However, it is made very clear that our adjudication of the issue, on merits, would come into play only if our stand, on legal grounds, is subsequently reversed by any higher judicial authority. 7.5.1 Exemption u/s 10(23G) not allowable as the bank was neither infrastructure capital c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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