TMI Blog2020 (12) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment proceedings. Though, these events have happened much prior to the initiation of re assessment proceedings and, in effect, the original assessment order has merged with the order of learned Commissioner (Appeals), still the Assessing Officer went ahead to not only initiate the proceeding under section 147 of the Act on the very same issue, but has also passed an assessment order under the said provision. This, in our view, is contrary to the settled legal position. On a perusal of the objections raised by the assessee, a copy of which is at Page 70 of the paper book, it is noticed that one of the grounds raised by the assessee is, on the basis of a census report of 2004 which is not applicable to the impugned assessment year, it cannot be said that some of the branches have exceeded certain population limit, hence, would not qualify as rural branches. However, it is a fact on record that the objection filed by the assessee raising such a vital issue has not been disposed off by the Assessing Officer independently prior to completion of assessment under section 143(3) r/w section 147 of the Act - Decided in favour of assessee. - ITA no.384 & 385/Chd./2008 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter stood thus, the Assessing Officer having reason to believe that the income chargeable to tax in the assessment year under dispute has escaped assessment, re opened the assessment under section 147 of the Act by issuing a notice under section 148 of the Act on 11th July 2006. Ultimately, the Assessing Officer completed the assessment under section 143(3) r/w 147 of the Act vide order dated 27th December 2006, disallowing deduction claimed under section 36(1)(viia) of the Act and adding back an amount of ₹ 6,00,41,600. Being aggrieved with the assessment order so passed, the assessee preferred appeal before learned Commissioner (Appeals), both, on the issue of validity of re opening of assessment under section 147 of the Act as well as on the merits of the disallowance of deduction claimed under section 36(1)(viia) of the Act. However, learned Commissioner (Appeals) decided both the issues against the assessee. 6. Challenging the validity of reopening of assessment under section 147 of the Act, the learned Authorised Representative submitted, re opening of assessment under section 147 of the Act was made after expiry of four years from the end of the relevant asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The learned Departmental Representative strongly relying upon the observations of the Assessing Officer and first appellate authority submitted, the assessee had claimed deduction under section 36(1)(viia) of the Act in respect of advances made by branches which cannot be considered as rural branches as per census record. He submitted, during the original assessment, the Assessing Officer completely failed to enquire into the aspect as to whether deduction claimed under section 36(1)(viia) of the Act in reality relates to rural branches. Therefore, he submitted, there is failure on the part of the assessee to disclose fully and correctly the facts relating to his assessment, hence, re opening of assessment after four years is valid. He submitted, since the Assessing Officer had not at all examined the issue whether the deduction claimed actually related to rural branches, there is no formation of opinion on the issue in the original assessment proceeding. The Assessing Officer having tangible material in his possession, the re opening of assessment is valid. 8. We have carefully considered the rival submissions, perused the orders of the authorities below and the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total: ₹ 62,31,32,924 10. The dispute in the present appeal is precisely with regard to a part of the deduction claimed of ₹ 50,74,37,500. On a perusal of the documents submitted in the paper book, it is noticed that in course of original assessment proceedings, in letters dated 31st January 2002 and 15th February 2002, the Assessing Officer had specifically enquired into the deduction claimed under section 36(1)(viia) of the Act. In compliance to the query raised by the Assessing Officer, the assessee had furnished its reply on 12th February 2002, not only justifying its claim, but furnished the details called for by the Assessing Officer. After considering the submissions of the assessee and making necessary enquiry, the Assessing Officer disallowed both the deductions claimed by the assessee under section 36(1)(viia) in its entirety. 11. It is worth mentioning, while disallowing the deduction of ₹ 50,74,37,500, under section 36(1)(viia) of the Act pertaining to rural advances, the Assessing Officer in the original assessment order has also dealt with the issue whether some of the branches can actually be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore, when there is no income escaping assessment, the initiation of proceedings under section 147 of the Act is not only uncalled for but does not arise. 14. It is further to be noted that after completion of original assessment disallowing assessee s claim of deduction under section 36(1)(viia) of the Act, the assessee had preferred appeal before learned Commissioner (Appeals). It is a fact on record that while disposing off assessee s appeal, learned Commissioner (Appeals) has deleted the disallowance made by the Assessing Officer. It is submitted before us by the learned Counsel for the assessee that against the order of learned Commissioner (Appeals) no appeal could be preferred before the Tribunal as the Committee on Dispute formed by the Government of India did not permit filing of such appeal. Thus, essentially, the dispute relating to assessee s claim of deduction under section 36(1)(viia) of the Act has attained finality after the decision of learned Commissioner (Appeals) on the issue arising out of the original assessment proceedings. Though, these events have happened much prior to the initiation of re assessment proceedings and, in effect, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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