TMI Blog2021 (5) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... facts that are necessary for completion of the assessment and further we observe in the reasons recorded, there is no reason to believe, allegation on the assessee that the income of the assessee under assessed or had escaped assessment. The contention of the assessee is that no new material has been found by the AO in the reassessment proceedings and therefore reopening of assessment is only due to change of opinion and that too beyond the time limit as prescribed in the proviso to section 147 of the Act which is bad in law. the reopening of assessment can be quashed on two counts, i) no new material was brought on record by the AO in the reopening of assessment to establish that the income of the assessee has escaped assessment as the assessee has already disclosed all the information necessary for completion of original assessment and ii) the reopening of assessment made beyond four years from the AY under consideration. We are of the view that the AO reopened the assessment based on change of opinion, which is not acceptable as per the decisions quoted supra. Therefore, we quash the reopening of assessment made by the AO and the grounds raised by the assessee on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back as taxable income. Accordingly the assessment has been reopened within the provisions of section 147 of IT Act 1961. 2.2. In response thereto the Appellant submitted its objections for reopening the assessment, which are as under: 1. Disallowance of claim of depreciation on investments: The assessing officer while completing the assessment disallowed a sum of ₹ 3,60,67,82,885/- representing depreciation on investments stating as under in paras 5 to 5.5 of the assessment order. 5.2. After careful consideration, AO has mentioned that, as per schedule 8 of financial accounts, an amount of ₹ 25,10,37,000/- was actually decreased from total investment depreciation on investment. It was also seen from the para 10.2 of schedule 18 notes on account that the same figure as taken as depreciation on investment but an amount of ₹ 3,85,78,19,885/- was claimed as deduction as per revised computation of income. 5.4. AO submitted that the HTM category is the investments capital in nature and has to be treated as a capital asset and do not constitute stock in trade as per the RBI guidelines vide circular no. OBOO no. BPIBC. 32121.04.04812000-01 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT Vs. Foramer France [264 ITR 566] for the proposition that where an assessment was already completed U/s 143(3) such assessment cannot be reopened after the expiry of four years from the end of the relevant assessment year in which the assessment was completed when there is no failure to file return or to disclose fully and truly all material facts. We also rely on the decision of Andhra Pradesh High Court in the case of Mahalakshmi Motors Ltd. Vs. DCIT [265 ITR 53] wherein it was held that issue of notice u/s. 148 is not valid when all the material facts for completion of assessment are filed by the assessee. We also rely on the proposition approved by various Hon'ble Courts as discussed hereunder. The Supreme Court and also several High Courts and the Andhra Pradesh High Court in the cases of V.S.L. Narasimha Rao Vs. Asst. Contr. of E.D., [80 ITR 662 (AP)] and YV. Anjaneyulu Vs. ITO [ 182 ITR 242 (AP)] held that the information must have come to the possession of the Assessing Officer after he had passed the original assessment order, and it is only on such information that he is entitled to act. If the information was already with him, then sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation of ₹ 3,60,67,82,885/- on investments. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). 4. The assessee before the CIT(A), inter-alia, submitted that the coordinate bench of this Tribunal has already decided similar issue in assessee's own case in earlier AYs. 5. Following the orders of ITAT in assessee's own case, the CIT(A) directed the AO to re-workout the depreciation allowance by considering earlier years opening stock and closing balances into consideration and allow accordingly. 6. Aggrieved by the order of the CIT(A) both the assessee and revenue are in appeals before us by raising the following grounds of appeal: 6.1 Assessee has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax (Appeals) is bad in law and against the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) erred in upholding the re-opening of assessment u/s. 147. 2.1. The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the reopening beyond 4 years is hit by the first Proviso to Section 147 as there was no allegation in the not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal: 1. Commissioner of (Appeals) erred in directing the A.O. to re-workout the disallowance of depreciation on investments ₹ 3,60,67,82,855/- wrt 'HTM' category of securities holding them to be stock in trade. Commissioner(Appeals) erred in directing the A.O. to re-workout the disallowance of depreciation on investments ₹ 3,60,67,82,855/- wrt 'HTM' category securities without verifying from the records of bank the purpose for which they were purchased by bank initially to determine nature of securities whether they are in nature of stock in trade or Investments. 3. Commissioner (Appeals) erred in directing the A.O. to re-workout the disallowance of depreciation on Investments ₹ 3,60,67,82,855/- wrt 'HTM' category of securities without calling for details of recategorization of securities made by bank during the year under consideration i.e. from AFS to HTM, HFT to HTM etc. 4. Commissioner (Appeals) erred in directing the A.O. re-workout the disallowance of depreciation on Investments ₹ 3,60,67,82,855/- wrt 'HTM' category of securities without verifying whether entire 'HTM' category of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well settled by a number of judgments of the Hon'ble Supreme Court that the twin conditions which are required to be fulfilled before an Assessing Officer can exercise his jurisdiction under clause (a) of section 147 of the Act are (a) that the Assessing Officer must have reason to believe that income, profits or gains chargeable to tax had either been under assessed or had escaped assessment and (b) that the Assessing Officer must have reason to believe that such escapement or underassessment was caused by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. 9.1. In the case on hand, all the information relating to depreciation on investments were there before the AO at the stage of original assessment, as there was no failure on the part of the assessee to disclose fully and truly all material facts that are necessary for completion of the assessment and further we observe in the reasons recorded, there is no reason to believe, allegation on the assessee that the income of the assessee under assessed or had escaped assessment. 9.2. The contention of the assessee is that no ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the return filed by the assessee, taking resort to Section 147/148 was unwarranted as it constituted a change of opinion, since the material acted upon had been made available along with return of income. (4) In Satnam Overseas vs. Addl. Commissioner of Income Tax, (2010) 329 ITR 237 (Delhi), the High Court held that the only reason which has been given seeking reopening of the assessment for the years 1997-98 and 1998-99 is that suppression of sales has taken place on account of the fact that when average price of the closing stock is multiplied with the quantity of the sales in the year then the value of the sales would be at a higher figure, than declared by the assessee. Clearly, there is no new material which is alleged to have come to the notice of the Assessing Officer which has caused him to seek reopening of the assessment. Admittedly, the reasons given for seeking reopening of the assessment contains the expression 'perusal of the case record reveals' clearly showing that it is on the basis of the same assessment record as was filed by the assessee, during the relevant assessment years and also scrutinised by the Assessing Officer before passing the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer. Hence, after 01-08-1989, 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 link with the formation of the belief If the facts of the present case including especially the reasons recorded by the Assessing Officer for reopening the assessment are considered in the light of the decision of the Coordinate Bench of this Tribunal in the case of Deputy Director of income Tax (International Taxation)-21, Mumbai-vs.-Societe International De Telecommunication (supra), I am of the view that the initiation of reassessment proceeding itself was bad in law and the assessment completed by the Assessing Officer under section 143(3) read with section 147 in pursuance of such invalid initiation is liable to be cancelled. I order accordingly. 9.4. In view of the above discussion, the reopening of assessment can be quashed on two counts, i) no new material was brought on record by the AO in the reopening of assessment to establish that the income of the assessee has escaped assessment as the assessee has already disclosed all the information necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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