TMI Blog2022 (3) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... t the issue as escapement of income. The reopening was made as per the report of the CAG. So, there is no tangible material to the ld. AO for permission of reasonable believe for escapement of income. Different Apex Court pointed out that the audit report cannot be the basis for re-opening u/s. 148 of the Act. Further, there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for this assessment. There is no reason to believe that the income has escaped assessment during the year. The Petitioner statement that all said withdrawals from security premium account consequent to the aforesaid proposal will be utilized for the adjustments set up prescribed above. The issue was already discussed in the financial statement for the financial year 2008-09 and which was came to the purview of the ld. AO. The re-opening is nothing but a mere change of opinion of the Ld. AO during formation of belief for re-opening, Pr CIT, Non-Corporate Cir.2(1)/Chennai vs M.R.Narayanan,[ 2021 (6) TMI 825 - MADRAS HIGH COURT] As a result, all the grounds of the Revenue are rejected in relation to the re-opening u/s. 148 - Decided against revenue. - ITA No.: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores. The revised return of income was filed on 04.09.2010 to claim the credit for additional TDS without any change of the total income. The case was selected for scrutiny and order u/s. 143(3) of the Income Tax Act, 1961 (in brevity the Act ) was passed on 21.12.2011, declaring total income of ₹ 109.13 crores. 3.2 The notice u/s. 148 for reopening of the assessment u/s. 147 of the Act was issued on 25.03.2015. The reasons behind is that the assessee is adjusted an amount of ₹ 323.53 crores in the security premium account adjusted against various provisions made during the years towards diminution in the value of investments/write off of loss assets. The following adjustments were made: (i) Provision for standard assets ₹ 200.00 crores (ii) Loss of bad debts/loan losses ₹ 100.00 crores (iii) Provision for diminution in the value Investments ₹ 23.53 crores Total ₹ 323.53 crores The amount was adjusted during the calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om capital account as per directions of Hon ble High Court will not become Revenue. The report of the CAG has merely taken the facts already disclosed at the time of assessment and had come to a different conclusion. This is nothing but a mere change of opinion. 6. The assessee had made its adjustments as per the directions of the Hon ble Jurisdictional High Court and routed this adjustments through P L accounts and adjusted this amount by deducting from computation u/s. 115JB of the Act. 7. The assessee in his tax audit report s discussed the issue and the copy of the extract of Auditor s report dated 18.05.2009 was enclosed in the volume 4 page no. 16 of the paper book of the assessee which reads as under: 4. Without qualifying our report, we invite attention to Note 2 of Schedule 18 on capital reduction regarding utilization / adjustment / set off of the Securities Premium Account towards creation of Provision for Standard Assets for an amount of ₹ 20,000 lakhs, adjustment of write off of the bad debts / loan losses and other non-recoverable assets for an amoiun of ₹ 10,000 lakhs and setting off of the provision for diminution, other than temporary, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) passed an order and the order of the ld. CIT(A) read as follows: 4. I have carefully gone through the facts in issue, submissions made by the appellant and material on record. As may be seen the assessment proceedings u/s.143(3) r.w.s. 147 have been objected to and challenged on the grounds of, both, assumption of jurisdiction u/s.148 r.w.s.147 as also on merits. For the sake of convenience, the issue with regard to jurisdiction is taken up first. 5. The appellant has highlighted the issues mentioned hereinafter with regard to the assumption of jurisdiction by the AO. That all material facts were fully and truly disclosed in respect of adjustment of ₹ 323.53 crores from the share premium account which apparently is the basis for re-opening of the impugned assessment. (i) The re-opening has been made merely on change of opinion that the amount of ₹ 323.53 crores was revenue in nature even though the earlier finding is that it was capital in nature and was credited to the P L account only as per the directions of the Madras High Court. (ii) The re-assessment has arisen only because of certain observations by the CAG who mentioned in the dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity premium account was made as per the order of the Hon ble High Court of Madras order bearing no CP.No. 3/2009 dated 20.04.2009. 14. In relation to re-opening u/s. 148 of the Act, the counsel of the assessee filed the following judgments: (i) Cholamandalam Investments and Finance Company Ltd vs ACIT W.O. No 19375 of 2017 dated 12.12.2017 (ii) IL FS Investment Managers Ltd vs ITO ORS WP No. 2703 of 2006 dated 27.11.2006 (2008) 298 ITR 032 (iii) N.K. Proteins Ltd vs. ITO (OSD) SCA No. 24746 of 2006 dated 20.09.2016, (2016) 389 ITR 541 (Guj) (iv) Grasim Industries Ltd vs DCIT WP No. 3068 of 2019 dated 07.12.2021 (v) CIT vs Mettur Chemical Industrial Corporation Tax Case No. 139 of 1984 dated 10.02.1998 (2000) 242 ITR 119 (mad) (vi) Cadila Healthcare Ltd vs ACIT SCA No. 15566 of 2011 (2013) 355 ITR 393 (Guj) (vii) TTK Prestige Ltd vs DCIT WP No. 30388/2015 dated 10.08.2018 (2018) 304 CTR 689 (Kar) (vii) Avtec Limited vs DCIT WP(C) 1874/2014 dated 16.12.2014 (2015) 370 ITR 611 (Del) (viii) Jagat Jayantilal Parikh vs DCIT Civil No. 16062 of 2012 dated 28.02.2013 (2015) 355 ITR 400 (Guj) 15. We heard both the parties. The assessee adjusted the se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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