TMI Blog2008 (12) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that the notice issued by the assessing officer under Section 148 of the Act was bad in law and, therefore, reassessment completed on the basis of such notice is liable to be quashed. It is also mentioned that the notice under Section 148 was issued and served after expiry of more than four years from the end of the assessment year, which was barred by limitation and, therefore, the reassessment proceedings are bad in law. The objections became due on 23-11-2003, but were actually filed on 22-11-2006. Thus, there is a delay in filing the objections by 1,094 days. After a lapse of about four days from the date of filing of the cross-objections, the assessee filed an application for condonation of delay, which was also accompanied by an affidavit. 2.1 The matter regarding condonation of delay was taken up at the outset by the learned Counsel for the assessee. He reiterated the facts narrated in the application, which may be summarised here. It is mentioned that the head office of the bank, in regard to Indian operations, was earlier located at Calcutta. The returns of income were being filed at Calcutta. In the financial year 1978-79, this office was shifted to Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Departmental Representative was that it would be incorrect to canvass by the learned Counsel that proper legal advice or all the records were not available. The assessee had filed Appeal No. 211 of 2005 on 3-1-2004 before the Tribunal, Bombay. The assessee had also filed another Appeal No. 6093 of 2003 before the Tribunal, Bombay, on 9-9-2003. Thus, the assessee had requisite legal aid as well as records with it right from September, 2003. Therefore, the plea of non-availability of records or the legal advice was false. The fact is that the assessee was either grossly negligent or had decided not to file cross-objections. No prejudice has been caused to the assessee by not filing cross-objections. Therefore, his case was that cross-objections may be taken up for decision on merits. 2.4. In the rejoinder, the learned Counsel again reiterated that the delay was on account of lack of proper legal advice. The appeal before the Commissioner (Appeals) was filed through the consultants, M/s Price Water House Coopers, while, the cross-objections before the Tribunal were filed through the consultants, M/s BSR Company, on their advice. Filing of an appeal here and there does not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271, 272 273/Del/2006 - Asst yrs. 1992-93 to 1994-95 3. Admittedly, facts for assessment years 1992-93 to 1994-95 are identical with the facts of the case for assessment year 1991-92, on which the ruling given in C.O. No. 270/Del/2006 (supra) is equally applicable. ITA No. 6620/Del/2002 - Asst yr. 1991-92 - Appeal of the revenue 4. The revenue has taken up only one substantive ground in this appeal to the effect that on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in deleting the addition of Rs. 20,93,725,being the amount written back to the Profit and Loss Account from provision for loan loss reserve (hereinafter called the reserve ). The ground taken in this year is typical in nature, which is repeated in subsequent years. The only difference is in regard to the amount written back to the Profit and Loss Account from the reserve. 4.1 The learned Counsel for the assessee moved an application under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, inter alia pointing out that the assessing officer was not justified in passing the order under Section 147 and that the notice issued to the assessee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not strictly applicable, the Tribunal has inherent powers under Section 254(1) to entertain the argument of the respondent which amounts to a new ground. Thereafter, the Tribunal referred to the decision of Hon'ble Bombay High Court in the case of B.R. Bamasi v. CIT (1972) 83 ITR 223 (Bom), a case dealing with the rights of the respondent to defend the order appealed against. It was held that the respondent will be entitled to raise a new plea in defence of the order appealed against provided that- (i) it does not require collection of further evidence and (ii) it does not offend the order appealed against, i.e., the plea is used only in defence of the appellate order. 4.3 In order to prove that ground No. 2, taken up before the Commissioner (Appeals), was decided against the assessee, reliance was placed on the decision of Hon'ble Delhi High Court in the case of Rohtak Hissar Districts Electric Supply Co. (P) Ltd. v. ITO (1981) 128 ITR 52 (Del), in which it was held that where a ground is taken in the memorandum of appeal but not dealt with by the Appellate Assistant Commissioner, it must be deemed to have been considered and decided against the assessee. He also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the assessing officer to allege such failure in the reasons recorded by him. He drew our attention to the reasons recorded by the assessing officer and communicated to the assessee, which read: The assessee is allowed deduction on account of provision of bad debts as per provisions of Section 36(1)(viia)(b), @ 5 per cent of the total income. Therefore, any provision for bad debts written back is required to be added to the income of the assessee in the year in which it is written back. Such provisions for bad debts written back was added to the income of the assessee in the assessment order for assessment year 1997-98, which has already been confirmed by Hon'ble Commissioner (Appeals), Calcutta, vide Order No. 49/A-II/2000-01, dated 14-12-2000. On this issue, notice under Section 133(6) dated 14-3-2001 was issued to the assessee, in response to which the assessee filed letter dated 20-3-2001, which indicates that in the year under consideration, an amount of Rs. 20,93,725 has been written back from provision for bad debts and the same has not been offered for taxation. Therefore, on the basis of the said information in my possession relating to provision for bad deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of Hon'ble Delhi High Court in the case of Wel Intertrade (P) Ltd. v. Income Tax Officer in Writ Petn. No. 7722 of 2007, dated 11-8-2008 (2008) 13 DTR 204 (Delhi) - Ed. and Hon'ble Punjab Haryana High Court in the case of Duli Chand Singhania v. Asstt. CIT (supra), which have been adverted to while discussing the case of Haryana Acrylic Manufacturing Co. (supra). 5.3 In reply, the learned Departmental Representative referred to the reasons recorded by the assessing officer. In particular, our attention was drawn towards the fact that the assessing officer had recorded such provision for bad debt written back was added to the income of the assessee in assessment year 1997-98, and such addition was confirmed by the Commissioner (Appeals). Therefore, on this issue, a notice under Section 133(6), dated 14-3-2001 was issued to the assessee. In response, a letter dated 20-3-2001 was filed, which indicates that an amount of Rs. 20,93,725 was written back to the Profit and Loss Account from the provision for bad debts and the same was not offered for taxation. In view of the aforesaid information, it was also recorded that income of Rs. 20,93,725 escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Praful Chunilal Patel v. M.J. Makwana, Asstt. CIT (1999) 236 ITR 832 (Guj). This case primarily dealt with reopening of the assessment within four years and, therefore, the ratio of that case is not applicable to the facts of this case. However, it may be recorded that the Hon'ble Court pointed out that the words escaped assessment , where the return of income has been filed, cover the case of discovery of a mistake in the assessment caused by erroneous construction of the transaction, non-consideration of the transaction, application of the wrong law to the transaction or a case where correct assessment could have been made on the basis of disclosure made by the assessee. Such an assessment can be reopened provided that the assessing officer has reason to believe that the income had escaped assessment. He also relied on the decision of Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal and Anr. v. ITO and Anr. (1993) 203 ITR 456 (SC), case reopened because it was discovered after assessment that the assessee had shown all amount of Rs. 50,000 as loan while it was merely an accommodation entry. The Hon'ble Court came to the conclusion that mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case. Therefore, the averment about the failure has to be made in the recorded reasons. Such an averment cannot be inferred from the correspondence between the assessee and the assessing officer for the reason that the jurisdiction is derived from the recorded reasons, which are communicated to the assessee. On perusal of the reasons recorded in this case, we find that no such averment has been made therein. Therefore, the ratio of the aforesaid decisions is squarely applicable to the facts of the case. Besides that, it is clear that the provision made and the provision written back to Profit and Loss Account were added to and subtracted from the income while drawing the statement of income, which was annexed to the return by the assessee. The figures shown therein were reproduced in the assessment order while making the original assessment. Thereafter, computation was made under Section 36(1)(viia)(b), which was also accepted by the assessing officer. The figures of the provision made and the provision written back were taken from the annual accounts, which were also annexed with the return of income. In the light of these facts, it will be difficult, well nigh impossible, to co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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