2021 (9) TMI 1359 - AT - Income Tax

Reopening of assessment u/s 147 - As argued AO has not recorded reasons properly and he has not mentioned that there is no escapement of income therefore, the reopening is invalid - HELD THAT - From reasons that the finding given by the A.O is that the assessee has already claimed as a provision for debt and same is allowed. Subsequently, the assessee has received an amount of ₹ 209.61 crores under Agricultural Debt Waiver and Debt Relief Scheme, 2008. It is very clear that the amount, which is already claimed as a bad debt by the assessee and again assessee has received the same amount under debt waiver and debt relief scheme. According to the A.O, there is an escapement of income. Accordingly, the A.O has issued a notice u/s. 148 of the Act and completed assessment u/s. 143(3) r/w. s. 147 of the Act on 29.12.2017. We are of the opinion that the A.O has correctly recorded the reasons and reopened the assessment and completed the assessment u/s. 147 of the Act thus, the reopening is valid. Whether the amount received under Agricultural Debt Relief and Debt Waiver Scheme is taxable or not? - As decided in own case 2019 (8) TMI 723 - ITAT CHENNAI under the scheme of Income-Tax Act, the CIT(A) has no power to set aside the assessment for reconsideration. However this Tribunal is of the considered opinion, it has to be verified whether the interest income was offered for taxation earlier. Accordingly in exercise of jurisdiction conferred on this Tribunal, the orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh in accordance with law after giving reasonable opportunity to the assessee.

Summary

Issues Involved:
1. Validity of reopening of assessment.
2. Taxability of amount received under Agricultural Debt Relief and Debt Waiver Scheme.

Analysis:

Issue 1: Validity of reopening of assessment
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. The assessee contended that the reopening of the assessment was invalid as the Assessing Officer (A.O) did not record proper reasons and failed to establish any escapement of income. However, the Departmental Representative (D.R) argued in favor of the reopening, citing a similar case where the Tribunal upheld the reopening. The A.O's reasons for reopening mentioned that the assessee had reserved a certain amount under Agricultural Debt Waiver and Debt Relief Scheme 2008, which was already claimed as a bad debt. The A.O believed that this amount needed to be brought to tax, leading to the reopening of assessment. After considering the arguments and reviewing the material on record, the Tribunal concluded that the A.O had correctly recorded the reasons for reopening, establishing the escapement of income. Therefore, the Tribunal held the reopening to be valid.

Issue 2: Taxability of amount received under Agricultural Debt Relief and Debt Waiver Scheme
The second ground raised by the assessee was regarding the taxability of the amount received under the Agricultural Debt Relief and Debt Waiver Scheme. The assessee's counsel referred to a previous case where the Tribunal directed the A.O to reexamine a similar issue. The Tribunal, in that case, found that the interest income might not have been offered for taxation, and directed the A.O to reexamine the matter in accordance with the law. Following the precedent set in the earlier case, the Tribunal directed the A.O in the current case to reexamine the taxability of the amount received under the scheme. Consequently, the Tribunal allowed this ground of appeal for statistical purposes. In conclusion, the appeal filed by the assessee was partly allowed for statistical purposes, in line with the Tribunal's directions.

In summary, the Tribunal upheld the validity of the reopening of the assessment due to the established escapement of income. Additionally, the Tribunal directed the A.O to reexamine the taxability of the amount received under the Agricultural Debt Relief and Debt Waiver Scheme based on a previous case precedent.