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TMI Blog2014 (1) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... ench: This appeal at the instance of the Revenue and the cross objection preferred by the assessee are directed against the CIT (A)'s order dated 28.09.2012. The relevant assessment year is 2005-06. 2. In the Revenue's appeal, the effective grounds raised are as follows: "2. The CIT (A) was not justified in holding that Rs.82,56,319 was an allowable expenditure. 3. The CIT (A) erred in holding that the expenditure incurred and pending verification/classification was called as provision but actually represents money utilised out of the imprest account. 4. The learned CIT (A) erred in holding that the amount of Rs.30,36,603 was amount written off in the books of accounts but claimed under a wrong classification as provision for expenses". 3. In the cross objection, the grounds raised by the assessee read as follows: "1. The learned CIT (A) and Assessing Officer failed to appreciate that the re-opening of assessment u/s 147 of the Income Tax Act, 1961 is illegal and against the law and the facts. 1.1 The learned CIT (A) failed to appreciate that the re-opening was based on change of opinion. 1.2 The learned CIT (A) failed to appreciate that the re-opening was based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.92,92,922/-, the amount of Rs.82,56,319/- represents various expenses like advertisement, traveling, printing and stationery etc., and these expenses are incurred as per the internal circular of the bank dated 18.07.2003. The appellant has got more than 350 branches and such petty expenses were incurred by all those branches and the vouchers/bills were prepared and sent to the Centralized Payment Unit (CPU). The expenditure incurred is pending verification/ classification by the CPU was called as provision but actually represents the utilization money out of the imprest account. Therefore, I am satisfied that the amount of Rs.82,56,319/- is an allowable expenditure while computing the total income. Therefore, the Assessing Officer is directed accordingly. As regards the write off of receivables from Vysya banks Housing Finance Ltd (VBHFL), the same is allowable as a bad debt u/s 36(1)(vii) of the Act. The amount of Rs.10,36,603/- was written off by the appellant in the books of accounts but claimed the same under wrong classification of provisions of expenses. In view of the submissions made by the appellant the said amount is eligible for deduction and the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings and the Assessing Officer considered the same as allowable, hence no disallowance was made, therefore, it was argued that there was a change of opinion and the assessment was reopened not due to any "reason to believe" and the re-assessment was made. The appellant filed very elaborate submissions in this regard however I am not convinced with the reasons. The term "reason to believe" has to be understood in a proper perspective. It may be seen from the original assessment order that the issue was not discussed in the assessment order hence the contention that there was a opinion formed by the Assessing Officer which was subsequently changed due to suspicion is incorrect and not based on any material. Therefore, I am of the considered opinion that the Assessing Officer had properly exercised the powers u/s 147/148 of the Act and assumed jurisdiction. Hence the grounds of appeal raised in this regard are dismissed". 7.1. The assessee bank being aggrieved has filed this cross objection. The learned AR reiterated the submissions made before the Income Tax Authorities, whereas the learned DR supported the findings of the CIT (A). 7.2. We have heard the rival submissions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious branches accrued as on 31.03.2005. It is submitted that the expenditure is not in the nature of a contingent liability and has crystallized during the relevant assessment year. As mentioned above, the bank employs the mercantile system of accounting. The bank has incurred and accrued for the above expenditure during the year. It is submitted that the above expenditure has been ascertained based on actual incurrence and is in the nature of a regular business expenditure. It is further submitted that it is an allowable expenditure for the computation of taxable income as per the method of accounting employed and the same should be allowed as a deduction". 7.5. From the above it is clear in the course of the scrutiny assessment proceedings completed u/s 143(3) of the Act (assessment order dated 31.12.2008), the Assessing Officer had occasion to consider the claim of expenditure of assessee to the tune of Rs.92.92 lakhs and after considering the same, accepted the contentions raised by the assessee and passed the assessment order without making any disallowance in this regard. Therefore, it can be concluded that the re-opening of the assessment was on count of mere change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. 14. In the second and third situation, the Revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the Revenue, they are entitled to and can invoke power under Section 263 of the Act. This aspect and position has been highlighted in CIT vs. DLF Powers Limited (2012) 17 taxmann.com 269 (Delhi), and BLB Limited vs. ACIT (2012) 206 Taxman 37/19 taxmann.com 115 (Delhi) (Mag.). In the last decision it has been observed: "13. Revenue had the option, but did not take recourse to Section 263 of the Act, inspite of audit objection. Supervisory and revisionary power under Section 263 of the Act is available, if an order passed by the Assessing Officer is erroneous and prejudicial to the interest of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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