9911796707
TMI Blog2014 (9) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent to a query, the Petitioner filed on 17th February, 2000, details of the Equipments leased to RESL. The PetitionerBank in its detailed note, pointed out that the equipment was installed and commissioned by RESL on 31st March 1998 and in support, also filed evidences. Besides filing evidences in support of its stand, that the lessee viz. RESL is not claiming any depreciation on the equipment. Similarly, on 25th September, 2000, on an enquiry by the Respondent-Revenue with regard to the bad debts claimed, the PetitionerBank pointed out it was being claimed at Rs. 10.12 Crores after adjusting the provisions under Section 36(1)(viia) of the Act amounting to Rs. 2.08 Crores . 4. On consideration inter alia of the aforesaid facts, the Assessing Officer on 28th February, 2008, passed an Assessment Order under Section 143(3) of the Act for Assessment Year 1989-99. The above order dated 28 February 2008, determined the Petitioner's income at Rs. 60.94 Crores and allowed the claim for deduction on account of bad debts of Rs. 10.12 Crores (as claimed) and the claim for depreciation at Rs. 4.50 Crores on the Equipments leased to RESL. 5. On 23rd March 2005, the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 148." 6. This Petition was admitted on 17 October 2005 and the impugned notice dated 23 March 2005 was stayed. 7. Ms. Vissanji, learned Counsel appearing for the PetitionerBank in support of the Petition, submits as under: (a) The impugned notice dated 23rd March 2005 is without jurisdiction as the reasons in support does not indicate any failure on the part of the PetitionerBank to disclose fully and truly all material facts necessary for assessment; (b) In respect of the bad debts, it is submitted that there is a complete disclosure made by the PetitionerBank in its Return of Income. The claim was made in its return as per the Petitioner's original figures without taking into account the variation on the quantum of the provisions for bad debts due to orders of rectification or orders passed in the Appellate proceeding for the earlier years. The claim for deduction of bad debts for a bank by its very nature is fluid/uncertain as it is dependent upon the provisions made for bad debts which in turn is dependent upon total income under Section 36 (viia) of the Act,. The determination of total income is subject to variation in appeal proceedings. In view of the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration of all facts concluded that the equipment was put to use on 31 March 1998 entitling the Petitioner's to avail the benefit of depreciation on the leased equipments under Section 32 of the Act. Thus there was no failure to disclose all facts truly and fully on the part of the PetitionerBank. Besides the very issue raised in the grounds in support of the impugned notice was considered by the Assessing Officer in the Assessment Order dated 28 February 2001. Therefore, the impugned notice has been issued on mere change of opinion. 8. As against the above, Mr. P. C. Chhotrary, learned Counsel appearing for the Respondent-Revenue, in support of the impugned notice dated 23rd March 2005, submits as under: (a) There has been a failure on the part of the Petitioner to disclose fully and truly all material facts necessary for Assessment. Consequently the impugned notice dated 23rd March 2005 does satisfy the jurisdictional requirement under the proviso to Section 147 of the Act in respect of notices issued beyond the period of four years from the end of the relevant Assessment Year; (b) So far as bad debts is concerned, it is submitted that the PetitionerBank had claimed more b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was commissioned on 31st March, 1998. Besides, it is submitted that the depreciation would be available to the PetitionerBank only if it itself uses the equipment in question. Therefore it is submitted that there was failure to disclose truly and fully all material facts necessary for assessment. 9. In the present case, the impugned notice dated 23rd March, 2005 has been issued beyond the period of four years from the end of the relevant Assessment Year i.e. Assessment Year 1998-99. The contours of the reopening notice under Section 148 of the Act have been long settled by the decision of the Supreme Court in Commissioner of Income Tax v/s. Kelvinator of India Limited 320 ITR 561 wherein it has been held that reason to believe that income chargeable to tax has escaped assessment would not mean a mere change of opinion. Therefore when the issue/ground on which it is proposed to reopen the assessment has been subject of consideration earlier while passing an Assessment Order then on the same facts, a different view cannot be taken for the purposes of reopening an assessment. The Court held that the Assessing Officer has power under the Act only to reassess and not to review a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation. We shall deal with each of the two grounds, separately. Bad Debts : 12. It is the case of the Respondent-Revenue as stated in the reasons recorded that, if the correct figures of the provisions for bad debts is taken into account, the PetitionerBank would be entitled to claim bad debts only to the extent of Rs. 5.06 Crores and not Rs. 10.12 Crores. This is on account of the fact that provisions for bad debts under Section 36(1)(viia) of the Act would be Rs. 7.15 Crores and not Rs. 2.08 Crores as claimed in the Return of Income and also during assessment proceedings. The first objection of the PetitionerBank is that the reasons do not indicate any failure on its part to disclose fully and truly all facts necessary for assessment. However in its Affidavit in rejoinder by the Petitioner states as under : "Secondly, at the time the Petitioner filed its Return of Income for the relevant year on 30th 1998, while the rectification order dated 2/3/1998 for the Assessment year 1995-96 was available with the Petitioner, the Petitioner had not received the Assessment orders for the remaining 2 Assessment years 1996-97 and 1997-98 which were passed subsequently on 23/3/1999 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra ordinary writ jurisdiction of this court to make a grievance of the reasons not indicating failure to disclose truly and fully all material facts necessary for assessment. The grievance of the reasons not indicating any failure, is available to a party who is at a loss to understand what is the failure of disclosure alleged in the notice for reopening in the exercise of writ jurisdiction. The knowledge of the alleged failure on the part of the PetitionerBank is evident in its affidavit in rejoinder. 13. The next objection raised is that there is in fact no failure to disclose truly and fully facts necessary for assessment. In support it is submitted that in terms of Section 36(1)(vii) and (vii a) of the Act, the PetitionerBank is allowed to write off bad debts only to the extent the bad debts exceeded the credit balance in the provisions for bad and doubtful debts. In terms of Section 36 (1)(viia) of the Act, the PetitionerBank can make provisions for bad and doubtful debts of an amount not exceeding 5% of the total income. In the above context, it was submitted that the provisions for bad and doubtful debts would be a varying figures as the amount of provisions would be depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of respect, we are unable to agree with the view of the Hon'ble Allahbad High Court in Jagdish Prasad (supra). The obligation of making true and full disclosure is on the assessee and the responsibility for doing the same, cannot be wished away by stating that the Assessing Officer was aware or ought to have been aware of the true facts in view of the Assessment Orders passed in the earlier Assessment Year. The obligation to disclose facts material for assessment fully and truly is on the assessee in unqualified terms in the proviso to Section 147 of the Act. In fact, during the assessment proceedings, the Assessing Officer on 12th September, 2000 did enquire of the PetitionerBank about the amount that was adjusted out of the accumulated provisions under Section 36(1) (vii a) of the Act. At that point of time, the PetitionerBank was aware of the orders passed for the Assessment Years 1995-96, 1996-97 and 1997-98. However, in its reply dated 25th September, 2000, the PetitionerBank did not bring to the notice of the Assessing Officer the change in the quantum of provisions created under Section 36(1) (vii a) of the Act and continued to claim the old figure of Rs. 2.08 Crores instea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. This reopening of an assessment, it is submitted could entail serious prejudice to the PetitionerBank as it would enable the Respondent-Revenue to reassess any other income in terms of Explanation 3 to Section 147 of the Act. Reliance is placed by the PetitionerBank upon the decision of this Court inHindustan Unilever Ltd. v/s. Deputy Commissioner of Income Tax - 325 ITR 102 wherein this Court held that the Assessing Officer should not exercise the power of reopening the assessment merely because of computational error as the same can be done by exercising power of rectification under Section 154 of the Act. One must not loose the sight of the fact that in the above case, the Court emphasizes that the error in the order of the assessment was not attributable to a lapse or omission on the part of the assesses. In the present case, even if one accepts that there is an error, the same has arisen on account of failure on the part of the PetitionerBank to disclose fully and truly all material facts necessary for assessment. Moreover in the present case, the issue whether or not the incorrect taking of provision leading to a higher claim of bad debts is not a mere computational err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner in the previous year relevant to Assessment Year 1998-99. Mr. Chhotrary, learned Counsel appearing for the Respondent-Revenue strongly contended that the equipments have not been put to use by the PetitionerBank during the Assessment Year 1998-99. He submitted that the PetitionerBank had only stated that the equipment was 'commissioned' during the Assessment Year 1998-99 and it was not stated that it was 'put to use'. According to him, since the depreciation can be claimed only if the equipment is put to use, there was no full and true disclosure. The undisputed facts which were brought out in a note filed on 17 July 2000 during the assessment proceedings clearly bring out the following facts: (a) The equipments were installed and commissioned by RESL on 31st March 1998. This was duly supported by certificate issued by Karnataka Electricity Board, which records that the Equipments were connected to Karnataka State Electricity Board grid and commissioned on 31st March, 1998. (b) Depreciation on the equipments was not being claimed by RESL as evidenced by the certificate of the leasee's Chartered Accountant that no depreciation was claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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