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TMI Blog2017 (7) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... t contains revision in terms of Section 263 of the Act if an order of assessment is found to be erroneous or prejudicial to the interest of the Revenue. Reopening of an assessment, however, has vastly different repercussions and entirely different parameters would apply. This was not a case where the Assessing Officer formed a belief that income chargeable to tax had escaped assessment. May be in the present case, the directives did not come from the audit party but some internal audit mechanism referred to as internal audit party. This, however, would not be of any significance. As long as it can be gathered that the Assessing Officer was compelled to issue notice of reopening against his own belief that no income chargeable to tax had escaped assessment, the notice must fail. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 16232 of 2010 - - - Dated:- 24-7-2017 - MR. AKIL KURESHI AND BIREN VAISHNAV, JJ. For The Petitioner : Mr RK Patel, Advocate For The Respondent : Mrs Mauna M Bhatt, Advocate ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner Axis Bank, previously known as UTI Bank, has filed this petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In view of the above, I have reasons to believe that income chargeable to tax has escaped assessment as per the provisions of section 147 of the I.T. Act, 1961. Therefore, a notice u/s. 148 of the I.T. Act is being issued for re-assessment u/s. 147 of the I.T. Act. 2.2 The assessee raised detailed objections to the notice of reopening under a communication dated 15.12.2010. Such objections were, however, rejected by the Assessing Officer by an order dated 15.12.2010. Hence, this petition. 3. From the reasons recorded, it can be seen that the sole ground for reopening the assessment was that according to the Assessing Officer, the assessee had booked a one time market loss of ₹ 114.53 crores by merely transferring the government securities from the category of Available for Sale to the category of Held to Maturity . According to the Assessing Officer, such loss was booked by the assessee without any transaction with any other party. The assessee had thus made mere entries and claimed a loss by way of allowable expenses. 4. In the objections before the Assessing Officer as well as in the present petition, the assessee had challenged the notice for reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner bank. These documents contain a letter dated 06.05.2008 written by the then Assessing Officer Shri. Anurag Sharma to the Commissioner of Income Tax. We may refer to the contents of this letter a while later. 7. From the record we gather that the internal audit party had raised certain objections concerning the petitioner assessee under letter dated 11.04.2008. On 17.04.2008, the Assessing Officer wrote to the petitioner Bank and sought clarification with respect to the loss of ₹ 114.53 crores on account of category change of the government securities. In response to this letter, the petitioner had sent a detailed explanation under letter dated 29.04.2008. It was summarized that the Bank was valuing its investment as per the guidelines issued by the RBI. The guidelines issued by the RBI was binding to the Bank. The loss was on account of following such directives of RBI. If the securities had not been shifted as required by the RBI guidelines, the bank would have suffered much greater loss. 8. After receiving the said communication dated 29.04.2008 from the petitioner, the Assessing Officer made a detailed presentation to the Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing judgements support the action :... 8.1 The Assessing Officer, thereafter, referred to several decisions of the Supreme Court and other High Courts and concluded as under: Thus, based on the above judicial decisions, it is seen that the loss incurred as a result of reclassification of securities, by marking the securities to the market value, is an allowable deduction. Therefore, the audit objection on this ground is not acceptable. 8.2 He summed up his suggestions as under: Remedial action : Summing up, the audit observation at point no. 2 only is acceptable and no other objections or observations are acceptable. But since the remedial action is to be taken, inspite of the nonacceptance of the audit objection, as per the instructions of the Board, remedial action is proposed in this case. From the facts as mentioned above, in my view, the remedial actions appropriate on various issues are : 9. From the materials on record, it can be seen that the Assessing Officer from the outset was not convinced about disallowing the sum of ₹ 114.53 crores claimed by the assessee by way of loss. He elaborated his reasons in his letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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