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TMI Blog2021 (6) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... view that there is merit in the contention of the assessee that reopening of assessment is not valid. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and hold that the reopening is bad in law. Appeal filed by the assessee is allowed. - ITA No. 185/Bang/2019 - - - Dated:- 22-6-2021 - Shri B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri S.V. Ravishankar, A.R. For the Respondent : Smt. R. Premi, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 26.11.2018 passed by Ld. CIT(A) Kalaburugi, and it relates to the assessment year 2012-13. The assessee has, inter-alia, challenged the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice on 12.2.2015 to the assessee during the course of original assessment proceedings asking the assessee to furnish information on various claims made by the assessee in the return of income. The query No.19 raised in the above said notice reads as under. Details of suspense liability, sundry liability, cost management dues and provision for standard assets shown in the balance sheet. The Ld A.R submitted that the AO has asked a specific query in respect of Provision for standard asset . He submitted that the assessee has also furnished all the information called for by the A.O. Accordingly, the A.O. has completed the original assessment accepting the explanations and information furnished by the assessee. 5. The Ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Ld A.R submitted that the AO has taken the view that the amount of ₹ 50,00,000/-, being the provision created for Standard Assets cannot be claimed as Provision for bad and doubtful debts u/s 36(1)(viia) of the Act. He submitted that the Provision for bad and doubtful debts is an estimate made on the basis of past experiences in respect of bad debts and the same is created in respect of all its outstanding debts. Further, the provisions of sec.36(1)(viia) nowhere mandate that the provision should be created only in respect of doubtful debts . The Ld. A.R. submitted that the AO has examined all these details during the course of original assessment proceedings and has allowed the claim of the assessee. Hence, the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(viia) of the Act allows deduction for provision made for bad doubtful debts , while sec. 36(1)(vii) allows deduction of actual bad debts. The deduction u/s 36(1)(via) allows deduction towards general provision made for expected bad debts that may arise in future on the aggregate amount of outstanding advances. Section 36(1)(via) nowhere states that the provision should be made on doubtful debts alone. Hence, it is not required to distinguish the outstanding balances of receivables into good debts and bad doubtful debts for the purpose of section 36(1)(viia) of the Act. He submitted that the A.O. has accepted the claim of the assessee in the original assessment proceedings and hence, the reopening of assessment is on account of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion , be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent of the amount of such assets shown in the books of account of the bank on the last day of the previous year: A plain reading of the above said provision would show that the deduction u/s 36(1)(viia) of the Act is allowed in respect of provisions for bad doubtful debts made by specified banks, subject to the limits prescribed in the section. The term provision for bad doubtful debts has not been defined under the Act and hence, the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction available u/s 36(1)(via) is also, in our opinion, not a correct view The Hon ble Delhi High Court in the case of Kelvinator of India Ltd. (supra) has held that the reopening of assessment upon mere change of opinion is not valid in law. Accordingly, we are of the view that there is merit in the contention of the assessee that reopening of assessment is not valid. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and hold that the reopening is bad in law. Accordingly, we quash the impugned orders passed by the tax authorities. 12. Since we have quashed the assessment order on the legal issue, the issues urged on merit would become academic in nature, hence we decline to adjudicate them. 13. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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