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TMI Blog2023 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings and despite such material available on hand, the AO has not thought it fit to make any addition with regard to aforesaid claim and as such when the material was very much available and accepted by the Assessing Officer while passing the assessment order now to re- open that issue again is appearing to be based upon change of opinion and in view of law laid down by the Court in case of Premium Finance Pvt. Ltd. [ 2016 (9) TMI 706 - GUJARAT HIGH COURT] and Gujarat State Board of School Texbooks [ 2016 (10) TMI 775 - GUJARAT HIGH COURT] such change of opinion cannot formed on the basis of re-opining of assessment No re-opening is permissible merely on the basis of change of opinion. Decided in favour of assessee. - R/SPECIAL CIVIL APPLICATION NO. 19336 of 2021 - - - Dated:- 20-4-2023 - HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI And HONOURABLE MR. JUSTICE J. C. DOSHI MR B S SOPARKAR(6851) FOR THE PETITIONER(S) NO. 1 MR DEV D PATEL FOR MR.VARUN K.PATEL(3802) FOR THE RESPONDENT(S) NO. 1 ORDER ( PER : HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI ) 1. By way of this petition under Article 226 of the Constitution of India, the petitioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved with the notice under Section 148 of the Act on 26.03.2021 asking the petitioner to file return of income of Assessment Year 2015-16. The petitioner without prejudice to the stand that may be taken submitted return of income in compliance of notice under Section 148 of the Act and submitted return of income on 28.05.2021 and sought for reasons recorded for re-opening of assessment. It is the case of the petitioner that reasons dated 22.03.2021 were provided on 14.06.2021 vide E-mail. As a result of this, preliminary objections vide communication dated 07.07.2021 were submitted questioning the validity of notice under Section 148 of the Act. The respondent authority thereafter has disposed of the objections on 09.11.2021 and simultaneously, on 09.11.2021, issued two notices calling upon the petitioner to supply details in relation to the reassessment by 24.11.2021. Since this is in clear conflict with the guidelines which are prescribed by the decision of this Court, wherein a clear period is prescribed to be given to the petitioner to challenge the notice under Section 148 of the Act after the order disposing of the objections are issued. The said decisions relied upon are in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his petition and stay further proceedings for assessment and recovery for A.Y. 2015- 16; (d) any other and further relief deemed just and proper be granted in the interest of justice; (e) to provide for the cost of this petition. 4. We have heard learned senior advocate Mr. Soparkar who has strenuously urged that the reasons recorded for reopening of the assessment of the year 2015-16 is nothing but an impermissible act on the part of the respondent authority in as much as the very issue has been gone into at the time of the assessment and he has chosen to finalize the assessment without any addition. It is the reopening beyond the period four years where there is nothing to indicate that the petitioner has not disclosed fully and truly all material facts. 5. According to learned counsel, while disposing off the objections raised against the reasons recorded, all the aspects have been brought to the notice of the respondent officer however, he has disposed of the same by holding that he would be examining this aspect at a future date without addressing the same at the time of disposing of. 6. Issue notice returnable on 10.01.2022. Over and above the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions in the form of queries were raised and the same was adequately answered by supplying detailed material and the assessing officer after having accepted the said explanation and reply of the assessee has not made any addition and as such, this is merely a case of re-opening on the basis of the change of opinion which is impermissible in view of the settled proposition of law. To canvass the submission, learned advocate Mr. B.S. Soparkar has made a reference to two decisions in the case of Premium Finance Pvt. Ltd., v. Assessee reported in (2016) 73 Taxmann.com 369 and Gujarat State Board of School Textbooks v. Assistant CIT reported in (2016) 75 Taxmann.com 281 and by relying upon these decisions, contention is reiterated that since re-opening is sought to be made on the basis of the change of opinion, the same is impermissible. Yet another contention which has been raised is that in any case, the assessee has correctly furnished details of bad debts and bad debts reserve made by the petitioner and no income in any manner has escaped assessment and for that learned advocate Mr. Soparkar has made a reference to the particulars which are stated in reply to the notice as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in the absence of any fresh material, it is always open for the authority to re-examine and such satisfaction of an authority may not be the subject matter of extraordinary jurisdiction at the instance of present petitioner and has requested that no relief be granted. In fact, according to Mr. Patel, learned advocate, a false claim was generated to the extent of Rs.24.63 crores by claiming excess bad debt and if a perusal of table which is tired to be relied upon, there is no reference to such amount, as indicated in table, reflecting on page 29, and as such stand taken by the petitioner is not a valid stand, deserves to be deprecated. 6.1. To substantiate his stand, Mr. Patel, learned advocate has made a reference to a decision in the case of Gruh Finance Ltd. versus Joint Commissioner of Income Tax reported in (2002) 123 Taxman 196 (Gujarat) and after referring to this, Mr. Patel, learned advocate has submitted that no case is made out by the petitioner to call for any interference. 7. In rejoinder to this stand, Mr. B. S. Soparkar, learned advocate appearing for the petitioner has reiterated that in fact, in specific terms, the quires were raised by an authority with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration, bad debts of Rs.1217,81,18,170/- have been shown as written-off u/s 36(1) (vii) of the Act in the revised computation of income furnished by the petitioner. However, it was seen by authority that in the revised ITR the bad debt figure is Rs.11,93,17,70,137/- and as such the petitioner by way of this notice was requested to reconcile the figure or to justify the anomaly of figures and as such was directed to furnish the relevant copies of ledger account showing the amount has been actually written-off. Paragraph 4 of the said notice thus reads as under:- 4. During the year under consideration, bad debts of Rs.1217,81,18,170/- have been shown as written-off u/s 36(1)(vii) of the Act in the revised computation of income furnished by you. (However, it is seen by authority that in the revised ITR the bad debt figure is Rs.11,93,17,70,137/-. You are requested to reconcile the figure or justify the anomaly of figures). Out of this amount, the opening balance of Rs.376,35,25,258/- has been subtracted and balance amount of Rs.841,45,92,912/- has been claimed as expenditure or deduction or allowable. In this connection, please furnish the list of the parties with their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998-99 to 2001-02 before the Hon. Gujarat HC and during the previous year is same. 25. Further, your goodself has asked to reconcile the figures of bad debts claimed in the revised income tax computation and revised ITR from. In this regard, we submit that in the revised computation, amount claimed as Bad debts of Rs.1217.81 crores comprises of writ off on account of bad debts of Rs.1,193.18 crores and loss of Rs.24.63 crores on account of NPA sell down. 12. In view of aforesaid submissions and particulars, a detailed assessment order has been passed on 12.12.2017, reflecting on page 34 on-wards Annexure-E to the petition and undisputedly in the said assessment order, no addition is made with regard to claim of excess amount of bad debt of Rs.24.63 crores. 13. Despite in the light of aforesaid situation on record, the authority has chosen to re-open the issue again and called upon the petitioner to furnish the explanation since authority is intending to re-open the assessment of the petitioner for Assessment Year 2015 - 2016 under Section 147 of the Act. 14. In the reasons recorded for re-opening of assessment indicated that the authority is inclined to re-open on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. However, undisputedly this attempt of re-opening is made beyond the period of four years and there is no failure on the part of petitioner to disclose truly and fully the material which has been sought for. Further from the reasons which are recorded, it is clearly mentioned in paragraph 2 on page 146 that justification to re-open is on the basis of perusal of assessment record for the year under consideration and what was found is that total bad debts claimed was Rs. 1217.81 crores which include bad debt written-off of Rs.1193.18 crores and Rs.24.63 crores on account of NPA sell down. Thus, on the basis of very same material which was made available during the course of assessment proceeding, the authority has come out with a case that this figure of Rs.24.63 crores deserves to be added and for that purpose re-opening tried to be justified. So essentially there is no tangible material or fresh material on the basis of which an attempt is made to re-open the assessment and undisputedly this figure of controversy was very much placed by the petitioner before Assessing Officer and while passing assessment order, the Assessing Officer has not made any addition and as such on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was any failure on the part of the petitioner to disclose truly and fully the material. Hence, the impugned action appears to be impermissible. 20. As indicated above that this re-opening is sought for is on the basis of assessment record itself, which assessment record undisputedly consist of the explanation about excess claim of bad debts and this re-opening is not on the basis of any fresh tangible material from what was forming part of assessment proceeding itself and as such in view of this when there is no fresh tangible due material distinct from what was very much available, the re-opening in such circumstance is impermissible as is well propounded in case of Shanti Enterprise (supra). The observations in paragraph 11 since relevant to the issue, we deem it proper to quote hereunder:- 11. The contention of the Revenue that the impugned action is within the period of four years and, therefore, it is always open for the authority to reopen the assessment cannot be accepted. Simply because the action is within the period of four years would not give a leverage to the authority to just go on repeating the exercise of examining the issue which has already been gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on hand, the Assessing Officer has not thought it fit to make any addition with regard to aforesaid claim of Rs.24.63 crores and as such when the material was very much available and accepted by the Assessing Officer while passing the assessment order now to re- open that issue again is appearing to be based upon change of opinion and in view of law laid down by the Court in case of Premium Finance Pvt. Ltd. (supra) and Gujarat State Board of School Texbooks (supra) such change of opinion cannot formed on the basis of re-opining of assessment. Hence, the observations made in paragraphs 15 and 16 in the case of Premium Finance Pvt. Ltd. (supra), we deem it proper to quote hereunder:- 15. Now in the background of these proposition of law, if we analyze the record of the present petition on hand, it would quite clear that the petitioner was asked to furnish details regarding the claim of bad debt written off. It is also found from the record that the same has been cogently explained and replied and therefore, while completing the scrutiny assessment, this issue has been gone into by the Assessing Officer and the perusal of record further indicates that while assessment order ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 12 is reproduced hereafter: 12. Insofar as the second ground for reopening the assessment, namely, deduction under section 54EC of the Act is concerned, it is evident that during the course of proceedings under section 143(3) of the Act, the Assessing Officer had called for details in this regard and the petitioner had produced the certificates issued by the Rural Electrification Corporation Ltd. for a total amount of Rs. 81,00,000/- and had also placed reliance upon the decision of the Tribunal in the case of Aspi Ginwala v. ACIT, Baroda (supra) and the Assessing Officer after being satisfied as regards the claim of the petitioner, had allowed the deduction of Rs.81,00,000/- under section 54EC of the Act. From the reasons recorded, it appears that the ground for reopening is that according to the Assessing Officer the assessee is entitled to deduction of only Rs.50,00,000/- under section 54EC of the Act and that against the decision of the Tribunal in the above case, an appeal is pending consideration before the High Court. Thus, it appears that the present Assessing Officer now believes that the Assessing Officer who had framed the assessment under section 143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt that authority is justified in re-opening the assessment but at this stage, we are benefited with the observation made by the Bombay High Court in case of Vodafone Idea Ltd. (supra) wherein on analysis of explanation attached to Section 147 of the Act, it was propounded that re-opening is impermissible and at this stage, we may deem it proper to quote hereunder the relevant observations contained in paragraphs 3, 4 and 5 of the said decision: 3. Thereafter, petitioner received notice dated 2nd August, 2019 under section 148 of the Act saying that there are reasons to believe that petitioner's income chargeable to tax for A.Y. 2013-14 has escaped assessment within the meaning of section 147 of the Act. Since the notice has been issued after the expiry of 4 years from the relevant assessment year and petitioner has been assessed under section 143(3) of the Act, the proviso to section 147 as it was then previously would apply. As per the proviso, the onus is on respondents to show that there was failure on the part of petitioner to fully and truly disclose all material facts required for assessment. Simply stating that as per Explanation (1) to section 147 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be concluded that while the duty of the assessee is to disclose fully and truly all primary relevant facts, it does not extend beyond this. 4. We have considered the reasons and in our view, it is nothing but a change of opinion. Reasons to believe cannot be arbitrary or irrational. Apex Court in CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312/320 ITR 561 held that one needs to give a schematic interpretation to the words reason to believe failing which, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion which cannot be per se reason to reopen. Apex Court also held that the Assessing Officer has no power to review and he has power to reopen provided there is tangible material to come to the conclusions that there is escapement of income from assessment and there was failure on the part of assessee to truly and fully disclose material facts. The Assessing Officer cannot simply say that he has reasons to believe that income which was chargeable to tax has escaped reassessment by reasons of failure on the part of assessee to disclose fully and truly all material facts necessary to take the case out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition that during the course of the assessment proceedings the assessee had made a full and true disclosure of all material facts in relation to the assessment. As a matter of fact, it would be necessary to note that the notice to reopen the assessment on the first issue is founded entirely on the assessment records. There is no new material to which a reference is to be found and the entire basis for reopening the assessment is the disclosure which has been made by the assessee in the course of the assessment proceedings. In Cartini India Limited v. Additional Commissioner of Income-tax [(2009) 314 ITR 275 (Bom.)], a Division Bench of this Court has observed that where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to the Assessing Officer to reopen the assessment based on the very same material with a view to take another view. The principal which has been enunciated in Cartini must apply to the facts of a case such as the present. The assessee had during the course of the assessment proceedings made a complete disclosure of material facts. The Assessing Officer had called for a disclosure on which a specific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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