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TMI Blog2017 (6) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie case for under assessment - Therefore, we do not find any error in the re-opening of assessment and uphold the issue of notice u/s.148 - CIT(A) also relied on the decision in the case of CIT v. Raman Co [ 1967 (7) TMI 2 - SUPREME COURT] and we uphold the order of the Ld.CIT(A) and dismiss the ground of the appeal of the assessee on this issue. Addition made u/s.36(1)(viia) - assessee has created NPA provisions and claimed the deduction in respect of the provisions for bad and doubtful debts - AR argued that the assessee has already made the provision in the earlier years which was unadjusted and brought forward in the books - HELD THAT:- In Income Tax, each year is an independent and the income has to be computed as per the sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of Assessment u/s.147 of IT Act. The assessee filed return of income declaring total income of Rs.NIL on 30.09.2008 and subsequently revised the return of income was filed and admitting the total income of Rs.7,81,94,570/- on 31.03.2010. The assessment was completed accepting the revised return of income on 28.12.2010. Subsequently, the assessment was re-opened u/s.147 the act to examine the claim of deduction u/s.36(i)(vii)(a). The AO re-opened the assessment as per the reasons recorded in Page No.2 of the Assessment Order as under: It was observed from profit and loss account for the year ended 31.03.2008 relevant to A.Y.2008-09 that provision for bad debts was made in the profit and loss account to the extent of Rs.8,74,58,800/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection. The AO has considered the issue in the original assessment made u/s.143(3) dated 28.12.2010 and give a categorical finding with regard to the deduction u/s.36(1)(viia). The AO cannot re-open the assessment on the same reason which was already considered by him in the Assessment Order originally passed. The issue with regard to the provisions for bad and doubtfulness claimed u/s.36(1)(viia) was examined by the AO and the consequent audit objection would amount to interpretation of law. The audit party is barred from interpretation of law as per the settled case laws. Therefore, Ld. Counsel vehemently opposed that the issue of notice u/s.148 is mere change of opinion required to be quashed. On the other hand, the Ld.DR argued that tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s.143(3) dated 28.12.2010. The fact regarding not making the provision u/s.36(1)(viia) was brought to the notice of the AO by Audit Party of the Income Tax Department and consequent to the audit objection, the AO re-opened the assessment by issue of notice u/s.148. The assessee has made the provision for Rs.7,72,84,858/- and claimed the deduction of Rs.19,49,25,398/- which is patently appears to be incorrect. This factual position has not been considered by the AO at the time of assessment. As rightly relied upon by the Ld.DR on the Hon'ble Supreme Court judgment in the case of 237 ITR 30 re-opening of the case on the basis of factual error pointed out by the Audit Party is permissible under law. What is brought to the notice of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted and there is no need to create the provision every year to claim the deduction u/s.36(1)(viia). The Ld.Counsel contended that since the assessee has claimed the deduction u/s.36(1)(viia) from the existing NPA provisions which was brought forward, there is no case for making any addition by the AO. On the other hand, the Ld.DR argued that in the Income Tax proceedings of each year are independent and the income has to be computed in accordance with the system of accounting followed by the assessee for every year independently. The brought forward and spill over provisions cannot be considered for computing the income of the year under consideration unless and otherwise provided in the Income Tax Act. Even in Sec.36(1)(viia), the words u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year relevant to the AY under consideration. No expenditure which is not debited to the Profit & Loss A/c in the year under consideration is permissible for deduction. In the instant case, the assessee has not debited the expenditure relating to the provisions for bad and doubtful debts. Therefore, the deduction u/s.36(1)(viia) is permissible to the extent of the amount debited to the Profit & Loss A/c or as per the permissible limits specified u/s.36(1)(viia) whichever is less. The contention of the assessee that the reserves already created in the earlier years is available in the books of accounts which remained unadjusted is not an acceptable proposition and not as per the Income Tax Act. This view is clarified by the CBDT in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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