Assessment reopening ruled unjustified; petitioner's disclosure deemed sufficient; notice quashed.

The court held that the reopening of the assessment was unjustified as the Assessing Officer had already considered the issues of bad debt provision and double claim of unabsorbed depreciation during the original assessment. The court found that the petitioner had disclosed all necessary material facts, and there was no failure on their part. Consequently, the notice dated 31.03.2015 was quashed, and the petition was disposed of accordingly.

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Issues Involved:
1. Reopening of assessment beyond four years.
2. Disallowance of bad debt provision under Section 36(1)(viia).
3. Double claim of unabsorbed depreciation of merged bank.

Issue-wise Detailed Analysis:

1. Reopening of Assessment Beyond Four Years:

The petitioner, a co-operative bank, challenged the notice dated 31.03.2015, which aimed to reopen the assessment for the year 2008-09. The original assessment was completed on 28.12.2010. The reopening notice was issued beyond four years from the end of the relevant assessment year. The Assessing Officer (AO) provided reasons for reopening, which included the disallowance of bad debt provision and the double claim of unabsorbed depreciation. The petitioner objected, arguing that both claims were examined during the original assessment.

2. Disallowance of Bad Debt Provision under Section 36(1)(viia):

The AO contended that the petitioner claimed a bad debt provision of Rs. 2.80 crores at 7.5% of gross income without making any actual provision in the profit and loss account. The AO relied on a CBDT circular which restricts the deduction to the amount actually provided in the books. However, during the original assessment, the petitioner had provided detailed explanations regarding the bad debt provision, referencing Section 36(1)(viia) and Section 36(1)(vii) r.w.s. 36(2)(v). The AO did not disallow this claim in the original assessment, implicitly accepting the petitioner's explanation. The court referenced the case of Gujarat Power Corporation Ltd. vs. Assistant Commissioner of Income Tax, which held that if an AO scrutinizes a claim and does not reject it, it implies the formation of an opinion, even if not explicitly stated in the assessment order.

3. Double Claim of Unabsorbed Depreciation of Merged Bank:

The AO also argued that the petitioner claimed unabsorbed depreciation of Rs. 8.28 lacs twice, once as part of the brought forward loss of Rs. 28.56 lacs from the merged Tapi Co-operative Bank. The petitioner clarified this in a communication dated 30.04.2010, admitting an error in claiming a loss of Rs. 7.98 lacs twice and requesting its addition to the total income. The AO did not disallow the unabsorbed depreciation claim in the original assessment. The court found no material evidence supporting the AO's assertion that the brought forward loss included the unabsorbed depreciation. The petitioner had fully disclosed all necessary material facts during the original assessment.

Conclusion:

The court concluded that the reopening of the assessment was not justified. The AO had considered both the bad debt provision and the unabsorbed depreciation during the original assessment. There was no failure on the petitioner's part to disclose material facts. The notice dated 31.03.2015 was quashed, and the petition was disposed of accordingly.

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