Appeal allowed due to lack of new material; Revenue's appeal dismissed as infructuous.

The Tribunal allowed the assessee's appeal, quashing the reopening of the assessment under Section 147 due to the absence of new material and the reopening being based on a change of opinion. The revenue's appeal was dismissed as infructuous since it was based on the reassessment, which was invalidated.

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Issues Involved:
1. Validity of reopening the assessment under Section 147 of the Income Tax Act, 1961.
2. Disallowance of depreciation on investments categorized as Held to Maturity (HTM) securities.

Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147

The assessee, a Government of India Undertaking engaged in banking, originally filed its return for AY 2010-11 on 31.08.2010, declaring an income of Rs. 9,17,60,29,790/-. A revised return was later filed on 29.03.2012, declaring an income of Rs. 7,50,28,41,861/-. The assessment was completed on 28.01.2013, determining the total income at Rs. 12,28,80,67,890/-. Subsequently, the AO issued a notice under Section 148 on 30.03.2017, leading to the reopening of the assessment. The reason for reopening was a discrepancy noted in the depreciation on investments, specifically an amount of Rs. 3,62,67,82,885/- that needed to be added back as taxable income.

The assessee objected to the reopening, citing the proviso to Section 147, which states that an assessment cannot be reopened after four years unless there was a failure to disclose fully and truly all material facts necessary for the assessment. The assessee argued that all relevant information was disclosed during the original assessment, and the reopening was merely a change of opinion, which is not permissible.

The Tribunal referred to several judgments, including CIT Vs. Foramer France [264 ITR 566], Mahalakshmi Motors Ltd. Vs. DCIT [265 ITR 53], and others, to support the contention that a mere change of opinion does not justify reopening an assessment. The Tribunal concluded that since all information was available during the original assessment, the reopening was invalid as it was based on a change of opinion and beyond the four-year limit.

2. Disallowance of Depreciation on Investments Categorized as HTM Securities

The AO disallowed a sum of Rs. 3,60,67,82,885/- representing depreciation on investments, stating that HTM securities are capital in nature and do not constitute stock in trade as per RBI guidelines. The AO argued that the assessee did not suffer any real loss on account of the fall in value of HTM securities, and therefore, the depreciation claimed was not allowable.

The CIT(A) directed the AO to re-work the depreciation allowance by considering the opening and closing balances of earlier years. Both the assessee and the revenue appealed against this order. The assessee contended that investments in its business are stock in trade, and the fall in market value is an allowable deduction. The revenue argued that the CIT(A) erred in directing the re-work without verifying the purpose for which the securities were purchased and whether they were held to meet SLR purposes.

The Tribunal noted that the reopening of the assessment was invalid due to the lack of new material and being based on a change of opinion. Consequently, the Tribunal quashed the reopening of the assessment, rendering the revenue's appeal infructuous.

Conclusion:

The Tribunal allowed the assessee's appeal, quashing the reopening of the assessment under Section 147 due to the absence of new material and the reopening being based on a change of opinion. The revenue's appeal was dismissed as infructuous since it was based on the reassessment, which was invalidated. The order was pronounced in the open court on 20th May 2021.

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