TaxTMI 
TaxTMI 
2014 (1) TMI 1483
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....ssessee read as follows: "1. The learned CIT (A) and Assessing Officer failed to appreciate that the re-opening of assessment u/s 147 of the Income Tax Act, 1961 is illegal and against the law and the facts. 1.1 The learned CIT (A) failed to appreciate that the re-opening was based on change of opinion. 1.2 The learned CIT (A) failed to appreciate that the re-opening was based on the same materials furnished by the respondent and not based on any new material". 4. There is a delay of 46 days in filing the cross objection by the assessee bank. The assessee has filed petition for condoning the delay along with the affidavit of the Deputy Head Taxation of the assessee Bank stating the reasons for delay in filing the cross objection. On perusal of the condonation petition and the affidavit, we deem it fit and proper to condone the delay of 46 days in filing the cross objection and we proceed to dispose off the matter on merits. 5. We shall first consider the Revenue appeal. ITA No. 55/Bang/2013 (Revenue's appeal) 6. Brief facts in relation to the Revenue's appeal are as follows: The assessee is a commercial bank having its head office in Bangalore. For the Assessment Year 2005-....
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....banks Housing Finance Ltd (VBHFL), the same is allowable as a bad debt u/s 36(1)(vii) of the Act. The amount of Rs.10,36,603/- was written off by the appellant in the books of accounts but claimed the same under wrong classification of provisions of expenses. In view of the submissions made by the appellant the said amount is eligible for deduction and the Assessing Officer is directed accordingly". 6.2 The Revenue being aggrieved is in appeal before us. The learned DR relied on the grounds raised and the order of the Assessing Officer. The learned AR on the other hand relied on the findings of the CIT (A). 6.3 We have heard the rival submissions and carefully perused the material on record. The CIT (A) has categorically came to a finding that out of the amount of Rs.92,92,922/- the amount of Rs.82,56,319/- represents various expenses like advertising, traveling, printing and stationery etc., and the expenses are not contingent liability. It was further held by the CIT (A) that these expenses though called provision; it actually represents utilization of money and is pending verification/classification by the Central Payment Unit of the Head Office of the assessee bank. These fin....
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..../148 of the Act and assumed jurisdiction. Hence the grounds of appeal raised in this regard are dismissed". 7.1. The assessee bank being aggrieved has filed this cross objection. The learned AR reiterated the submissions made before the Income Tax Authorities, whereas the learned DR supported the findings of the CIT (A). 7.2. We have heard the rival submissions and carefully perused the material on record. Section 147 of the Act mandates that the Assessing Officer must have "reasons to believe" that the income has escaped assessment before proceeding to issue re- assessment notice u/s 148 of the Act. Judicial pronouncements have held that the following elements must exists cumulatively to qualify as "reasons to believe" for the purpose of initiation of re- assessment proceedings: * Some material or materials to establish that income has escaped assessment; * A nexus between such material and the belief of escapement of income from assessment as envisaged u/s 147; * An application of mind by the learned Assessing Officer to such material; and * An inference based on reason drawn tentatively by the officer that income has escaped assessment. 7.3 In the instant case the re-asse....
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....cer had occasion to consider the claim of expenditure of assessee to the tune of Rs.92.92 lakhs and after considering the same, accepted the contentions raised by the assessee and passed the assessment order without making any disallowance in this regard. Therefore, it can be concluded that the re-opening of the assessment was on count of mere change of opinion by the Assessing Officer. The law does not provide for reopening of the assessment on mere reason to "suspect" that the income has escaped assessment. The information/materials were provided by the assessee with regard to expenses amounting to Rs.92.92 lakh and same were examined by the learned Assessing Officer in the course of the scrutiny assessment proceedings. In addition to the information provided by the assessee which is already on record at the time of scrutiny assessment, there is no new material which had come into the possession of the Assessing Officer that could lead to the belief that the income has escaped assessment. Therefore, it can be safely concluded that the reopening of assessment was based on 'change of opinion' by the Assessing Officer. The Courts on various occasion have held that the re-opening of ....
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.....com 115 (Delhi) (Mag.). In the last decision it has been observed: "13. Revenue had the option, but did not take recourse to Section 263 of the Act, inspite of audit objection. Supervisory and revisionary power under Section 263 of the Act is available, if an order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. An erroneous order contrary to law that has caused prejudiced can be correct, when jurisdiction under Section 263 is invoked. 15. Thus where an Assessing Officer incorrectly or erroneously applies law or comes to a wrong conclusion and income chargeable to tax has escaped assessment, resort to Section 263 of the Act is available and should be resorted to. But initiation of reassessment proceedings will be invalid on the ground of change of opinion". 7.6 Further in the case of CIT vs. P.G. Foils Ltd (2013) 33 taxmann.com 485 ('Guj.), Hon'ble Gujarat High Court have rejected the Revenue's submission that if the Assessing Officer has not carried out proper inquiries, it would be a case of income escaping assessment and reopening would be permissible, even though the Assessing Officer may have raised queries during the assessment....