TaxTMI 
TaxTMI 
2014 (10) TMI 660
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....ed from export proceeds in AY 2001-02 for foreign exchange on account of export proceeds u/s. 80HHC of the Act. For this, assessee has raised following ground nos. 3 and 4: "3. For that CIT(A) erred in confirming the disallowance of the bad debt claimed in accordance with law on the basis of the wrong assumption of the AO that the assessee claimed that it had received the export proceeds in the asst year 2001-02 when no such statement was made by the assessee, the amount was due from the debtor which was written of during the year after obtaining the permission of the competent authority. 4. For that on the facts and circumstances of the case the Ld. CIT(A) should have allowed the claim for bad debt of Rs. 32,38,978/-. The claim of bad debt cannot be disallowed simply because the assessee was wrongly allowed deduction u/s. in asst. year 2001-02." 3. Briefly stated facts are that the assessee firm is an exporter of cast iron and miscellaneous goods. Assessee filed its return of income u/s. 139(1) of the Act on 15.10.2004 in the relevant AY 2004-05. Original assessment was completed u/s. 143(3) of the act vide order dated 15.12.2008 by ACIT, Circle-37, Kolkata, wherein net loss wa....
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....s bad debt since it was recovered from the said company in convertible foreign exchange. These led to the under assessment of Rs. 24,87,513/- Rs. 32,38,978/- less Rs. 7,51,470/-). As the income to the tune of Rs. 24,87,513/- has escaped assessment, hence, the case was reopened u/s. 147 and notice u/s. 148 was issued." The AO disallowed the claim of bad debt at Rs. 32,38,978/-. 4. Aggrieved, assessee preferred appeal before CIT(A), who confirmed the action of AO in assuming jurisdiction u/s. 147 read with section 148 of the Act by observing in para 2.3 as under: "2.3. I have considered the above submission of the Ld. A/R. I have also gone through the assessment order as well as the remand report. I find that the AO had the material available on record to reach a subjective satisfaction of the escapement of income at the stage of issue of notice u/s. 148. In the instant case, the notice u/s. 148 has been issued within four years from the end of the AY 2004-05. Considering the facts of the case and also the decision of the Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Broker (P) Ltd. reported in 291 ITR 500, the reopening of assessment u/s. 147 by issue of notice u/s. 14....
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....ty ledger of AY 01-02 and B/sht of that period is seen to ensure that Bad Debt amount was actually taken into consideration at that time." Ld. counsel for the assessee also drew our attention to page 21 of assessee's paper book wherein the copy of questionnaire issued u/s. 142(1) of the Act dated 19.01.2005 and vide question No. 10 the specific question in respect to this bad debt was raised. And assessee in reply vide letter dated 26.02.2005 has replied to question no. 10 by enclosing the details of Sahar Trading Co. NCCUAE regarding bad debts. Ld. counsel for the assessee also filed copy of UTI Bank Ltd. informing the RBI Circular No. AB/DIR/12 dated 9.9.2000 wherein nonrealisation of overdue export bills and write off of export realisation in the case of M/s. Bengal Export Corporation i.e. the assessee on account of export bill of M/s. Sahar Trading Corporation, UAE amounting to Rs. 69.790.50 USD was required. The copy of bank letter dated 18.02.2004 vide no. UTIB/IB/243/03-04 dated 18.02.2004, which is enclosed at page 35 of assessee's paper book, the RBI has permitted vide letter of request for write off of overdue export bills from the exporters. The assessee has also enclos....
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....gible material was available before the AO for reopening the assessment and consequently, the AO acted on the same material, which was available before him at the time of original assessment. We find that this issue is squarely covered in favour of the assessee and against revenue by the judgment of Hon'ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. (2010) 310 ITR 561 (SC), wherein newly substituted provision of section 147 of the Act with effect from 01.04.1989 is interpreted by observing, that section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the AO to initiate reassessment proceeding upon his mere change of opinion. Further, if 'reason to believe' of the AO is founded on an information which might have been received by the AO after the completion of assessment, it may be a sound foundation for exercising the power under section 147 r.w.s. 148 of the Act. It cannot be accepted that only because in the assessment order, detailed reasons have not been recorded, an analysis of the materials on the record by itself may be justifying the AO to initiate a proceeding u/s. 147 of the Act. When a regular order of assessme....
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.... and truly all material facts necessary for his assessment for that assessment year." This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147. In Rakesh Aggarwal v. Asst. CIT [1997] 225 ITR 496, the Delhi High Court held that in view of the proviso to section 147 notice for reassessment under section 147/148 should only be issued in accordance with the new section 147, and where the original assessment had been made under section 143(3) then in view of the proviso to section 147, the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO [2000] 242 ITR 612. In our opinion, we have to see the law prevailing on the date of issue of the notice under section 148, i.e., November 20, 1998. Admittedly, by that date, the new section 147 has come into force and, hence, in our opinion, it is the new section 147 which will apply to the facts of the present case. In the present case, there was admittedly....
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....ribunal in the appeal relating to the assessment of the petitioner's own case, vide Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and hence when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under section 147/148 would obviously be on the basis of a mere change of opinion by the income-tax authorities, which would not be valid as held by the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 ; Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Deputy CIT [1998] 234 ITR 170 (Delhi), etc. In the decision of the Tribunal in the assessee's own case, Deputy CIT v. ONGC [1999] 70 ITD 468 (Delhi) it has been held that the income from the contract between the parties was business income and not fee for technical services. Although we are of the opinion that the law existing on the date of the impugned notice under section 147/148 has to be seen, yet even in the alternative even if ....