TaxTMI 
TaxTMI 
2017 (2) TMI 915
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....f manufacturing of HDPE pipes, fittings and sprinkler system filed its return of income on 31.10.2007 declaring Nil income. Assessment was completed u/s 143(3) determining the income at Rs. 1,28,19,120/- before set off of brought forward business losses and NIL income after set off of such losses. Subsequently, assessment was reopened under section 147 and the reassessment was completed on 22.03.2013 u/s 143(3) r.w.s. 147 determining the income of the assessee at Rs. 31,35,90,689/- before set off of brought forward business losses and nil income after set off of brought forward business losses. While completing the reassessment, the assessing officer made addition of Rs. 30,07,71,569/- being the waiver of principal amount of loan by Bank as taxable u/s 41(1)/28(iv) of the Act. On appeal, the Ld. CIT (Appeals) sustained the reopening of assessment as well as the addition made by the assessing officer on merits, against which the assessee is in appeal before us. 4. The Ld. Counsel for the assessee at the outset submits that the reopening of assessment u/s 147 is bad in law. The Ld. Counsel for the assessee submits that in the course of original assessment proceedings, the assessing ....
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....he Ld. Counsel for the assessee placed reliance on the following decisions in support of his contentions as stated above. (1) CIT Vs. Kelvinator of India Ltd. [(2010) 320 ITR 561 (SC)] (2) Jashan Textiles Mills P. Ltd. Vs. DCIT - [(2006) 284 ITR 542 (Bom)] (3) German Remedies Ltd. Vs DCIT [(2006) 285 ITR 26(Bom)] (4) German Remedies Ltd. Vs CIT [(2006) 287 ITR 494(Bom)] (5) Siemens Information Systems Ltd Vs Asstt. CIT [(2007) 295 ITR 333 (Bom)] (6) Haryana Accrylic Manufacturing Co.Vs.CIT[(2009) 308 ITR 38 (Del.)] (7) Asain Paints Vs Dy.CIT [(2009) 308 ITR 195 (Bom)] 5. Coming to the merits of the case, the Ld. Counsel for the assessee submitted that the assessee is engaged in the business of manufacturing plastic pipes. Up to A. Y. 2001-02 company has incurred huge loss as a result it become sick company and got registered by BIFR in terms of section 3(1)(O) of Sick Industrial Companies Act (SICA). He submits that SBI was appointed as operating agency to carry out techno economic viability study, valuation of assets and to prepare Draft Rehabilitation Scheme. The Ld. Counsel for the assessee submitted that as per revival scheme as approved by BIFR vide order dated ....
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....il income on 31.10.2007 and the assessment was completed u/s 143(3) on 30.11.2009. In the course of assessment proceedings, the assessing officer called for the details in respect of waiver of principal amount of loan on one time settlement from the bank claimed as deduction in the computation of income. The assessee vide letter dated 16.10.2009 submitted a detailed explanation and clarification as to why only the interest which was waived by the bank was offered to tax and why the principal amount of loan which was waived by the bank on one time settlement was claimed as not taxable and deduction was claimed in the return of income. In its detailed submission, the assessee also placed reliance on the decisions in support of its contention that the principal amount waived by the banks on one time settlement is not taxable. The detailed note submitted by the assessee is as under : "1. During the previous years ending 31st March 2007 the company has made One Time Settlement (OTS) with Debenture holders and Banks. The lenders have agreed to waive the interest and principal amount of debts the details breakup of principal and interest as on the date of settlement are given in Annexur....
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....receipts which can form part of "profits and gains of business or profession" with the 'submission that this type of receipt does not fall in any category of the receipts given under section 28 of the Act. Since there is no specific head with regard to chargeability of wavier of loan it cannot assume the character of taxable income. In support of this contention, the reliance has been placed on following cases. (I) Comfund Financial Services (I) Ltd. Vs Dy. CIT [67 ITD 304 (Bang)] (ii) CIT Vs. Chetan Chemicals (P.) Ltd [267 ITR 770 (Guj)] (iii) Mahindra and Mahindra Ltd. v. CIT [261 ITR 501 (Bom)] (iv) CIT Vs. Hukumchand Mohanlal [82 ITR 624 (SC)] (v) Mehboob Productions (P.) Ltd. v. CIT [106 ITR 758 (Bom)]" 9. The assessment was completed u/s 143(3) on 30.11.2009 accepting the submission of the assessee. No addition was made in the assessment order in respect of the principal amount waived by the banks under one time settlement, which was claimed as deduction in the computation of income by the assessee. 10. Subsequently, the assessing officer issued notices dated 29.03.2012 u/s 148 and in response to the said notice, the assessee submitted that the copy of return ....
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....ttlement with bank and NCD holders and this amount was credited to P&L account as income, but was claimed as deduction in the computation of income and therefore income had escaped assessment. It is not the case of the revenue that the assessee has not submitted any details in respect of the loan waived by the banks, but, it was the contention of the assessing officer that there is no change of opinion which in our considered view is not correct. The assessee has furnished all the information and a detailed submission along with case law in its support for its claim for deduction of waiver of loan by Banks on OTS. We also find that there is nothing on record to suggest that the revenue has got tangible material in its possession after completion of assessment suggesting escapement of income. What we see is only mere change of opinion of the incumbent assessing officer to bring to tax the amount of principal waiver of loan claimed as deduction by the assessee in its computation of income on same set of facts which were already on record. 13. The Hon'ble Bombay High Court in the case of Asian Paints Ltd. Vs. DCIT [308 ITR 195] held that when a regular order of assessment is passed u....
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....the Delhi High Court in its judgment in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 and the Full Bench has observed thus (page 19) : "The said submission is fallacious. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub- section (3) of section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong." 9. It is clear from the observations made above that the Full Bench of the Delhi High Court has taken a view that in a situation where according to the Assessing Officer he fail....