TaxTMI 
TaxTMI 
2019 (9) TMI 653
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....er of Income Tax (Appeals) erred in upholding the re-opening of assessment u/s 147. 2.1 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the re-opening was mere change of opinion as such, bad in law. 2.2 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the re-opening was based on existing material and evidences and not based on any new evidences 2.3 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the re-opening beyond 4 years is hit by the First Proviso to section 147. 2.4 The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the matters with respect to which the additions have been made are subject matter of appeal before CIT(A) and Hon'ble ITAT and therefore, they cannot be considered in the re-assessment proceedings in view of the Third Proviso to Section 147. 3. The learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to classify rural branches as was done for AY 2010-11 for the purpose of Section 36(1)(vii). 3.1 The learned Commissioner of Income Tax (Ap....
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....s. 36(1)(vii) of the Act has to be allowed to the assessee-bank to an extent of Rs. 91,86,24,875/- and the provisions of Section 115JB of the Act are not applicable. But CIT(A) confirmed the reopening of assessment u/s. 147 of the Act and disallowance of claim u/s. 36(1)(viia) of the Act and partly allowed the appeal. 4.1. Aggrieved by the order of CIT(A), assessee preferred an appeal before the Tribunal on two issues being the reopening of assessment u/s. 147 of the Act and disallowance of claim u/s. 36(1)(viia) of the Act. 5. At the time of hearing, Ld.AR submitted that the original assessment was completed u/s. 143(3) of the Act on 31-01-2008, whereas notice u/s. 148 was issued on 25-03-2013, which is beyond a period of four years and the AO has made disallowance of claim u/s 36(1)(viia) of the Act. Ld.AR emphasized that the reasons for reopening was provided to the assessee and objections were filed, whereas the AO has dismissed the objections and confirmed the validity of re-opening of assessment. The contentions of learned AR are that the assessee-bank has disclosed the material facts necessary for assessment and there is no failure on the part of assessee-bank. Further....
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....the Income-tax Act, 1961 - Business expenditure - Allowable as - Whether section 37 applies only to items which do not fall in sections 30 to 36; if a provision for doubtful debt is expressly excluded from section 36(1)(vii), then such a provision cannot be claimed as a deduction under section 37 even on basis of 'real income theory' - Held, yes" and the learned DR prayed for upholding the order of the CIT(A). 7. We heard the rival submissions and perused the material on record and the information filed during the course of hearing. The sole matrix of the disputed issue is with respect to the validity of re-assessment u/s. 147 of the Act and issue of notice u/s. 148 of the Act. Ld.AR has vehemently argued that the assessee has disclosed full and complete information and furnished the details and there is no concealment of any particulars or income. Ld.AR referred to the plethora of decisions in paper book and relied on the jurisdictional Hon'ble High Court decision in the case of Venkatesh Power Works Vs. CIT (2005) [278 ITR 436] and also decision of Canara Sales Corporation Ltd., Vs. CIT [176 ITR 340] the observations are as under: ..............................
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....ng deduction available u/s. 36(1)(viia) of the Act. Whereas AO on verification of the details submitted by the bank found that the branches located in sub areas, cannot be defined as Rural Branches. The AO observed that the rural branch must be located in a place that is revenue village, however, the branches are situated in place which is defined as per Urban Agglomeration Census of India of 2001 as town Panchayats and Municipalities. Hence, the AO based on the information obtained from the scrutiny assessment proceedings for the AY. 2010-11 has re-opened the assessment and issued notice u/s 148 of the Act. Ld.AR referred to Page No. 90 of the Paper Book on the Branch Banking statistics information as on 31-03-2009 and the explanatory notes, which read as under: Explanatory Notes 1. Reference Period of data on all bank offices/branches prescribed in this volume relate to 31 March 2009, unless otherwise specified. 2. Population Group Classification of centres is based on 2001 population census data obtained from the Office of the Registrar General and Census Commissioner, Government of India. 3. The state-wise data on Average Population Per Bank Office....
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....cial Banks (Local Area Banks) 9. Banked Centre is a center having at least a branch/office of a commercial or co-operative bank or a temporary office, such as an extension counter or a satellite office or an off-site ATM of a commercial or co-operative bank is functioning". 7.2. The Ld.AR drew attention to the computation of income and in particular head of 'business or profession' for the AY. 2006-07 at Page No. 22 of the Paper Book, where the assessee has made disclosure of claim permissible u/s. 36(1)(viia) of the Act and the Revenue has not disputed such disclosure. We found strength in the submissions of the Ld.AR on validity of assessment u/s 147 of the Act in the assessee's own case and the Bank has disclosed the complete particulars/information. The Ld.AR has substantiated with voluminous material, which cannot be overlooked. We are of the substantive opinion that the bank is a public sector undertaking and has followed the RBI guidelines, which are mandatorily considered in the accounting system of bank and relied on the judicial decisions: i. Chaitanya Properties (P) Ltd., (2016) [67 taxmann.com 201] (Karnataka); ".................It is clear....
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....eafter i.e., after four years, the reassessment proceedings are initiated. When the returns fully and truly disclosed all material facts, the Assessing Authority could not have initiated proceedings under section 147 of the Act, after the end of assessment year. That is precisely what the Tribunal has held. Therefore, we do not see any merit in this appeal. The substantial question of law are answered in favour of the assessee and against the Revenue". iii. Usha International Ltd., (2012) [25 taxmann.com 200] (Del)(FB); "13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of "change of opinion". (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in orig....
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....income involving matters which are the subject matter of any Appeal, Reference or Revision, which is chargeable to tax and has escaped assessment. In the present case, it has emerged from the affidavit in reply of the Revenue that the Assessee had filed an Appeal to the CIT(Appeals) against the order of assessment. paragraph 4(v) of the reply states that by his order dated 29 September 2010, the CIT(Appeals) partly allowed the Appeal filed by the Petitioner by accepting the claim under Section 36(1)(vii) and Section 36(1)(vii) and by allowing a proportionate deduction under Section 10(23G) on the basis of the ratio adopted in the earlier assessment................". vii. Reliance Energy Ltd., 2012 (12) TMI 379 - Bombay High Court; "..............Moreover, the Tribunal has also correctly held that the jurisdiction to issue a reopening notice for the assessment year 2001-02 is absent in view of the fact that the profits earned as determined under Section 80IA of the Act with regard to its Dahanu generation plant was the subject matter of appeal before the Commissioner of Income Tax (Appeals) and the Tribunal leading to order dated 02.08.2004 and 24.01.2008 respectiv....