TaxTMI 
TaxTMI 
2024 (3) TMI 731
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....le to the assessment year in question, was inserted in Sub-section (1) of Section 36 by the Finance Act, 1979 with effect from 1st April 1980 and the amended version, as applicable to assessment year in question, reads as under: "Other deduction 36.(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in Section 28- (i) xxxxxxxxxxxxxxx (viia) in respect of any provision for bad and doubtful debts made by- (a) a scheduled bank not being a bank incorporated by or under the laws of a country outside India or a non-scheduled bank or a co-operative bank other than a primary agricultural credit society or primary cooperative agricultural and rural development bank, an amount not exceeding seven and one-half per cent of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner: xxxxxxxxxxxx" 3. Petitioner filed its return of income ("ROI") on 8th October ....
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....005-06 62,334,392 Fin Year 2006-07 126,176,880 Fin Year 2007-08 200,734,588 Fin Year 2008-09 412,298,107 Total 801,543,967 Utilised towards write offs in AY 2010-2011 (801,543,967) Fin Year 2008-09 653,716,370 Total-Balance carried forward 653,716,370 6. As regards doubtful advances and advances relating to rural branches, Petitioner stated "......The Bank did not claim any deduction for rural advance as on 31st March 2010". 7. The Assessing Officer ("AO") passed an order dated 29th January 2013 assessing the total income of Petitioner at Rs. 814,50,04,230/-. The AO did not discuss the issue of Section 36(1)(viia) of the Act in the assessment order. 8. Petitioner, thereafter, received on 4th April 2015 a notice dated 31st March 2015 under Section 148 of the Act in which it was alleged that there were reasons to believe that income chargeable to tax for AY 2010-11 has escaped assessment. Petitioner was also provided the reasons recorded for initiating proceedings under Section 147 of the Act and the same reads as under: "The assessee company e-filed its original return of income on 08.10.2010 for A.Y. 2010-11. Subs....
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....g the proceedings for AY 2012-13, Assessee has submitted that bank has not claimed any deduction under Section 36(1)(viia) of the Act on rural advances and has also not submitted any evidence for having rural branches. The entire basis for reopening is that the Hon'ble Supreme Court in Catholic Syrian Bank Ltd. v. Commissioner of Income Tax 343 ITR 270 (SC)., has held that the provision for bad and doubtful debts under Section 36(1)(viia) of the Act is available only in case of rural advances and not in case of urban advances and Assessee has claimed provision for bad and doubtful debts on non-rural advances which is not in accordance with the law as confirmed by the decision in the case of Catholic Syrian Bank Ltd. (supra). 10. It is Petitioner's case, as submitted by Mr. Agrawal, that (a) it was a clear case of change of opinion since during the course of the original assessment proceedings, a query was raised which was replied to and the AO having been satisfied with the explanation did not consider it necessary even to discuss the issue in the assessment order dated 29th January 2013; (b) there is no new tangible material on the basis of which Respondent No....
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.... (c) in Kalyanji Mavji & Co. v. Commissioner of Income Tax, West Bengal II 1976 (102) ITR 287 (SC)., it is held, where the information is as to the true and correct state of the law derived from relevant judicial decisions, the AO will have complete jurisdiction to reopen the original assessment. FINDINGS: 13. The indisputable fact is Catholic Syrian Bank Ltd. (supra) was the law when the assessment order dated 29th January 2013 was passed. Even in the reasons recorded, it is not stated that this judgment was not cited. The fact is the issue of deduction under Section 36(1)(viia) of the Act was under active consideration of the AO. The AO had called upon Petitioner to give details of outstanding balance in provision for bad and doubtful debts created under Section 36(1)(viia) of the Act and also raised a specific query in respect of rural branches separately and called for proof of such rural branches. It is also stated in the Petition, and that has not been denied, that Petitioner was called upon to make submissions for the relevant assessment year on the basis of the notice dated 12th August 2010 issued for AY 2008-09. It is also averred in the petition that Petiti....
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....sis for any escapement of income. 18. In fact, when the petition was admitted on 20th April 2016 also the Court had expressed a prima facie view that the AO would have formed a necessary opinion taking a view that the decision of the Apex Court in Catholic Syrian Bank Ltd. (supra) would not militate against the view canvassed by Assessee and allow the claim of Petitioner for deduction under Section 36(1)(viia) of the Act. The order passed by this Court at the time of admitting the petition reads as under: "1. Heard. Rule. 2. Both these petitions under Article 226 of the Constitution of India challenge Notices dated 31st March, 2015 seeking to reopen assessments for Assessment Years 2010-11 and 2011-12. The reasons recorded by the Assessing Officer in support of both the impugned notices are identical save and except the quantum involved. 3. The reasons in support of the impugned notices for coming to the reasonable belief that income chargeable to tax has escaped assessment is on the interpretation of Section 36(1)(viia) of the Act. In support the reasons place reliance upon the decision of the Apex Court in Catholic Syrian Bank Ltd. Vs. Commissioner o....