TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1665
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....alidity of assessment order 1.1 On the facts and in the circumstances of the case and in law, the ld. CIT (A) erred in upholding the order passed u/s 144B, even when no time was given to appellant to furnish replies to the draft assessment order. Reopening of Assessment 2.1 On the facts and in the circumstances of the case and in law, the la. CIT (A) erred in upholding the reopening proceedings even when no new tangible material was found and the reopening was based on materials already on record. 2.2 On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in upholding the reopening proceedings even when the reopening was only based on a change of opinion. Addition on account of opening balance of FCTR 3.1 On the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in confirming the order of AO charging to tax the opening balance of Foreign Currency Translation Difference (FCTR). 3.2 On the facts and in the circumstances of the case and in law, the Id. CIT (A) ought to have appreciated that even as per transition provisions of Income Computation and Disclosure Standards (ICDS), it is only the income arising in....
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....pinion', the Ld. counsel for the assessee referred reasons recorded available on page 2 and 3 of the Paper Book and submitted that no new tangible material or information has been referred by the Assessing Officer for reopening of the assessment, therefore, the Assessing Officer has reopened the assessment merely on the basis of change of opinion on the same very material, which was available to him during the assessment proceedings u/s 143(3) of the Act. The Ld. counsel for the assessee referred to the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. reported in 162 taxmann.com 390 (Bom). The Ld. counsel also referred to the decision of the Hon'ble Bombay High Court in the case of Castrol India Ltd. reported in 162 taxmann.com 51. 8.1 On the contrary, the Ld. Departmental Representative (DR) referred to the decision of the Hon'ble Punjab and Haryana High Court in the case of Greater Mohali Area Development Authority v. DCIT CWP No. 26125 of 2017. 8.2 The reasons recorded for the year under consideration are reproduced as under: "Sir/ Madam/ M/s, Subject: Communication of reasons of reopening u/s 147 for A.Y 2017-18 in the case of UNION BANK OF IN....
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....ontention of the assessee that there was no new tangible material and assessment has been reopened merely on the basis of the change of the opinion based on the same material which was available during regular assessment. The Ld. CIT (A) in para 6.2.3 of the impugned order has rejected the contention of the assessee that no new material is available observing as under: "6.2.3 In view of the above, the appellant's contention that all the documents were already available with the Department while completing the assessment earlier u/s. 143(3) of the Act and no other new tangible material was available there to reopen the assessment is not acceptable." 9.1 The Ld. CIT (A) with reference to the foreign exchange gains not offered to tax in accordance with section 43AA r.w.s. 145(2) of the Act upheld the validity of the reassessment on the reasoning that Assessing Officer reopened the assessment in view of change in section 43AA of the Act with retrospective effect from assessment year 2017-18. Regarding another issue of interest accrued, the Ld. CIT (A) in para 6.2.6 observed that assessee did not offer the interest on accrual basis as clarified by the Central Board of Direct Tax....
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.....4 However, we may like to refer to the finding of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra) wherein, the Hon'ble High Court has observed that the information which formed reasons to believe for escapement of the assessment was already available during the assessment proceedings and there was nothing new which had been brought on record, then it would be a clear case of change of opinion. The relevant finding of the Hon'ble High Court is reproduced as under: "4. The fact that the reasons recorded by the AO for reopening the assessment are based entirely on the documents already filed by Assessee, cannot be disputed. Mr. Mistri tendered a compilation of documents containing copies of the return of income, the computation of total income, Form No. 3CD, Annual Report and the assessment order. In the annexure to the statement of income filed, there is mention of write off and provisions relating to prior years, which have been added and allowable expenses from the same being interest on Fixed Deposits and interest of Security Deposits have been deducted. The notes to computation also provides "The interest expense in respect of Security Deposit and Fixe....
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....was a clear case of change of opinion." 9.5 Further, the Hon'ble High Court in the case of Castrol India Ltd. (supra) has observed as under: "19. However, Assessing Officers without appreciating the true import of the aforesaid decision of the Supreme Court, continue to reopen assessments on the ground of income having escaped assessment despite the fact that all the material and information was already available with him while passing the original assessment order. Furthermore, while conclusive proof of escapement of income may not be necessary to reopen an assessment, the least that is required is a requisite belief based on tangible material which was Shivgan not accessible to the AO or that which was deliberately withheld by Assessee, which then would amount to non-disclosure of relevant information. When an assessment is sought to be reopened within a period of four years of the end of the relevant assessment year, the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. An AO, who has plainly ignored relevant materials in arriving at an assessment acts contrary to la....
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....gh the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that ...4/- www.taxguru.in - 4 - where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition a....
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....ceived from the external source or from the internal source and without such trigger reopening of the assessment merely to relook into the assessment on the issues, which had been considered during the regular assessment proceedings, will amount to review of the assessment order by the Assessing Officer, which is not permitted in law under the provisions of section 147 of the Act. The Assessing Officer can only reassess the assessment wherever income escaped assessment, and not the review the order passed by him. In view of the above discussion and respectfully following the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra) and Castrol India Ltd. (supra), we set aside the finding of the Ld. CIT (A) on the issue of validity of the reassessment and we quash the reassessment proceedings. The ground No. 2 of the appeal of the assessee is accordingly allowed. 9.8 Since, we have already quashed the reassessment proceedings therefore, the ground Nos. 3 and 4 of the assessee challenging the merit of the addition and merely rendered academic and therefore, we are not adjudicating upon the same. 10. In the appeal for assessment year 2016-17, the asse....
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....5,28,10,596/-had been added back while computing the taxable income in assessment under normal provision of the IT Act. This has resulted in under assessment of income to the extent of Rs. 575,73,50,404/-. 2.1 Therefore I am of the view that income to the extent of amount of Rs. 575,73,50,404/-, as explained above, has escaped assessment. 2.2 Further, it was noticed that the assessee had claimed amounting to Rs. 1937,62,60,435/- as deduction under section 36(1)(viia) of the IT Act. As per their computation the assessee had claimed deduction of Rs. 1525,44,08,636/- i.e. 10% on aggregate rural advance amounting to Rs. 15254.41 crore from the Rural branch and Rs. 412,18,51,799/- as 7.5% of the Gross total income. The assessee during assessment furnished the list of Rural Branch and aggregate average advance made during the year in support of their claim. It was noticed from the list, that huge advances were shown against few Branches and claimed it as Rural branch eligible for deduction under section 36(1)(viia) of the IT Act. The categories of Branches were test checked from RBI press release dated 1st November 2011 i.e. Branch locator as per ce....