TaxTMI 
TaxTMI 
2025 (2) TMI 1660
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....first. 4. Representatives of both sides were heard at length. Case records carefully perused and the relevant judicial decisions brought to our notice duly considered. 5. Briefly stated, the facts of the case are that the assessee filed its return of income on 28/11/2006 declaring total income of Rs. 1,42,54,80,793/-. The return was selected for scrutiny assessment and subsequently, assessment was framed u/s 143(3) of the Act vide order dated 04/02/2008. During the course of scrutiny assessment proceedings, the following issues inter alia were considered by the AO:- "8. Bad debt provision in respect of Rural Advances u/s.36(1)(viia): Rs. 3,62,05,800 As seen from the computation statement, the assessee claimed an amount of Rs. 147,69,35,537/- as reduction u/s.36(1)(viia). A perusal of the calculation sheet filed along with the return revealed that out of the said deduction, 10% of average rural advances was claimed at Rs. 125,91,55,500/-. In support of this claim, the assessee enclosed a list of 215 branches along with population details and also showing the average advances. Vide this office letter dated 17.01.08, the assessee was requested to furnish the po....
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.... 125,91,55,500/- as 10% of average aggregate rural advances and 7.5% of total income amounting to Rs. 21,77,80,037/- During the course of assessment the AO disallowed the average aggregate advances claimed in respect of following 8 branches: SI No. Name of branch Reason for disallowance 1 Sr. M.M. Hills Population for more than 10,000 2 Kamagere The assessee could not furnish any evidence in support of the claim. 3 Donimalai Township The assessee could not furnish any evidence in support of the claim. 4 Khandepar Goa The assessee could not furnish any evidence in support of the claim. 5 Bommbasandra Part of urban area [Bangalore] 6 Hoody Part of urban area [Bangalore] 7 Suttur The assessee could not furnish any evidence in support of the claim. 8 VTU Mache, Belgaum The assessee could not furnish any evidence in support of the claim. During the course of assessment proceedings of the assessee bank for the AY 2010-11 the claim of deduction made by the bank u/s 36(1)(viia) was examined in details. As per section 36(1)(via) the average aggregate advances made by rural branches will be taken into c....
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....orded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link....
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....re the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." [emphasis supplied]" 9. The reasons recorded for reopening the assessment exhibited elsewhere when read with the first proviso, it can be safely concluded that there is no mention of any failure on the part of the assessee to disclose all material facts truly and correctly. 10. The ld. D/R strongly contended that merely because the AO has not mentioned one sentence of failure on the part of the assessee, would not invalidate the impugned assessment order. Drawing support from Explanation (1) to Section 147 of the Act, the ld. D/R argued that the assessee has not disclosed the true facts of rural branches during the course of the assessment proceedings while claiming deduction u/s 36(1)(viia) of the Act. It is the say of the ld. D/R that it was the duty of the assessee to furnish all the relevant details which it failed and, therefore, the reopening is good in law. 10.1. Strong reliance was placed on the decision of the H....