Account Of Mere Change Of Opinion When There Was Nodiscussion On The Issue In The Original Assessment Order ? v. State Of Jharkhand And Ors. Civil Appealno.5390/2007 ?

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1858 OF 2017 Pr. Commissioner of Income Tax-15, MumbaiAaykar Bhavan, M. K. Road,Mumbai ...Appellant vs.EPC Industries Ltd.Plot No. H-109, MIDC, Ambad,Nashik-422 010 ...Respondent ---- Mr. Akhileshwar Sharma for Appellant.Mr. Vipul B. Joshi a/w. Ms. Dinkle H. Hariya i/b Ms. Namrata S. Kasale for the Respondent. ---- CORAM : K. R. SHRIRAM AND AMIT B. BORKAR, JJ.DATE : 26 OCTOBER 2021 ORAL JUDGMENT: (Per Amit B. Borkar, J.) This appeal under Section 268A of the Income Tax Act,1961 (the Act) challenges the order dated 10/2/2017 passed byIncome Tax Appellate Tribunal (ITAT). The subject matter of theAppeal is the Assessment Year 2007-2008. 2.The Revenue urges the following questions of law for our consideration: A.Whether on the facts and in the circumstances of thecase and in law, the Hon'ble ITAT was right in holding thatthe reassessment made under section 143 read with section147 of the Act was bad in law and reopening was only on account of mere change of opinion when there was nodiscussion on the issue in the original assessment order ? B.Whether on the facts and circumstances of the case,and in law the Hon'ble ITAT was right in holding that thereassessment made under Section 143 read with Section147 of the Act was bad in law and reopening was only onaccount of mere change of opinion when there is newinformation in the form of audit objection in the light of theprinciples laid down by the Supreme Court in Larsen &Toubro Ltd. vs. State of Jharkhand and Ors. Civil AppealNo.5390/2007 ? C.Whether on the facts and circumstances of the case,and in law the Hon'ble ITAT was right in holding that thereassessment made under Section 143 read with Section147 of the Income tax Act, 1961, was bad in law andreopening was only on account of mere change of opinionwithout deciding the issue on the merits of the case ? 3.The assessee company is engaged in the business ofmanufacturing of HDPE pipes, fittings and sprinkler system. Thereturn of income has been filed on 31/10/2007 declaring nil income.Assessment under Section 143(3) of the Act came to be completeddetermining the income at Rs.1,28,19,120/- before set off of broughtforward business losses and nil income after set off of brought rsk forward business losses. Assessment was completed under Section143(3) of the Act on 30/11/2009. 4.On 29/3/2012 Assessing Officer issued notice forreopening of assessment by giving following reasons for reopening ofassessment. “The assessee had claimed deduction of Rs.30,07,71,569/- for waiver of loan on account of One TimeSettlement (OTS) with banks and NCD holders. The amountwas credited to the P & L Account as income but claimed asdeduction in the statement of computation of income. Theassessee had claimed deduction for depreciation on the assetsacquired with the said loan, banks claimed the write-off ofthe loan on OTS as bad debts and the writ back by assesseewas to be treated as income. Therefore, I have reasons tobelieve that income to the extent of Rs.30.07 crores hasescaped assessment within the meaning of Section 147 of theAct.” 5.The assessee by letter dated 1/1/2013 submitted itsobjections to the reopening of assessment stating that there is noescapement of income by the assessee and it had furnished all theinformation in the course of assessment proceedings in respect ofwaiver of loan by the bank on One Time Settlement as required by theAssessing Officer and therefore reopening of assessment was merely achange of opinion and there was no tangible material which justifiedAssessing Officer to reopen the assessment. 6.Assessing Officer rejected the objections of the assessee byorder dated 8/1/2013 and completed reassessment under Section rsk 5.The assessee by letter dated 1/1/2013 submitted itsobjections to the reopening of assessment stating that there is noescapement of income by the assessee and it had furnished all theinformation in the course of assessment proceedings in respect ofwaiver of loan by the bank on One Time Settlement as required by theAssessing Officer and therefore reopening of assessment was merely achange of opinion and there was no tangible material which justifiedAssessing Officer to reopen the assessment. 6.Assessing Officer rejected the objections of the assessee byorder dated 8/1/2013 and completed reassessment under Section rsk 143(3) on 22/3/2013 bringing to tax the waiver of principal amountof loan of Rs.30,07,71,569/- as income of the assessee underSection41(1)/28(iv) of the Act. Being aggrieved by order dated23/3/2013 assessee preferred appeal before the Commissioner ofIncome Tax (Appeal) Mumbai being CIT(A)-22/ACIT(OSD)-10(3)/IT-154/2013-14 which was dismissed by order dated 29/2/2016. 7.Assessee being aggrieved by order dated 29/2/2016passed by CIT(A) filed appeal bearing ITA No.3210/Mum/2016which is allowed by ITAT holding that the assessment was reopenedbased on information which was already on record and no newtangible material was brought on record to suggest escapement ofincome in respect of waiver of loan on One Time Settlement by bankswhich was claimed by assessee as deduction. ITAT further observedthat in the course of original assessment proceedings, AssessingOfficer had called for details in respect of waiver of loan on accountof One time Settlement with banks and NCD holders and the assesseehad filed detailed submission as to why principal amount which waswaived by the Bank on One Time Settlement was not taxable. 8.Mr. Sharma, learned counsel appearing for the Revenuesubmitted that the issue of deduction of waiver of loan by banks asOne Time Settlement finds no mention in the original assessmentorder passed under Section 143 (3) of the Act. Thus no opinion wasformed by the Assessing Officer while passing original assessmentorder. Therefore there was no bar in issuing notice for reopening of rsk assessment. He therefore submitted that the substantial questions oflaw as proposed arise for consideration in the present appeal. 9.It is now well settled that the power of Assessing Officerto reopen the assessment is not subject to the limitation provided inSection 147 of the Act viz., failure on the part of assessee to truly andfully disclose all material facts necessary for assessment. In the resulteven where the assessee had disclosed all facts fully and truly for thepurpose of assessment, the Assessing Officer will have jurisdiction toreopen the reassessment, if he has reason to believe that incomechargeable to tax has escaped the assessment. However, this reason tobelieve that any income chargeable to tax had escaped assessmentwithin 4 years from the end of the relevant Assessment-Year has toarise not on account of mere change of opinion but on the basis ofsome tangible material. (Commissioner of Income Tax vs. Kelvinatorof India Limited)1 10.In the facts of the present appeal a query was raised bythe Assessing Officer in original assessment in respect of waiver ofloan on account of One Time Settlement with the banks and assesseehad filed detailed submission as to why principal amount was waivedby the bank on account of One Time Settlement is not taxable. Oncethere was query raised with regard to a particular issue during regularassessment proceedings it must follow that the Assessing Officer hadapplied his mind and taken a view in the matter as reflected in the rsk assessment order. (Aroni Commercials Ltd. vs. AssistantCommissioner of Income Tax)2 11.The Division Bench of this Court in the case of Marico Ltd.vs. Assistant Commissioner of Income -tax 12(3)(2) 3 had occasion todeal with similar submission made by the Revenue. This Court in paragraph 11 held as under: rsk assessment order. (Aroni Commercials Ltd. vs. AssistantCommissioner of Income Tax)2 11.The Division Bench of this Court in the case of Marico Ltd.vs. Assistant Commissioner of Income -tax 12(3)(2) 3 had occasion todeal with similar submission made by the Revenue. This Court in paragraph 11 held as under: "11. ..... Therefore, it must follow that where queries havebeen raised during the assessment proceedings and theassessee has responded to the same, then the non-discussion of the same or non-rejection of the response ofthe assessee, would necessarily mean that the AssessingOfficer has formed an opinion accepting the view of theAssessee, Thus an opinion is formed during the regularAssessment proceedings, bars the Assessing Officer toreopen the same only on account of a different view." 12. The pronouncement of the co-ordinate Bench of this Court on similar issue is binding on us. The appellant has not made out acase to take a different view in the matter. We are therefore satisfiedthat no substantial question of law arise in the present appeal. 13.Appeal is therefore dismissed. (AMIT B. BORKAR, J) (K. R. SHRIRAM, J.) Digitally signedRAJESHWARIby RAJESHWARISUBODHSUBODH KARVEKARVEDate: 2021.10.2918:47:01 +0530 2(2014) 362 ITR 403 (Bom) 3(2019) 111 Taxmann.com 253 (Bombay)