M/S. Indian Overseas Bank,763, Anna Salai,Chennai 600 002.Pan.aaaci 1223J v. The Asst. Commissioner Of Income Tax,Large Taxpayer Unit-2,Chennai 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVANAND THE HONOURABLE MR. JUSTICE J. SATHYA NARAYANA PRASAD T.C.A.No. 61 of 2022 M/s. Indian Overseas Bank,763, Anna Salai,Chennai 600 002.PAN.AAACI 1223J .. Appellant/Appellant Versus The Asst. Commissioner of Income Tax,Large Taxpayer Unit-2,Chennai 600 034 .. Respondent/RespondentTax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, “A” Bench, Chennai, dated 30.09.2021 inITA.No.660/Chny/2019. TCA.No. 61 Of 2022 Against the order of the The Commissioner of Income Tax(Appeals) 17 Chennai-34, dated 31/01/2019 Made inITA.No.202/2017-18 against the order of the The DeputyCommissioner of Income Tax, Large Taxpayer Unit-2,Chennai 600 101, dated 28/03/2013 made in GI/PA.No. AAACI 1223 Jfor the Assessment Year 2011-2012. For Appellant : Mr. Subbaraya Aiyar PadmanabhanFor Respondent : Mr. T. Ravikumar, Senior Standing Counsel J U D G M E N T (Judgment of the court was made by R. MAHADEVAN, J.) This is an assessee's appeal assailing the order of theIncome Tax Appellate Tribunal dated 30.09.2021 in ITANo.660/Chny/2019 relating to the assessment year 2011-12. https://hcservices.ecourts.gov.in/hcservices/ 2.The relevant facts leading to the filing of this appealwould run thus: 2.1. The appellant / assessee is a Nationalised Bankcarrying on the business of banking. For the assessment year2011-12, they filed its return declaring income of Rs.550.19crores, on 29.09.2011. After scrutiny of the same, theassessment was completed under section 143(3) of the Income-taxAct, 1961 (in short, 'the Act') on 28.08.2013 determining thetotal income of Rs..2117.12 crores. Subsequently, the assessmentwas reopened under section 147 of the Act and notice undersection 148 dated 30.03.2016 came to be issued, to which, theappellant filed its return on 20.04.2016 declaring the sameincome as was admitted in its original return filed on29.09.2011 and also requested the assessing officer to furnishthe reasons recorded for reopening the assessment. The assessingofficer, vide communication dated 16.07.2016, stated that “theappellant had reserved Rs.209.81 crores under Agricultural DebtWaiver and Debt Relief Scheme, 2008 (in short, 'the Scheme') asthird instalment during the year; and the provision of debt wasalready allowed as bad debt; and hence, the same is required tobe brought to tax”. Upon receipt of the same, the appellantfiled its objection on 25.07.2016 to the reopening of theassessment. 2.2. However, the Assessing Officer, by order dated28.11.2016, rejected the said objections. Thereafter,reassessment order dated 29.12.2017 came to be passed undersection 143(3) r/w sec.147 of the Act, determining the totalincome at Rs.1750,79,83,070/-, including Rs.209,61,00,000/-towards loan amount repaid by the Government under the Scheme,besides levied penalty under section 271(1)(c). 2.3. Aggrieved by the said reassessment order passed by theassessing officer, the appellant / assessee preferred an appealbefore the Commissioner of Income Tax (Appeals), who, vide orderdated 31.01.2019 upheld the reopening of assessment afterfollowing the order of the Tribunal in ITA.Nos.2124, 2125 and2126/Mds/2013 relating to the Assessment Years 2006-07, 2007-08and 2010-11 and partly allowed the appeal by directing theassessing officer to verify the claim of the appellant and passfresh orders. 2.4. Challenging the said order of the CIT (Appeals), theappellant went on further appeal before the Income Tax AppellateTribunal. The Tribunal also, by order dated 30.09.2021, partlyallowed the appeal and directed the assessing officer to re-examine the issue afresh in accordance with law. 2.5. Therefore, the appellant / assessee is before this https://hcservices.ecourts.gov.in/hcservices/ court with this tax case appeal. 2.4. Challenging the said order of the CIT (Appeals), theappellant went on further appeal before the Income Tax AppellateTribunal. The Tribunal also, by order dated 30.09.2021, partlyallowed the appeal and directed the assessing officer to re-examine the issue afresh in accordance with law. 2.5. Therefore, the appellant / assessee is before this https://hcservices.ecourts.gov.in/hcservices/ court with this tax case appeal. 3.The following substantial questions of law are formulatedin this tax case appeal: “1.Whether on the facts and circumstances ofthe case, the Tribunal was right in law in holdingthat reopening of assessment is valid in theabsence of any new tangible material that had cometo the knowledge of the assessing officer afterthe completion of scrutiny assessment u/s.143(3)of the Act? 2.Whether the order of the Tribunal isperverse in holding that there is escapement ofincome with regard to the amount which is alreadyclaimed as bad debt by the assessee and again theassessee has received the same amount under debtwaiver and debt relief scheme? 3.Whether the order of the Tribunal isperverse in not appreciating that there is noescapement of income since the amount reimbursedby the Government to the extent it pertained tointerest was already credited to P & L account andoffered to tax and in respect of the principalamount, the same was only a repayment of loanwhich was paid by Government of India instead offarmer and hence the same can never be treated asincome of the bank? 4.Whether the Tribunal was right in law insetting aside the assessment to the file of theAssessing Officer to verify whether any of theloans have been allowed as a provision made u/s.36(1)(viia)? 5.Whether the Tribunal erred in notappreciating the fact that the provisions madeu/s.36(1)(viia) is an overall provisions and not aprovision against any specific loan and will notreduce the outstanding of any specific loan.Hence the recovery of any loan will not result inany income in the nature of recovery of a specificdebt written off? 6.Whether the Tribunal erred in notappreciating that only when a loan written offu/s.36(1)(vii) as per Explanation and Section 36(1)(vii) read with Explanation 5 to Section 36(1), the same should be set off against the provisionsmade u/s.36(1)(viia) and not when an outstandingloan is recovered?” 5.Whether the Tribunal erred in notappreciating the fact that the provisions madeu/s.36(1)(viia) is an overall provisions and not aprovision against any specific loan and will notreduce the outstanding of any specific loan.Hence the recovery of any loan will not result inany income in the nature of recovery of a specificdebt written off? 6.Whether the Tribunal erred in notappreciating that only when a loan written offu/s.36(1)(vii) as per Explanation and Section 36(1)(vii) read with Explanation 5 to Section 36(1), the same should be set off against the provisionsmade u/s.36(1)(viia) and not when an outstandingloan is recovered?” 4.According to the learned counsel for the appellant, thereis no escapement of income, since the amount reimbursed by theGovernment to the extent it pertained to interest, was alreadycredited to P& L account and offered to tax; and in respect ofthe principal amount, the same was only the repayment of loan,which was paid by the Government, instead of farmer andtherefore, the same can never be treated as income of the bank;hence, there was no new tangible material based on which theassessment was reopened by the assessing officer. However,without considering the said aspect in proper perspective, boththe CIT(A) and the Tribunal erroneously upheld the reopening ofthe assessment by the assessing officer. In support of the saidsubmission, he placed reliance on the decisions of Full Bench ofDelhi High Court in the case of CIT v. Kelvinator of IndiaLimited [256 ITR 1], which was affirmed by the Hon'ble Supremecourt in the decision reported in 320 ITR 561; and this court inthe case of TANMAC India v. DCIT [(2016) 97 CCH 0189]. Further,the learned counsel, placing reliance on the decision of theHon'ble Supreme Court in Catholic Syrian Bank Ltd v. CIT [343ITR 270], wherein it was held that “only agricultural debtswritten off should be first adjusted against the provisions madeand allowed under section 36(1)(viia)”, submitted that theTribunal erred in setting aside the issue of taxing thereimbursement by the Government loan due from agriculturist tothe file of the Assessing officer to verify whether any part ofthe loan was allowed as a provision made under section 36(1)(viia). It is also submitted by the learned counsel that theappellant has already preferred an appeal in TC(A) No.178 of2020 against the order relied on by the Tribunal in respect ofthe assessee's own case in ITA No.1879/Chny/2017 dated06.06.2019 for the assessment year 2008-09 and hence, the saidorder has not become final. With these submissions, the learnedcounsel prayed for allowing this appeal by setting aside theorder of the Tribunal. 5.Mr.T.Ravikumar, learned senior standing counsel takingnotice for the respondent submitted that after carefulexamination of the facts and circumstances of the case, in thelight of the material evidence placed before it, the Tribunalhas rightly held the reopening the assessment as valid, butremanded the matter to the file of the Assessing Officer forconsideration of the issue afresh and hence, the same does notrequire any interference by this court. 6.Heard both sides and perused the materials placed beforethis court. 7.The facts stated above are not in dispute. The issuesraised before the Tribunal were (i)whether reopening theassessment is valid or not; and (ii)whether the amount receivedunder Agricultural Debt Relief and Debt Waiver Scheme is taxableor not. The Tribunal recorded the following findings: IssueNo.1: 6.Heard both sides and perused the materials placed beforethis court. 7.The facts stated above are not in dispute. The issuesraised before the Tribunal were (i)whether reopening theassessment is valid or not; and (ii)whether the amount receivedunder Agricultural Debt Relief and Debt Waiver Scheme is taxableor not. The Tribunal recorded the following findings: IssueNo.1: “6.We find from the above reasons that thefinding given by the AO is that the assessee hasalready claimed as a provision for debt and same isallowed. Subsequently, the assessee has received anamount of Rs.209.61 crores under Agricultural DebtWaiver and Debt Relief Scheme, 2008. It is very clearthat the amount, which is already claimed as a baddebt by the assessee and again assessee has receivedthe same amount under debt waiver and debt reliefscheme. According to the AO, there is an escapement ofincome. Accordingly, the AO has issued a notice u/s.148 of the Act and completed assessable u/s. 143(3)r/w s.147 of the Act on 29.12.2017. 7.In view of the above, we are of the opinionthat the AO has correctly recorded the reasons andreopened the assessment and completed the assessmentu/s. 147 of the Act thus, the reopening is valid.” Issue No.2: “9.The ld. counsel or the assessee has submittedthat the similar issue already came up before theHon'ble ITAT “C” Bench, Chennai for assessment years2008-09, 2009-10 & 2012-13 in ITA Nos.1879, 1880 &1881/Chny/2017 vide order dated 06.06.2019 directedthe AO to re-examine the issue afresh in accordancewith law. ... 10.We therefore respectfully following the orderpassed by the Tribunal in the assessee's own case, wedirect the AO to re-examine the issue afresh inaccordance with law.” 8.Though the appellant challenged the aforesaid order ofthe Tribunal in respect of both the issues, by raising variousgrounds and also placing reliance on case laws, we are of theview that the Income-tax Act is a self-contained Act and thiscourt under section 260A of the Act in its appellatejurisdiction, is not the proper forum for deciding such mixedquestions. Therefore, we remand the matter to the AssessingOfficer as done by the Tribunal, however, with a direction toconsider all the issues raised by the appellant, without beinginfluenced by any of the observations made by the Tribunal, and pass orders afresh, after providing reasonable opportunity tothe appellant. Such an exercise shall be completed within aperiod of three months from the date of receipt of a copy ofthis judgment. 9.Accordingly, this tax case appeal stands disposed of. Nocosts. Sd/-Assistant Registrar(CCC) //True Copy// Sub Assistant Registrar msrTo1. The Income Tax Appellate Tribunal 'A' Bench, Chennai. 2. The Asst. Commissioner of Income Tax, Large Taxpayer Unit-2, Chennai 600 034. 3. The Commissioner of Income Tax (Appeals) 17 Chennai. 4. The Deputy Commissioner of Income Tax, Large Taxpayer Unit-2, Chennai 600 101. +1cc to Mr. T. Ravikumar, Advocate, S.R.No.11167+1cc to Mr. Subbaraya Aiyar Padmanabhan, Advocate, S.R.No.11834 T.C.A.No. 61 of 2022 NMI(CO)CT 16/03/2022