The Commissioner Of Income Tax-I v. The Sangli Bank Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1280 OF 2011 The Commissioner of Income Tax-I..Appellantversus The Sangli Bank Ltd. ..Respondent -------- Mr. Vimal Gupta, Sr. Adv with Mrs. Padma Divakar for the Appellant. Ms. Aarti Vissanji with S.P.Mehta for the Respondent.............. M.S.SANKLECHA, JJ. DATE : 24[th] January, 2013 P.C. : In this appeal by the revenue for the assessment year 1997-98, the following question of law has been proposed for our consideration. “ Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that the initiation of proceedings u/s 147 of the Income Tax Act, 1961, was invalid as the Assessing Officer did not allege in the reasons recorded as to how in the case of assessee had failed to furnish/disclose fully and truly all facts material to the computation of income.” 2 respondent-assessee filed its return of income declaring an income of Rs.6.38 crores. On 09.02.2000, the Assessing Officer passed an assessment order under Section 143(3) of the Act, assessing the respondent-assessee to an income of Rs.10.13 crores. 3Thereafter, on 31.01.2003 a notice under Section 148 of the Act was issued to the respondent-assessee seeking to reopen the assessment for the assessment year 1997-98. The reason for reopening the assessment was that respondent-assessee had claimed interest on non performing advances of Rs.1.23 crores as allowable deduction. The reasons recorded for reopening the assessment read as under : “The assessee has claimed interest on non-performing advances of Rs.1,23,17,000/- as allowable deduction. The assessment under section 143(3) has been made in which the above income chargeable to tax has been under assessed to the above extent. Under deeming provisions of clause (i)(c) of Explanation 2 of section 147 of the Income Tax Act, 1961, the interest income chargeabletotheextentof Rs.1,23,17,000/- has under assessed. I have reasons to believe that income of Rs.1,23,17,000/- chargeable to tax has escaped assessment for the assessment year 1997-98. I, therefore, satisfied that this is a fit case for issue of notice under section 148 in view of Explanation 2 to section 147. Issue notice under section 148.” 4The Tribunal in the impugned order records the fact that the assessment was reopened beyond the period of 4 years from the end of the relevant assessment year. The reasons for reopening do not allege that there was any failure on the part of the respondent-assessee to disclose fully and truly all material facts necessary for the assessment of its income for the assessment year 1997-98. Therefore, assumption of jurisdiction itself was improper. Further, the Tribunal records a finding of fact that the issue on which the assessment is sought to be reopened is the very issue on which specific query was raised by the Assessing Officer during the assessment proceedings and the respondent-assessee had filed a full reply alongwith evidence by its letter dated 24.12.1999 as to why the deduction is allowable. On consideration of the response given by the respondent-assessee, the Assessing Officer passing the order under Section 143(3) of the Act on 09.02.2000 had allowed deduction. Consequently, the reopening by the notice dated 31.01.2003 was only on account of a change of opinion and therefore without jurisdiction. 5We find no fault with the order of the Tribunal. The notice to reopen the assessment for the assessment year 1997-98 as correctly held by the Tribunal is without alleging failure to disclose fully and truly all material facts necessary for assessment. Further, the entire process of reopening was done by the revenue only on account of change of opinion as all facts were considered by the Assessing Officer while passing the assessment order on 09.02.2000. In the circumstances, we do not entertain the proposed question of law as formulated by the revenue. 6Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)