DCIT Corporate Circle 1, Coimbatore V. Chiranjeevi Wind Energy Limited, Coimbatore

ITA 1879/CHNY/2018

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the decision of the CIT(A) which quashed the reassessment proceedings against M/s. Chiranjeevi Wind Energy Ltd. for the Assessment Year 2011-12. The reassessment was initiated by the Assessing Officer (AO) based on the observation that the assessee had claimed a sum of Rs.420.88 Lacs as bad debts for an advance towards the purchase of land, which was considered capital expenditure and wrongly allowed as revenue expenditure. The CIT(A) found that the AO had previously considered this issue during the original assessment and had made a conscious decision, thus the reopening of the assessment constituted merely a change of opinion and was impermissible under the law as per the Supreme Court's decision in CIT vs. Kelvinator of India Ltd.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134239 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-06-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2018
• Other Referred Cases: Kalyanji Mavji & Co. vs. CIT(SC) 102 ITR 287, Som Dutt Builders (P) Ltd., Vs. DCIT 98 ITD 78, Malabar Industrial CO. Ltd.,vs CIT 243 ITR 83 (SC), PVS Beedis P Ltd vs. CIT 237 ITR 13(SC), CIT vs. Kelvinator of India Ltd. 320 ITR 561
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Difference of opinion; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 148; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण “बी” ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय ी महावीर िसंह, उपा ! एवं माननीय ी मनोज कुमार अ&वाल ,लेखा सद) के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.1879/Chn y/2018 (िनधा*रण वष* / As sessment Year: 2011-12) DCIT Corporate Circle-1, Coimbatore. बनाम / V s. M/s. Chiranjeevi Wind Energy Ltd. 45/3A, Arts College Road, Opp. to Bala Lodge, Coimbatore-641 018. थायीलेखासं./जीआइआरसं./PAN/GIR No. A AAC C -8 761- H (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओर से/ Appellant by : Shri R. Vijayaraghavan (Advocate)-Ld.AR थ की ओर से/Respondent by : Shri D. Hema Bhupal (JCIT)- Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 21-06-2023 घोषणाकीतारीख /Date of Pronouncement : 27-06-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Coimbatore [CIT(A)] dated 01-03-2018 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143 r.w.s. 147 of the Act on 16-12-2016. The grounds taken by the Revenue read as under: - “1. The order of the Id. CIT(A), Coimbatore is against the facts and circumstances of the case and is erroneous by law. 2 ITA No.1879/Chny/2018 2. The learned CIT(A) ought to have appreciated that reassessment is permissible even if the information was obtained after proper investigation from the material on record or from any enquiry or research into facts or law - information need not be from an external source as held by the Hon'ble Supreme Court in the case of Kalyanji Mavji & Co. vs. CIT(SC) 102 ITR 287. 3. The learned CIT(A) ought to have appreciated that change of opinion comes to the rescue of the assessee only when the Assessing Officer has taken one of the permissible views at the time of the original proceedings. A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law as held by the Hon'ble ITAT, Kolkata in the case of Som Dutt Builders (P) Ltd., Vs. DCIT reported in 98 ITD 78, on the basis of the views of the Hon'ble Supreme Court in the case of Malabar Industrial CO. Ltd.,vs CIT cited in 243 ITR 83 (SC). 4. In the case of PVS Beedis P Ltd vs. CIT reported in 237 ITR 13(SC), the Hon'ble Supreme court had held that change of opinion is valid in cases where the assessment is reopened by mere change of opinion. 5. Whenever, there is escapement of income by way of under assessment, assessment of tax at lesser rate, assessment based on wrong claim, excessive deduction allowed, the provisions of section 147 has to be invoked.” As is evident, the revenue is aggrieved by quashing of reassessment proceedings in the impugned order. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. The assessee being resident corporate assessee is stated to be engaged in assembling and sale of windmills. An assessment was framed u/s 143(3) on 31.03.2014. However, the case was reopened within 4 years and notice u/s 148 was issued on 29.03.2016. The same stem from the observation of Ld. AO that the assessee paid sum of Rs.420.88 Lacs to M/s Sucheta Consultancy Private Ltd. as advance towards purchase of land. This amount was claimed as bad-debts. Since it was capital expenditure and wrongly allowed as revenue expenditure, the case was reopened. The assessee opposed reopening on the ground that AO had already verified the claim and reopening was without any tangible and new material. The reopening tantamount to review of 3 ITA No.1879/Chny/2018 existing available material and on mere change of opinion. The Ld. AO rejected the same on the ground that the said claim was not expressely allowed and the issue was not discussed in the assessment order. Only part of the claim was discussed and disallowed which was upheld by first appellate authority. As per Explanation 2(c)(iii) to Sec.147, it would be case of deemed escapement where an assessment was made and income was subject to excessive relief under the act. Accordingly, assessee’s objection was rejected and write-off of Rs.420.88 Lacs was held to be not allowable as bad debts. 3. The Ld. CIT(A) noted that the assessee debited bad debts for Rs.641.77 Lacs under the head Administration and Selling expenses. During the course of original assessment proceedings, the assessee had given a note regarding advances written off, separately for purchase of land and advance for import of machinery. The AO after analyzing the material has assessed part of the bad debts written off as not an admissible loss being capital in nature. The AO had picked up a single entry of Profit & Loss Account for Rs.641.77 Lacs and assessed a portion amounting to Rs.204.26 Lacs which clearly establishes that AO had considered the matter, applied his mind and took a conscious decision to assess it. In assessment, generally an AO proceeds on the assumption that the accounts are correct and only discusses issue of expenditure not allowed. Hence, it would be incorrect to conclude that the issued was not considered by AO while completing the original assessment. It could thus be concluded that the action of AO was nothing but mere change of opinion and there was no tangible material to come to the conclusion that there was escapement of income. The 4 ITA No.1879/Chny/2018 ratio of decision of Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (320 ITR 561) would apply and it was to be held that action of AO was nothing but a change of opinion and reappraisal of the already available facts. Therefore, the assessment was held to be invalid and finally cancelled. Aggrieved, the revenue is in further appeal before us. 4. From the fact, it emerges that the assessee has debited bad debts written off for Rs.641.77 Lacs in the Profit & Loss Account. The details of the same were called for by Ld. AO during the course of original assessment proceedings. The assessee had supplied the requisite details. After considering the assessee’s reply, Ld. AO disallowed bad debts to the extent of Rs.204.26 Lacs and chose not to make any further addition on this account. There is no further discussion whatsoever in the assessment order, in this regard. However, when the complete details were asked for and the same were duly furnished by the assessee and Ld. AO chose to disallow a part of the same, it could rightly be concluded that the issue was duly considered by AO with due application of mind and a conscious decision was taken in the matter. To reopen the already concluded assessment on the same very issue would be nothing but review of the order and on mere change of opinion which is impermissible as per the decision of Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. (320 ITR 561). Therefore, impugned order could not be faulted with and we concur with the same. 5 ITA No.1879/Chny/2018 5. The appeal stands dismissed. Order pronounced on 27 th June, 2023 Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा45 / VICE PRESIDENT लेखा सद7 / ACCOUNTANT MEMBER चे9ई Chennai; िदनांक Dated :27-06-2023 DS आदेशकीAितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयुA/CIT 4. िवभागीय ितिनिध/DR 5. गाडFफाईल/GF