DCIT CIR 3(1), MUMBAI V. ICICI BANK LTD, MUMBAI

ITA 5191/MUM/2009

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9589 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 18-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 10-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C CHHOTARAY LD
• Assessee Lawyers: AARTI VISSANJI LD
• Keywords: Business income; Depreciation; Audit objection; Maximum Marginal Rate; Rule of consistency; Tangible material; Bad and doubtful debts; Difference of opinion; Corroborative evidences; Assessment record; Non passing of speaking order; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings; TDS; Set aside
• Section: 271(1)(c); 43B; 143(3); 142(1); 14A; 40(a)(ia); 143(1); 148; 154; 139

Judgement Text

1 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5191/MUM/2009 ( / ASSESSMENT YEAR: 2004-05) D CIT - CIRCLE 3(1) ROOM NO.607, 6 TH FLOOR AAYKAR BHAVAN MUMBAI-400 020. / VS. ICICI BANK L IMITED ICICI BANK TOWERS BANDRA-KURLA COMPLEX MUMBAI-400 051. ! ./ ./PAN/GIR NO. AAACI-1195-H ( / APPELLANT ) : ( / RESPONDENT ) & C.O. NO.127/MUM/2010 [ARISING OUT OF I.T.A. NO.5191/MUM/2009] ( / ASSESSMENT YEAR: 2004-05) ICICI BANK L IMITED ICICI BANK TOWERS BANDRA-KURLA COMPLEX MUMBAI-400 051. / VS. D CIT - CIRCLE 3(1) ROOM NO.607, 6 TH FLOOR AAYKAR BHAVAN MUMBAI-400 020. ! ./ ./PAN/GIR NO. AAACI 1195 H ( /CROSS OBJECTOR) : ( / RESPONDENT ) ASSESSEE BY : MS. AARTI VISSANJI-LD. AR DEPARTMENT BY : SHRI P.C. CHHOTARAY -LD.DR / DATE OF HEARING : 08/05/2019 / DATE OF PRONOUNCEMENT : 03/07/2019 2 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2004-05 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-XXVII, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-XXVII/DCIT/-3(1)/IT-3/09-10 DATED 30/06/2009 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING 100% DEDUCTION AMOUNTING TO RS.11 ,07,20,000/- (RS.49,27,20,000/- AS CLAIMED BY THE ASSESSEE - RS. 38,20,00,000/- AS ALLOWED BY THE AO IN THE RE-ASSESSMENT PROCEEDINGS) IN CONT RAVENTION OF THE PROVISION OF SECTION 35DDA OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 492,25,70,772 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 45,92,32,087/ - MADE BY THE AO IN RESPECT OF EXEMPTION U/S 10(23G) OF THE L.T.ACT. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS N OT ELIGIBLE TO EXEMPTION U/S. 10(23G) AS IT IS NOT AN INFRASTRUCTURE CAPITAL COMP ANY AS DEFINED IN EXPLANATION 1 TO SECTION 10(23G) OF THE IT. ACT, 1961. 5. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE ASSESSEE, UPON RECEIPT OF NOTICE OF HEARING, HA S FILED CROSS OBJECTIONS AGAINST THE SAME. THE MEMORANDUM OF CROSS-OBJECTION S READ AS UNDER: - [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXVII, MUMBA I [CIT(A)] ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON THE GROUND THAT THE ASSESSING OFF ICER HAD REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSES SMENT. [2] THE CIT(A) FAILED TO APPRECIATE THAT THE CLAIM OF DEDUCTION OF BAD DEBTS UNDER SECTION 36(1)(VII), EXEMPTION UNDER SECTION 10(23G) , DEDUCTION UNDER SECTION 35DDA HAD BEEN CONSIDERED IN THE ASSESSMENT ORDER P ASSED UNDER SECTION 143(3) DATED DECEMBER 29, 2006 AND SECTION 147 OF T HE ACT DOES NOT POSTULATE 3 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 CONFERMENT OF POWER UPON THE ASSESSING OFFICER TO I NITIATE REASSESSMENT PROCEEDINGS UPON A MERE CHANGE OF OPINION AS HAS BE EN HELD BY THE DELHI HIGH COURT (FB) IN THE CASE OF CIT V. KELVINATOR OF INDI A (256 ITR 1) AND AFFIRMED BY THE SUPREME COURT IN 320 ITR 561. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN THE BUSINESS OF BANKING AND FINANCE WAS SUBJECTED TO RE-ASSESSMENT PROCEEDINGS U/S. 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 FOR THE IMPUGNED AY VID E ORDER DATED 25/02/2009 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.1908.20 CRORES UNDER NORMAL PROVISIONS AFTER CER TAIN ADDITIONS / DISALLOWANCES AS AGAINST INCOME OF RS.1396.45 CRORE S DETERMINED IN SCRUTINY / REGULAR ASSESSMENT U/S 143(3) VIDE ORDER DATED 29/12/2006. 2.2 THE CASE OF THE ASSESSEE FOR IMPUGNED AY WAS RE OPENED U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 26/06/2008 WHICH IS W ITHIN 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN OF INCOME ON 07/08/2008 AND DEMANDED C OPY OF REASONS FOR REOPENING THE ASSESSMENT WHICH WERE SUPPLIED ALONG WITH STATUTORY NOTICES U/S 143(2) AND 142(1) CALLING FOR REQUISITE INFORMA TION / EVIDENCES. THE ASSESSEE, INTER-ALIA, SUBMITTED THAT THE REOPENING WAS ON MERE CHANGE OF OPINION AND THEREFORE, NOT VALID IN LAW. HOWEVER, T HE SAID PLEA COULD NOT FIND FAVOR WITH LD. AO. THE ASSESSEE, VIDE ITS SUBMISSIO NS DATED 22/12/2008, CONTESTED EACH AND EVERY ISSUE FOR WHICH THE REASSE SSMENT PROCEEDINGS WERE TRIGGERED AGAINST THE ASSESSEE, THE COPY OF WH ICH HAS BEEN PLACED ON RECORD. 4 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 2.3 THE FOLLOWING QUANTUM ADDITIONS AS MADE IN THE REASSESSMENT PROCEEDINGS ARE THE SUBJECT MATTER OF PRESENT DISPU TE BEFORE US: - NO. NATURE OF ADDITION AMOUNT (RS.) 1. DEDUCTION U/S 35DDA 11.07 CRORES 2. DEDUCTION OF BAD DEBTS U/S 36(1)(VII) 492.26 CRO RES 3. EXEMPTION U/S 10(23G) 45.92 CRORES THE BRIEF FACTS OF EACH OF THE IMPUGNED ADDITIONS A RE AS FOLLOWS: - 2.3.1 DEDUCTION U/S 35DDA IT TRANSPIRED THAT THE ASSESSEE FLOATED AN EARLY RETIREMENT OPTION SCHEME 2003 [HEREINAFTER REFERRED TO AS ERO SCHEME] DURING THE MONTH OF JULY, 2003 FOR ALL EMPLOYEES WHO COMPLETED 40 YEARS OF AGE AND 7 YEARS WITH THE ASSESSEE BANK. IN ACCORDANCE WITH THE TERM S OF SCHEME AS APPROVED BY RBI, THE PAYMENT UNDER ERO SCHEME AGGRE GATED TO RS.191 CRORES, THE BREAK-UP OF WHICH WAS AS FOLLOWS: - NO . NA TURE OF PAYME NT TOTAL (RS.) 1. ERO: CASH COMPONENT 150,55,00,000 2. ERO: ANNUITY 15,45,00,000 3. SL ENCASHMENT 8,18,00,000 4. PROPORTIONATE LTA 62,00,000 5. OTHERS 2,36,00,000 TOTAL (A) 177 , 16 , 00 , 0 0 0 6. LEAVE ENCASHMENT 1,75,00,000 7. GRATUITY 2,52,00,000 8. PENSION 9,57,00,000 TOTAL ( B ) 13,84,00,000 T OTAL (A) + (B) 191,00,00,000 THE ASSESSEE, IN ITS BOOKS OF ACCOUNTS, AMORTIZED T HE SAID AMOUNT OF RS.191 CRORES OVER A PERIOD OF 5 YEARS STARTING FRO M AUGUST 1, 2003. ACCORDINGLY, THE PROPORTIONATE AMOUNT OF 8 MONTHS P ERIOD ENDING ON 5 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 31/03/2004 AMOUNTING TO RS.25.60 CRORES WAS CHARGED IN THE PROFIT & LOSS ACCOUNT. HOWEVER, IN THE COMPUTATION OF INCOME, THE ASSESSEE CLAIMED DEDUCTION OF RS.49,27,20,000/- AS ALLOWABLE DEDUCTI ON U/S 35DDA WHICH WAS COMPUTED AS 20% OF TOTAL (A) AS TABULATED ABOVE PLUS FULL AMOUNT OF RS.13.84 CRORES AS TABULATED ABOVE AS TOTAL (B). IN OTHER WORDS, THE AMOUNT PAID ON ACCOUNT OF LEAVE ENCASHMENT, GRATUIT Y AND PENSION WAS CLAIMED IN FULL DURING IMPUGNED AY ONLY. THE REASON ING GIVEN TO CLAIM THE AFORESAID AMOUNT IN FULL WAS THE FACT THAT THE PAYM ENTS ON ACCOUNT OF LEAVE ENCASHMENT, GRATUITY AND PENSION WERE NOT PAYMENTS IN CONNECTION WITH ERO SCHEME AS ANY EMPLOYEE WHO RESIGNS / RETIRES EV EN IN ORDINARY COURSE WOULD BE ENTITLED FOR THE SAME AND THEREFORE , FULL DEDUCTION OF THE SAME WAS ALLOWABLE IN THE YEAR OF PAYMENT. THESE PA YMENTS WERE STATED TO BE STATUTORY BENEFITS AVAILABLE TO EACH AND EVER Y EMPLOYEE ON TERMINATION OF EMPLOYMENT WHETHER ON RESIGNATION OR RETIREMENT. HOWEVER, REJECTING THE ASSESSEES PLEA AND TREATING THE ENTI RE PAYMENT AS PART OF ERO SCHEME ITSELF, LD. AO OPINED THAT ONLY 1/5 TH OF THE ENTIRE PAYMENT WOULD BE ALLOWABLE TO ASSESSEE AS DEDUCTION DURING IMPUGNED AY AS PER THE PROVISIONS OF SECTION 35DDA. ACCORDINGLY, AN AM OUNT OF RS.11.07 CRORES WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 2.3.2 DEDUCTION OF BAD DEBTS U/S 36 (1)(VII) IT TRANSPIRED THAT THAT ASSESSEE CLAIMED DEDUCTION OF BAD DEBTS AGGREGATING TO RS.1649.92 CRORES DURING THE YEAR. THE SAID FIGU RE WAS ARRIVED AT AFTER REDUCING THE CREDIT BALANCE IN PROVISION FOR BAD AN D DOUBTFUL DEBTS ACCOUNT MADE U/S 36(1)(VIIA) OF THE ACT AND THE WRITE-OFF O F THE SPECIFIC PROVISIONS FOR 6 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 THE YEARS 1993-94 AND 1994-05 SINCE THE PROVISIONS WERE ALLOWED IN THOSE YEARS. THE ASSESSEE SUBMITTED THAT PARTWISE LIST OF DEBTORS WAS ALREADY PROVIDED TO LD. AO DURING REGULAR ASSESSMENT PROCEE DINGS U/S 143(3) AND THE LD. AO, AFTER DUE EXAMINATION, DISALLOWED AN AM OUNT OF RS.1157.66 CRORES AND ALLOWED THE BALANCE AMOUNT OF RS.492.26 CRORES. IT WAS SUBMITTED THAT REQUISITE DETAILS / INFORMATION / EV IDENCES, IN THIS REGARD, WAS ALREADY SUPPLIED BY THE ASSESSEE DURING REGULAR ASS ESSMENT PROCEEDINGS U/S 143(3). HOWEVER, IN THE ABSENCE OF ANY FURTHER INFORMATION FORTHCOMING FROM THE ASSESSEE WITH RESPECT TO BALANCE CLAIM OF RS.492.26 CRORES, LD. AO FORMED AN OPINION THAT THE ASSESSEE FAILED TO PR OVE THAT THE BAD DEBTS HAVE BEEN WRITTEN-OFF IN THE BOOKS OF ACCOUNTS WHIC H WAS THE BASIC REQUIREMENT OF SECTION 36(1)(VII). IN FACT, THE NON - FURNISHING OF REQUISITE INFORMATION / DETAILS BY THE ASSESSEE DURING ORIGIN AL ASSESSMENT PROCEEDINGS WAS ONE OF REASON WHICH LED TO REOPENIN G OF ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. RESULTANTLY, THE AMOUNT OF RS.492.26 CRORES WAS DISALLOWED AND ADDED TO THE INCOME OF TH E ASSESSEE. 2.3.3 EXEMPTION U/S 10(23G) IT WAS NOTED THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.110.62 CRORES U/S 10(23G) ON NET BASIS AFTER DISALLOWING INTEREST EXP ENSES RELATING TO INFRASTRUCTURE BONDS IN VIEW OF INSERTION OF SECTIO N 14A OF THE INCOME TAX ACT. IN ASSESSMENT ORDER U/S 143(3), THE NET INCOME QUALIFYING FOR DEDUCTION U/S 10(23G) WAS ARRIVED AT RS.45.92 CRORES BY APPLY ING THE GROSS PROFIT RATE OF 13.69% TO THE GROSS INCOME RECEIVED AMOUNTI NG TO RS.335.45 CRORES. HOWEVER, THE SAID EXEMPTION WAS NOT, AT ALL , IN THE OPINION OF LD. 7 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 AO, WAS AVAILABLE TO THE ASSESSEE IN VIEW OF THE FA CT THAT THE ASSESSEE WAS NEITHER AN INFRASTRUCTURE COMPANY NOR INFRASTRUCTUR E CAPITAL FUND ESTABLISHED FOR MOBILIZING RESOURCES FOR FINANCING INFRASTRUCTU RE WITHIN THE MEANING OF FINANCE (NO.2) BILL, 1996 AND CBDT CIRCULAR NO.762 DATED 18/02/1998. ALTHOUGH THE ASSESSEE DEFENDED ITS STAND IN SUPPORT OF EXEMPTION, HOWEVER, THE SAME COULD NOT FIND FAVOR WITH LD. AO. RESULTANTLY, THE AFORESAID EXEMPTION OF RS.45.92 CRORES WAS DENIED T O THE ASSESSEE. 2.4 APART FROM ABOVE ADDITIONS, THE ASSESSEE HAS BE EN SADDLED WITH DISALLOWANCE U/S 43B ON ACCOUNT OF UNPAID BONUS FOR RS.1.97 CRORES SINCE THE DEDUCTION OF THE SAME WAS ALLOWED TO THE ASSESS EE IN SUBSEQUENT AY 2005-06 ON PAYMENT BASIS. HOWEVER, THE SAID ADJUSTM ENT IS NOT UNDER CHALLENGE BEFORE US. THE SAME WOULD BE RELEVANT FRO M THE POINT OF VIEW OF TESTING THE VALIDITY OF REASSESSMENT PROCEEDINGS AS DISCUSSED BY US IN THE LATER PART OF THIS ORDER. INCORPORATING THE ABOVE ADDITIONS, THE ASSESSMENT W AS FRAMED U/S 143(3) R.W.S. 147 ON 25/02/2009 WHICH WAS SUBJECTED TO CHA LLENGE BEFORE LD. CIT(A). 2.5 AN OFFICE NOTE HAS BEEN APPENDED BY LD. AO WITH ASSESSMENT ORDER U/S 143(3) R.W.S. 147 DATED 25/02/2009 WHEREIN IT H AS BEEN STATED THAT THE FIGURES OF BAD DEBTS U/S 36(1)(VII) FOR RS.1649.92 CRORES HAS BEEN ARRIVED AT AFTER REDUCING THE CREDIT BALANCE IN PROVISION FOR BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.31.05 CRORES. THE PROVISION U/S 36( 1)(VIIA) FOR THIS YEAR HAS BEEN COMPUTED TO BE RS.129.12 CRORES WHICH IS N OT TO BE ADJUSTED FROM THE BAD DEBTS OF THIS YEAR IN VIEW OF CBDT CIR CULAR NO.17/2008 DATED 8 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 26/11/2008. IT HAS FURTHER BEEN SUBMITTED THAT DEDU CTION U/S 36(1)(VIIA) WOULD BE DEPENDENT UPON TOTAL INCOME OF THE ASSESSE E AND IF THE TOTAL INCOME UNDERGOES CHANGE DUE TO ANY SUBSEQUENT ORDER S, THE COMPUTATION WOULD BE SUBJECT TO CHANGE. THE LD. AO CONCURS WITH THE DEDUCTION OF RS.31.05 CRORES AS CLAIMED BY THE ASSESSEE SINCE IT IS AS PER REGULAR ASSESSMENT ORDER U/S 143(3) DATED 29/12/2006. PROCEEDINGS BEFORE LD. FIRST APPELLATE AUTHORITY 3.1 BEFORE LD. CIT(A), THE ASSESSEE RAISED LEGAL GR OUNDS BY SUBMITTING THAT REOPENING WAS INITIATED ON MERE CHANGE OF OPIN ION BY A SUCCEEDING OFFICER ON ACCOUNT OF REVENUE AUDIT OBJECTION ON IS SUES WHICH WERE ALREADY CONSIDERED IN-DEPTH IN REGULAR ASSESSMENT U/S 143(3 ) AND THEREFORE, THE REASSESSMENT WAS NOT VALID IN LAW. RELIANCE WAS PLA CED ON CERTAIN JUDICIAL DECISIONS TO FORTIFY THE SAID PROPOSITION. HOWEVER, THE SAID SUBMISSIONS COULD NOT CONVINCE LD. FIRST APPELLATE AUTHORITY WH O DISMISSED ASSESSEES PLEA BY OBSERVING AS UNDER: - 2.9 I HAVE CONSIDERED THE FACTS OF THE CASE AND I HAVE ALSO GONE THROUGH THE SUBMISSIONS AND CASE LAWS RELIED UPON BY THE APPELL ANT. ON REASONABLE CONSIDERATION, I HAVE NOTED THAT AS REGARDS BAD DEBTS OF RS.1,649.92 CRORES THE SAID ISSUE HAS BEEN DISCUSSED AT LENGTH IN THE ASSESSMENT ORDER WHEREIN THE AO HAS DISALLOWED BAD DEBTS TO THE EXTENT OF RS.1,157.66 CRORES. HOWEVER, THE A O HAS NOT DISCUSSED THE BAD DEBTS OF RS.492.25 CRORES. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE AO HAS EXAMINED BAD DEBTS TO THE EXTENT OF RS.492.25 CRORES AND HAD ALLOWED THE SAME BY APPLYING HIS MIND. WHEN THE ISSUE OF BAD DEBTS IS SUPPOSED TO BE CONSIDERED AND EXAMINED IN ENTIRETY, HE HAS OMITTED TO CONSIDER THE BALANCE BA D DEBTS CLAIM OF RS.492.25 CRORES. UNDER THIS FACTS AND CIRCUMSTANCES, THE AO HAD REAS ON TO BELIEVE THAT THE INCOME OF THE APPELLANT HAS BEEN UNDER ASSESSED. AS REGARDS THE ISSUE OF CLAIM U/S.10(23G), THE AO HIMSELF HAS NOTED IN THE ORIGINAL ASSESSMENT ORDER THAT THERE WAS NO DISPUTE ABOUT THE ROLE PLAYED BY THE APPELLANT IN THE ECONOMIC DEVELO PMENT AND THE INTENTION OF INTRODUCING PROVISIONS OF SECTION 10(23G). FURTHER THE AO HAS ALSO NOTED THAT THE PROVISION OF SECTION 10(23G) IS APPLICABLE TO ALL A SSESSEES IN THE COUNTRY AND NOT THE APPELLANT ALONE. THUS, THE ACTION OF THE AO ON THIS ISSUE SEEMS ERRONEOUS, HOWEVER AS PER PROVISIONS OF SECTION 147 IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME HAS 9 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ESCAPED ASSESSMENT WHICH COMES TO HIS NOTICE SUBSEQ UENTLY IN THE COURSE OF PROCEEDINGS U/S.147, THE SAME CAN BE RE-ASSESSED BY HIM. THOUGH THE APPELLANT HAS MADE A REFERENCE TO ITS OWN TRIBUNAL CASE FOR THE A .Y. 1994-95 AND OTHER CASES OF THE BOMBAY HIGH COURT AND OTHER COURTS, I FIND THAT THE SAID CASES ARE DISTINGUISHABLE FROM THE PRESENT CASE AS IN THE INSTANT CASE THERE IS NO CHANGE OF OPINION. EVEN WITHOUT TAKING UP THE OTHER ISSUES RECORDED IN THE REASONS FOR REOPENING, I FIND THAT THE AO IS JUSTIFIED IN ISSUING NOTICE U/S.148 OF IT ACT. THIS GROUND IS DECIDED AGAINST THE APPELLANT. 3.2 HOWEVER, ON MERITS, THE LD. FIRST APPELLATE AUT HORITY CONCURRED WITH ASSESSEES SUBMISSIONS WITH RESPECT TO CLAIM OF DED UCTION U/S 35DDA AND DELETED THE ADDITIONS BY OBSERVING AS UNDER: - 3.8 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS ON RECORD. AS PER SECTION 35DDA OF THE ACT, IF THE ASSESSEE INCURS AN Y EXPENDITURE BY WAY OF PAYMENT OF ANY SUM TO AN EMPLOYEE IN CONNECTION WITH HIS VOLUN TARY RETIREMENT, ONE-FIFTH OF THE AMOUNT SO PAID SHALL BE DEDUCTED IN COMPUTING THE P ROFITS AND GAINS OF THE BUSINESS FOR THAT PREVIOUS YEAR AND THE BALANCE SHALL BE DEDUCTE D IN EQUAL INSTALLMENTS FOR EACH OF THE FOUR IMMEDIATELY SUCCEEDING PREVIOUS YEARS. THU S, AS PER THE SAID SECTION ONLY PAYMENTS MADE TO AN EMPLOYEE IN CONNECTION WITH HIS VOLUNTARY RETIREMENT WOULD COME WITHIN THE PURVIEW OF THE SAID SECTION. AMOUNTS PAI D BY THE APPELLANT IN RESPECT OF LEAVE ENCASHMENT, GRATUITY AND PENSION ARE NOT PAYMENTS M ADE IN CONNECTION WITH THE VOLUNTARY RETIREMENT AS ANY EMPLOYEE WHO RESIGNS/RE TIRES EVEN IN THE ORDINARY COURSE IS ENTITLED TO RECEIVE LEAVE ENCASHMENT, GRATUITY AND PENSION. HOWEVER, AS THE SAME HAVE BEEN MADE TO THE EMPLOYEES WHO HAVE OPTED FOR THE E RO SCHEME, THE APPELLANT HAS ACCOUNTED FOR THE SAME AS PAYMENTS MADE UNDER THE E ARLY RETIREMENT OPTION. FURTHER THIS ISSUE WAS RAISED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE CONTENTION OF THE APPELLANT IS PRESUMED TO HAVE BEE N ACCEPTED BY HIM AS NO DISALLOWANCE WAS MADE BY HIM IN THE ASSESSMENT ORDE R. 3.3 REGARDING ASSESSEES CLAIM OF BAD DEBTS U/S 36( 1)(VII) FOR RS.492.26 CRORES, IT WAS SUBMITTED THAT THE ASSESSEE FULFILS CONDITIONS LAID DOWN U/S 36(2) OF THE ACT AND THE DEBTS REPRESENT MONEY LENT IN THE ORDINARY COURSE OF ASSESSEES BUSINESS WHICH HAS TURNED BAD AND THE REFORE, THE SAME HAS BEEN WRITTEN-OFF AS PER AN ELABORATE SYSTEM OF IDEN TIFYING BAD DEBTS FOLLOWED BY THE ASSESSEE. SINCE THE BAD-DEBTS WERE WRITTEN-OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUNT, IT WAS SUFFI CIENT COMPLIANCE OF SECTION 36(1)(VII) AND THE DEDUCTION THEREOF WAS AL LOWABLE TO THE ASSESSEE. 10 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 3.4 IT WAS OBSERVED BY LD. FIRST APPELLATE AUTHORIT Y THAT THE ASSESSEE HAD CLAIMED AGGREGATE BAD DEBTS OF RS.1649.92 CRORES DU RING THE IMPUGNED AY, OUT OF WHICH RS.1157.66 CRORES WAS DISALLOWED I N REGULAR ASSESSMENT PROCEEDINGS U/S 143(3) AND THE BALANCE AMOUNT OF RS .492.26 CRORES WAS ALLOWED. THE AMOUNT OF RS.1157.66 CRORES AS DISALLO WED BY LD. AO WHILE FRAMING ASSESSMENT U/S 143(3) WAS DELETED UPON FURT HER APPEAL BEFORE FIRST APPELLATE AUTHORITY VIDE ORDER DATED 31/07/2008. FO LLOWING THE SAME, LD.CIT(A) HELD THAT THE BALANCE AMOUNT OF RS.492.26 CRORES AS DISALLOWED IN REASSESSMENT PROCEEDINGS DESERVE TO BE DELETED. THE OPERATIVE PORTION OF THE APPELLATE ORDER, FOR EASE OF REFERENCE, COUL D BE EXTRACTED IN THE FOLLOWING MANNER: - 4.10 I HAVE GONE THROUGH THE FACTS AND SUBMISSIONS OF THE APPELLANT. I FIND THAT THE CONTENTION OF THE APPELLANT THAT THE ISSUE OF BAD D EBTS HAS BEEN CONSIDERED BY THE A.O. IN LENGTH IN THE ORIGINAL ASSESSMENT ORDER DATED 26 -12-2006 IS ACCEPTABLE. IN THE ORIGINAL ASSESSMENT IT WAS OPEN TO THE A.O TO EXAMI NE THE ENTIRE CLAIM OF BAD DEBTS. AS SUCH THE ALLOWABILITY OF THE ENTIRE BAD DEBT HAS BE EN EXAMINED BY THE A.O AND THE A.O AFTER SUCH EXAMINATION OF FACTS HAD DISALLOWED BAD DEBTS AGGREGATING RS. 11,57,66,77,475/-. THAT SHOWS THE AO HAD ACCEPTED B AD DEBTS TO THE EXTENT OF RS.4,92,25,70,772/-. THUS, THERE IS NO JUSTIFICATIO N FOR DISALLOWING THE DEBTS WHICH HAVE BEEN ALLOWED BY HIM EARLIER. FURTHER, THE LEGAL POS ITION REGARDING THE ALLOWABILITY OF BAD DEBTS HAS CONSIDERABLY CHANGED AFTER THE AMENDMENT OF SECTION 36(1)(VII) W.E.F. 1-04- 1989 WHEREIN IF A DEBT HAS BEEN WRITTEN OFF AS IRRE COVERABLE IN THE ACCOUNTS OF THE ASSESSEE, IT WILL SUFFICE FOR CLAIMING IT AS BAD DE BT. FURTHER THIS ISSUE HAS BEEN DISCUSSED IN LENGTH BY ME IN THE APPELLANT'S OWN CA SE FOR THE AFORESAID ASSESSMENT YEAR IN APPEAL NO.CIT(A) XXVLL/ADDL. CIT 3(1)/LT -1 71/06-07 FILED AGAINST THE ORDER PASSED U/S 143(3) AND AFTER GOING THROUGH THE VARIO US SUBMISSIONS, I HAVE ALLOWED THE APPELLANT'S BAD DEBT CLAIM. FOLLOWING THE SAME, THE BALANCE CLAIM OF THE APPELLANT OF RS.492,25,70,772/- IS ALLOWED. 3.5 THE DEDUCTION U/S 10(23G) OF THE ACT, AS DENIED TO THE ASSESSEE BY LD. AO, WAS ALSO ALLOWED BY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF AMRITSAR TRIBUNAL RENDERED IN J & K BANK LTD. V/S ACIT [114 TTJ 728]. 11 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ANOTHER REASON TO ALLOW THE SAME WAS THE FACT THAT SIMILAR DEDUCTION WAS BEING ALLOWED TO THE ASSESSEE IN ALL THE EARLIER AS SESSMENT YEARS TILL AY 2004-05 AND THEREFORE, THE RULE OF CONSISTENCY WAS TO BE FOLLOWED. 3.6 THE STAND OF APPELLATE AUTHORITY HAS GIVEN RISE TO APPEAL BY REVENUE AND CROSS-OBJECTION BY ASSESSEE. THE REVENUE IS CON TESTING THE DELETION OF ADDITION ON MERITS WHEREAS THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF REASSESSMENT PROCEEDINGS AS UPHELD BY LD. CIT(A). SUBMISSIONS BY LD. COUNSEL FOR ASSESSEE [AR] LEGAL SUBMISSIONS ON VALIDITY OF REASSESSMENT PROCE EDINGS 4.1 THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], MS. AARTI VISSANJI , AT THE OUTSET, CONTESTED THE VALIDITY OF REASSESS MENT PROCEEDINGS. OUR ATTENTION IS DRAWN TO THE FACT THAT ASSESSMENT WAS REOPENED ON FOLLOWING ISSUES: - (I) DEDUCTION ALLOWED U/S 36(1)(VIIA) AMOUNTING TO RS.129.12 CRORES NOT ADJUSTED WHILE COMPUTING BAD DEBTS U/S 36(1)(VII) (II) UNPAID BONUS OF RS.1.97 CRORES REMAINED TO BE ADDED BACK. (III) EXCESS DEDUCTION OF RS.11.07 CRORES U/S 35DDA TOWARDS VRS PAYMENT (IV) BAD DEBTS OF RS.492.26 CRORES ALLOWED WITHOUT ANY DOCUMENTARY EVIDENCES. (V) EXEMPTION U/S 10(23G) NOT ALLOWABLE AS THE BANK WAS NEITHER INFRASTRUCTURE CAPITAL COMPANY NOR INFRASTRUCTURE FUND ESTABLISHED FOR MOBILIZING RESOURCES THE LEGAL ARGUMENTS RAISED BY LD. AR COULD BE SUMMA RIZED IN THE FOLLOWING MANNER: - 4.1.1 REGARDING ADJUSTMENT OF PROVISIONS MADE U/S 36(1)(VIIA) WHILE COMPUTING THE FIGURES OF BAD-DEBTS U/S 36(1)(VII), IT HAS BEEN SUBMITTED THAT THE AFORESAID ADJUSTMENT WAS ALLOWED DURING ORIGINA L ASSESSMENT PROCEEDINGS BY LD. AO WITH DUE APPLICATION OF MIND. OUR ATTENTION IS DRAWN TO THE COMPUTATION OF BAD DEBTS U/S 36(1)(VII) TO S UBMIT THAT THE SAME WERE 12 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 COMPUTED ONLY AFTER ADJUSTING THE BAD DEBTS PROVISI ONS U/S 36(1)(VIIA) FOR RS.21.80 CRORES CLAIMED FOR AY 2003-04 AND THEREFOR E, THE REASONS FOR REOPENING WERE FACTUALLY ERRONEOUS. ANOTHER PLEA RA ISED IS THE FACT THE REOPENING HAS BEEN TRIGGERED MERELY ON THE BASIS OF REVENUE AUDIT OBJECTIONS WITHOUT INDEPENDENT APPLICATION OF MIND BY LD. AO. IT HAS FURTHER BEEN SUBMITTED THAT NO NEW TANGIBLE MATERIAL CAME T O THE POSSESSION OF LD. AO WHICH WOULD JUSTIFY REASSESSMENT PROCEEDINGS AGA INST THE ASSESSEE ON THIS ISSUE. RELIANCE HAS BEEN PLACED ON THE DECISIO N OF HONBLE BOMBAY HIGH COURT RENDERED IN ICICI HOME FINANCE CO. LTD. [210 TAXMAN 67] & THE DECISION OF HONBLE DELHI HIGH COURT RENDERED I N CARLTON OVERSEAS (P) LTD. [319 ITR 295] RELIED UPON IN FIS GLOBAL BUSINESS SOLUTIONS INDIA (P.) LTD. VS. ACIT [102 TAXMANN.COM 471] FOR THE SUBMISSIONS THAT ASSESSMENT COULD NOT BE REOPENED MERELY ON AUDIT OB JECTIONS. 4.1.2 REGARDING UNPAID BONUS DISALLOWABLE U/S 43B , IT HAS BEEN SUBMITTED THAT THE SAID AMOUNT WAS DULY REFLECTED A S UNPAID LIABILITY IN THE TAX AUDIT REPORT AND THE SAME HAD REMAINED TO BE ADDED BACK INADVERTENTLY. THE OMISSION TO DISALLOW THE SAME WA S MERE COMPUTATIONAL ERROR WHICH SHOULD HAVE BEEN RECTIFIED U/S 154 RATH ER THAN TO REOPEN THE ASSESSMENT. RELIANCE HAS BEEN PLACED ON THE DECISIO N OF HONBLE BOMBAY HIGH COURT RENDERED IN HINDUSTAN UNILEVER LTD. V/S DCIT [325 ITR 102] FOR THE SAID SUBMISSIONS . 4.1.3 REGARDING DEDUCTION U/S 35DDA, IT HAS BEEN S UBMITTED THAT THE ISSUE OF DEDUCTION WAS DULY EXAMINED BY LD. AO IN T HE ORIGINAL ASSESSMENT PROCEEDINGS. NO NEW TANGIBLE MATERIAL CAME TO THE P OSSESSION OF LD. AO 13 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 WHICH WOULD JUSTIFY TRIGGERING OF REASSESSMENT PROC EEDINGS AND THEREFORE, THE REOPENING WAS BASED ON MERE CHANGE OF OPINION. THE LD. AR SUBMITTED THAT REVIEW OF ORDER IS NOT PERMISSIBLE UNDER LAWS IN THE LIGHT OF THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - SIMILAR PLEA HAS BEEN RAISED TO THE EFFECT THE REAS SESSMENT PROCEEDINGS MERELY AT THE BEHEST OF REVENUE AUDIT OBJECTIONS, C OULD NOT BE SUSTAINED UNDER LAW. 4.1.4 REGARDING CLAIM OF BAD DEBTS U/S 36(1)(VII) FOR RS.492.26 CRORES, DRAWING OUR ATTENTION TO QUERIES RAISED BY LD. AO & REPLIES FURNISHED BY ASSESSEE DURING REGULAR ASSESSMENT PROCEEDINGS U/S 143(3), LD. AR SUBMITTED THAT THE STATED ISSUE WAS EXTENSIVELY EXA MINED BY LD. AO WHICH IS EVIDENT FROM THE FACT THAT LD. AO CHOSE TO DISAL LOW A SUM OF RS.1157.66 CRORES OUT OF TOTAL BAD DEBTS OF RS.1659.17 CRORES AS CLAIMED BY THE ASSESSEE AND ALLOWED THE BALANCE AMOUNT OF RS.492.2 6 CRORES. THIS COULD BE POSSIBLE ONLY AFTER SCRUTINY OF ALL THE BAD DEBT S. ANOTHER PLEA RAISED IS THE FACT THAT NO NEW FRESH TANGIBLE MATERIAL CAME T O THE POSSESSION OF LD. AO SO AS TO TRIGGER REASSESSMENT PROCEEDINGS AND TH EREFORE, THE SAME WAS NOTHING BUT MERE CHANGE OF OPINION. RELIANCE HAS BE EN PLACED ON JUDICIAL NO. CASE LAW JUDICIAL AUTHORITY CITA TION 1. KELVINATOR OF INDIA LTD. HONBLE SUPREME COURT 3 20 ITR 561 2. PLUS PAPER FOOD PAC LTD. VS. ITO & ANR. HON'BLE BOMBAY HIGH COURT 374 ITR 485 25/03/2015 3. PR.CIT VS. CENTURY TEXTILES & INDUSTRIES LTD. HON'BLE BOMBAY HIGH COURT 412 ITR 228 [2019] DATED 03/04/2018 4. CIT VS. HEWLETT-PACKARD GLOBALSOFT PVT.LTD. HON'BLE KARNATAKA HIGH COURT 380 ITR 386 [2016] DATED 14/08/2015 5. M/S. TATA COMMUNICATIONS LTD. V/S ACIT ITAT MUMBAI ITA NO.3417/M/2009 DATED 29/01/2016 14 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 PRONOUNCEMENTS AS TABULATED IN PARA 4.1.3. THE JUDG MENT CITED BY LD. AO, IN THE QUANTUM ASSESSMENT ORDER, ARE SOUGHT TO BE D ISTINGUISHED ON THE FACTS. 4.1.5 ANOTHER PERTINENT ARGUMENT RAISED BY LD. AR IS THE FACT THAT THE ASSESSEES APPEAL, ON THIS ISSUE, WAS PENDING BEFOR E LD. CIT(A) AT THE TIME OF ISSUANCE OF NOTICE U/S 148. THEREFORE, IN VIEW O F 2 ND PROVISO (AS IT STOOD AT RELEVANT POINT OF TIME I.E. ISSUANCE OF NOTICE U /S 148 DATED 26/06/2008) TO SECTION 147 BY VIRTUE OF WHICH LD. AO WAS BARRED FROM REASSESSING INCOME INVOLVING MATTERS WHICH WERE THE SUBJECT MAT TER OF FURTHER APPEAL. THIS WAS BECAUSE THE LD. CIT(A) WAS VESTED WITH THE POWERS OF ENHANCEMENT AND COULD ASSESS INCOME RELATING TO THE SUBJECT MATTER OF APPEAL THAT MAY HAVE ESCAPED ASSESSMENT. OUR ATTENT ION IS DRAWN TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE FOR AY 2003-04 IN WRIT PETITION NO. 1765 OF 2011 [242 CTR 292] WHEREIN HONBLE COURT HELD THAT LD. AO COULD NOT HAVE REOPENED THE ASSESSMENT ON THE MATTERS WHICH FORM SUBJECT MATTER OF APPEAL BEFORE LD. CIT(A). 4.1.6 REGARDING ELIGIBILITY TO CLAIM EXEMPTION U/S 10(23G), IT HAS BEEN SUBMITTED THAT STATED ISSUE WAS ALREADY EXAMINED IN DEPTH BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS U/S 143(3). T HE MERE FACT THAT THE AFORESAID EXEMPTION IS DENIED TO THE ASSESSEE IN SU BSEQUENT AY 2005-06, COULD NOT BE A GROUND TO RE-OPEN THE ASSESSMENT FOR AY 2004-05 SINCE IT WOULD AMOUNT TO REVIEW. 4.1.7 SIMILAR PLEA HAS BEEN RAISED TO THE EFFECT T HAT THE ASSESSEES APPEAL, ON THIS ISSUE, WAS ALREADY PENDING BEFORE L D. CIT(A) AT THE TIME OF 15 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ISSUANCE OF NOTICE U/S 148. THEREFORE, LD. AO WAS B ARRED FROM REASSESSING THE SAME IN VIEW OF 2 ND PROVISO TO SECTION 147. ON MERITS 4.2.1 REGARDING DEDUCTION U/S 35DDA, IT HAS BEEN S UBMITTED THAT LEAVE ENCASHMENT, GRATUITY AND PENSION PAYMENTS WER E STATUTORY PAYMENTS THOUGH PAID AT THE TIME OF RETIREMENT OF EMPLOYEES UNDER ERO SCHEME. THESE PAYMENTS DO NOT FALL WITHIN THE AMBIT OF SECT ION 35DDA AS THE LIABILITY TO MAKE THOSE PAYMENTS ARISES UNDER APPLI CABLE STATUTES. THESE STATUTORY LIABILITIES WERE INCORPORATED IN INDIVIDU AL CONTRACTS OF EMPLOYMENT BY VIRTUE OF WHICH THE EMPLOYEES WERE ENTITLED TO T HE SAID PAYMENTS WHENEVER THEY RESIGNED OR RETIRED. BECAUSE THEY WER E STATUTORY PAYMENTS, THE SAME HAVE BEEN DISALLOWED U/S 43B UNDER THE HEA D DISALLOWANCE U/S 43B-VRS EXPENDITURE IN THE COMPUTATION OF INCOME. IN THE PRESENT CASE, THE EVENT WHICH TRIGGERED THESE PAYMENTS WERE RETIR EMENT UNDER ERO SCHEME. THOUGH THE EMPLOYEES RETIRED CONSEQUENT TO EXERCISING THE OPTION UNDER THE ERO SCHEME, NEVERTHELESS THE PAYMENTS WER E INDEPENDENT STATUTORY PAYMENTS AND DID NOT FALL WITHIN THE SCOP E OF SEC 35DDA. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN BHOR INDUSTRIES LIMITED 264 ITR 180. 4.2.2 REGARDING DISALLOWANCE OF BAD DEBTS U/S 36(1 )(VII), IT HAS BEEN SUBMITTED THAT IN THE ORIGINAL ASSESSMENT ORDER, IT IS THE CATEGORICAL FINDING OF LD. AO THAT THE TOTAL AMOUNT WRITTEN-OFF AS BAD DEBTS WAS RS.1683.69 CRORES. THIS AMOUNT OF RS.1683.69 CRORES INCLUDES R S.492.26 CRORES WHICH IS EVIDENT FROM PAGE-5 OF THE PAPER BOOK. OUR ATTENTION IS DRAWN TO 16 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 PARA 11.3 OF THE ORIGINAL ASSESSMENT ORDER TO SUBMI T THAT LD. AO DID NOT DOUBT THE EXISTENCE OF THE DEBTS OR THE WRITE-OFF O F THE SAME BUT DISPUTES THAT THE DEBTS HAVE BEEN WRITTEN OFF WITHOUT VALID REASONS AND PROPER BASIS AND THE DEBTS HAVE BEEN ARTIFICIALLY WRITTEN OFF AS BAD AND IRRECOVERABLE. THEREFORE, THERE IS NO MATERIAL FOR THE AO TO CONCL UDE IN THE REASSESSMENT THAT THE DEBTS DO NOT EXIST OR HAVE NOT BEEN WRITTE N OFF. THE ASSESSEE ALSO OFFERED RS.115.39 CRORES ON ACCOUNT OF BAD DEBTS WR ITTEN BACK WHICH ESTABLISH THAT THE ASSESSEE WAS FOLLOWING CONSISTEN T POLICY OF WRITING-OFF THE BAD DEBTS. THE OBSERVATION OF LD. AO IN REASSESSMEN T ORDER THAT NO INFORMATION WAS AVAILABLE IS ALSO ERRONEOUS AND WIT HOUT ANY BASIS WHICH IS EVIDENT FROM THE DETAILS FILED BY THE ASSESSEE DURI NG ORIGINAL ASSESSMENT PROCEEDINGS. THIS IS FURTHER FORTIFIED BY THE FACT THAT LD. AO CATEGORIZED THE BAD DEBTS CLAIMED BY THE ASSESSEE AND CHOSE TO DISA LLOW THOSE BAD DEBTS, IN RESPECT OF WHICH DETAILS WERE NOT AVAILABLE ON R ECORD. IN CONTRAST, THE SUM OF RS.492.26 CRORES HAS CONSCIOUSLY BEEN ALLOWE D BY LD. AO. RELIANCE HAS BEEN PLACED ON DECISION OF HONBLE SUP REME COURT RENDERED IN TRF LIMITED [323 ITR 397] AND VIJAYA BANK [323 ITR 166] FOR THE SUBMISSIONS THAT NOW THERE IS NO REQUIREMENT TO PRO VE THAT THE DEBTS HAVE ACTUALLY BECOME BAD. 4.2.3 FOR ASSESSEES ELIGIBILITY TO CLAIM DEDUCTIO N U/S 10(23G), OUR ATTENTION IS DRAWN TO THE FACT THAT STATED ISSUE ST OOD SQUARELY COVERED IN ASSESSEES FAVOR BY THE DECISION OF THIS TRIBUNAL R ENDERED IN ASSESSEES OWN CASE FOR AY 2005-06 VIDE ITA NOS.5276,3841/MUM/ 2013 ORDER DATED 17 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 03/11/2017 AS WELL AS BY THE DECISION OF DELHI TRIB UNAL IN ACIT V/S ORIENTAL BANK OF COMMERCE [ITA NO.I73/DEL/2011]. SUBMISSIONS BY LD. SR. COUNSEL FOR REVENUE [DR] 5.1 ON THE OTHER HAND, LD. COUNSEL FOR REVENUE [DR] , SHRI P. C. CHHOTARAY, VEHEMENTLY CONTESTED THE ISSUES ON LEGAL GROUND AS WELL AS ON MERITS BY WAY OF ELABORATE ORAL AS WELL AS WRITTEN SUBMISSIONS. THE SAME COULD BE SUMMARIZED IN THE FOLLOWING MANNER. LEGAL SUBMISSIONS ON VALIDITY OF REASSESSMENT PROCE EDINGS 5.2.1 OUR ATTENTION HAS BEEN DRAWN TO THE FACT THA T REGULAR ASSESSMENT WAS FRAMED ON 29/12/2006 AND THE NOTICE U/S 148 WAS ISSUED ON 28/06/2008 AND THEREFORE, THE REASSESSMENT PROCEEDI NGS HAVE BEEN INITIATED WITHIN A PERIOD OF FOUR YEARS FROM THE EN D OF RELEVANT ASSESSMENT YEAR AND THEREFORE, THE ONLY REQUIREMENT UNDER LAW TO REOPEN THE ASSESSMENT WAS THAT LD. AO HAD REASONS TO BELIEVE T HAT CERTAIN INCOME ESCAPED ASSESSMENT. SINCE THE SAID CONDITION, IN TH E PRESENT CASE, HAS BEEN FULFILLED AND THEREFORE, THE REOPENING WAS JUS TIFIED. 5.2.2 THE LD. SR. COUNSEL SUBMITTED THAT THERE WAS NO BAR UNDER LAW TO REOPEN THE ASSESSMENT BASED ON REVENUE AUDIT OBJ ECTION AS LONG AS LD. AO APPLIED HIS MIND INDEPENDENTLY AND REACHED A CON CLUSION THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF THE ASSES SEE. 5.2.3 THE ARGUMENT OF CHANGE OF OPINION HAS BEEN W AS COUNTERED BY SUBMITTING THAT SPECIFIC REASONS WERE RECORDED BY L D. AO WHILE REOPENING THE ASSESSMENT. 18 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 5.2.4 THE ARGUMENTS ARE SOUGHT TO BE FORTIFIED BY DRAWING OUR ATTENTION TO THE FACT THAT DEDUCTION OF UNPAID LIABILITY OF R S.1.97 CRORES WAS ALLOWED IN REGULAR ASSESSMENT WHICH REMAINED TO BE ADDED BACK AS PER SECTION 43B AND THEREFORE, THERE WAS CERTAIN ESCAPEMENT OF INCO ME TO THAT EXTENT. THIS IS FURTHER EVIDENT FROM THE FACT THAT AFORESAID ADD ITION WAS DULY ACCEPTED BY THE ASSESSEE BY NOT CONTESTING THE SAME ANY FURTHER . THE ARGUMENT THAT THE SAID MISTAKE WAS RECTIFIABLE MISTAKE WAS NEVER RAIS ED BY THE ASSESSEE IN ITS LETTER DATED 22/12/2008 FILED DURING ASSESSMENT PRO CEEDINGS. THE LD. SR. COUNSEL SUBMITTED THAT THE REVENUE COULD TAKE RECOU RSE TO SECTION 147 EVEN WHEN IT COULD HAVE TAKEN RECOURSE TO SECTION 1 54. IN FACT, IT WOULD BE A SAFER OPTION IN SUCH CASES TO TAKE RECOURSE TO SE CTION 147 SINCE SECTION 154 PROCEEDINGS ARE MEANT TO RECTIFY ONLY THOSE MIS TAKES WHICH ARE APPARENT FROM RECORD. OUR ATTENTION IS DRAWN TO OBS ERVATION OF LEARNED AUTHOR SHRI A.C. SAMPATH IYENGAR MADE IN LAW OF IN COME TAX [VOLUME 7, PAGE NOS. 11166 AND 11167] WHEREIN, IN THE LIGH T OF CERTAIN CASE LAWS, IT BEEN EXPLAINED BY THE LEARNED AUTHOR THAT IN CASES WHERE ACTION UNDER SECTION 154 COULD HAVE BEEN TAKEN, THE REVENUE IS N OT BARRED FROM REOPENING THE ASSESSMENT UNDER SECTION 147. IT HAS FURTHER BEEN SUBMITTED THAT LD. AO HAD NOT FORMED ANY OPINION ON THE ISSUE OF DISALLOWANCE U/S 43B DURING REGULAR ASSESSMENT PROCEEDINGS AND HENCE , THERE COULD BE NO OCCASION TO TREAT THE SAME AS MERE CHANGE OF OPINIO N. 5.2.5. RELIANCE HAS BEEN PLACED ON THE FOLLOWING JU DICIAL PRONOUNCEMENTS FOR THE ARGUMENTS OF CHANGE OF OPINI ON, REASSESSMENT PROCEEDINGS BASED ON REVENUE AUDIT OBJECTIONS ETC.: - 19 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ON THE STRENGTH OF ABOVE JUDICIAL PRONOUNCEMENTS, I T HAS BEEN SUBMITTED THAT AT THE TIME OF REOPENING. LD. AO SHOULD ONLY H AVE PRIMA-FACIE REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSME NT AND AT THIS STAGE, HE IS NOT REQUIRED TO CONCLUSIVELY ESTABLISH CONCEA LMENT. FURTHER, SINCE THE REOPENING IS WITHIN 4 YEARS, THE SAME COULD BE RESO RTED TO ON THE BASIS OF MATERIAL ALREADY AVAILABLE ON RECORD. THE OMISSION TO CONSIDER THE SAME BY LD. AO WOULD NOT AMOUNT TO CHANGE OF OPINION. FURTH ER, LD. AO WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT ON THE BA SIS OF FINDINGS IN ANOTHER ASSESSMENT YEAR. 5.2.6 REGARDING EXCESS DEDUCTION OF RS.11.07 CRORE S U/S 35DDA, IT HAS BEEN SUBMITTED THAT THE ASSESSEE CLAIMED FULL D EDUCTION OF CERTAIN EXPENDITURE AS AGAINST SPECIFIC PROVISIONS OF SECTI ON 35DDA WHICH MANDATES THE ASSESSEE TO CLAIM DEDUCTION ONLY TO TH E EXTENT OF 20%. THIS NO. CASE LAW JUDI CIAL A UTHORITY CITA T ION 1. ACIT V/S RAJESH JHAVERI STOCK BROKERS PVT. LTD. HONBLE SUPREME COURT 291 ITR 500 2. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. VS. ADDL. CIT & ORS. HON'BLE BOMBAY HIGH COURT 2013 350 ITR 651 3. ITO & ORS. VS. BIJU PATNAIK HON'BLE SUPREME COURT [1991] 188 ITR 247 4. A.L.A. FIRM VS. CIT HON'BLE SUPREME COURT [1991] 189 ITR 285 5. M/S. ELEGANZA JEWELLERY LIMITED VS. CIT HON'BLE BOMBAY HIGH COURT W.P.NO.2763 OF 2013 DATED 18/02/2014 6. RAYMOND WOOLLEN MILLS LTD. VS. ITO & ORS. HON'BLE SUPREME COURT [1999] 236 ITR 34(SC) DATED 17/12/1997 7. RABO INDIA FINANCE LTD. VS. DCIT & ORS. HON'BLE BOMBAY HIGH COURT [2013] 356 ITR 200 DATED 03/05/2013 8. MULTISCREEN MEDIA PRIVATE LIMITED VS. UNION OF INDIA AND ANR. HON'BLE BOMBAY HIGH COURT [2010]324 ITR 54 DATED 17/02/2010 A.Y.2004-05 20 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 CLAIM WAS ALLOWED IN FULL IN REGULAR ASSESSMENT LEA DING TO UNDER ASSESSMENT OF INCOME TO THE TUNE OF RS.11.07 CRORES . THERE IS NO DISCUSSION, WHATSOEVER, ON THE ISSUE IN THE ASSESSM ENT ORDER AND LD. AO DID NOT MAKE ANY ADDITION ON THIS ACCOUNT IN REGULA R ASSESSMENT. THE LD. DR DREW ATTENTION TO THE FACT THAT QUERY, IN THIS R ESPECT, WAS MADE ON 17/10/2015 WHEREAS THE REPLY WAS FURNISHED BY THE A SSESSEE ON 02/11/2016 I.E. AFTER MORE THAN ONE YEAR AND THEREF ORE, IT WOULD BE DIFFICULT TO LINK THE TWO. A PLEA HAS BEEN RAISED TO SUBMIT T HAT IT WAS QUITE POSSIBLE THAT LD. AO SIMPLY OMITTED TO EXAMINE THIS ISSUE PA RTICULARLY WHEN THERE IS NO DISCUSSION ON THIS ISSUE IN THE ASSESSMENT ORDER . HENCE, THERE IS NO CHANGE OF OPINION AND THE ASSESSMENT WAS VALIDLY RE OPENED ON THIS ISSUE. 5.2.7 REGARDING EXCESS ALLOWANCE OF DEDUCTION OF B AD DEBTS FOR RS.492.26 CRORES, IT HAS BEEN SUBMITTED THAT THE AS SESSEE CLAIMED BAD DEBTS TO THE TUNE OF RS.1649.92 CRORES IN THE PROFI T & LOSS ACCOUNT. AFTER DETAILED DISCUSSION IN THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAD DISALLOWED BAD-DEBT CLAIMS TO THE EXTENT OF RS.1157 .66 CRORES THEREBY IMPLYING THAT THE BALANCE BAD DEBTS OF RS.492.26 CR ORES WERE ALLOWED. HOWEVER, NO DETAILS HAVE BEEN BROUGHT ON RECORD FOR THE BALANCE BAD DEBTS AS ALLOWED TO THE ASSESSEE. EVEN BASIC DETAILS LIKE NAME OF THE PARTIES AGAINST WHOM THE DEBTS ARE SHOWN AS BAD DEBTS AND A MOUNTS OF SUCH BAD DEBTS ETC. HAVE NOT BEEN FURNISHED BY THE ASSESSEE. ON THIS GROUND, THE LD. AO HAD REASON TO BELIEVE THAT INCOME OF RS.492.26 C RORES ESCAPED ASSESSMENT. THE LD. SR. COUNSEL COUNTERED THE ARGUM ENT OF LD. AR THAT THE ISSUE WAS EXTENSIVELY DEALT WITH BY LD. AO IN R EGULAR ASSESSMENT, BY 21 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 SUBMITTING THAT LD. AO OMITTED TO DEAL WITH BALANCE BAD DEBTS CLAIM OF RS. 492.26 CRORES WHICH IS EVIDENT FROM THE FACT THAT N O SUCH DETAILS WERE EVER FURNISHED BY THE ASSESSEE. THE ARGUMENTS HAVE BEEN MADE TO SUBMIT THAT THE ASSESSEE FURNISHED DETAILS OF BAD DEBTS ABOVE R S.5 CRORES ONLY. 5.2.8 THE LD. SR. COUNSEL HAS DRAWN OUR ATTENTION TO THE COMPUTATION OF BAD DEBTS FOR RS.1157.66 CRORES AS DISALLOWED BY LD. AO IN THE REGULAR ASSESSMENT ORDER PASSED U/S 143(3) TO SUBMIT THAT A LTHOUGH LD. AO DISALLOWED BAD DEBTS FOR RS.1157.66 CRORES, HOWEVER , NO CONSIDERATION HAS BEEN GIVEN TO BALANCE BAD DEBTS OF RS.492.26 CRORES . NO DETAILS IN RESPECT OF BALANCE AMOUNT OF RS.492.26 CRORES IS AVAILABLE ON RECORD AND FOR THIS VERY REASON, REASSESSMENT PROCEEDINGS WERE TRIGGERE D AGAINST THE ASSESSEE AND THEREFORE, THE REASSESSMENT PROCEEDING S WERE VALIDLY INITIATED. THE ASSESSING OFFICER SIMPLY FAILED TO C ONSIDER THESE DEBTS AGGREGATING TO RS.492.26 CRORES WHICH IS ALSO NOTED BY LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER AND THEREFORE, THE REASSESSMENT PROCEEDINGS WERE VALID. 5.2.9 REGARDING APPLICATION OF 2 ND PROVISO TO SECTION 147 AND RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN ASS ESSEES WRIT PETITION [WP NO. 1765 OF 2011 DATED 09/11/2011) FOR THE SUBM ISSION THAT POWER OF THE CIT(A) WAS CO-TERMINUS WITH THAT OF LD. AO INCL UDING THE POWER OF ENHANCEMENT, WHEN AN APPEAL WAS PENDING ON THE ISSU E, THE AO HAD NO JURISDICTION TO REOPEN THE ASSESSMENT ON THAT ISSUE , THE LD. SR. COUNSEL SUBMITTED THAT THIS OBJECTION WAS NEVER RAISED BY T HE ASSESSEE IN ITS SUBMISSIONS DATED 22/12/2008 OBJECTING TO REOPENING OF THE ASSESSMENT. 22 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 THE LD. SR. COUNSEL SUBMITTED THAT IT IS A SETTLED POSITION OF LAW THAT JUST AS THE ASSESSING OFFICER COULD NOT IMPROVE UPON THE RE ASONS RECORDED FOR REOPENING AN ASSESSMENT BY SUBSEQUENT SUBMISSIONS A ND THE REOPENING WOULD SWIM OR SINK WITH THE REASONS RECORDED FOR RE OPENING THE ASSESSMENT, SIMILARLY, THE ASSESSEE COULD NOT SUPPL EMENT ITS OBJECTIONS BY SUBSEQUENT SUBMISSIONS. THIS ARGUMENT WAS ALSO NOT ADVANCED BEFORE THE CIT(A). ON THIS GROUND, THE NEW ARGUMENT OF THE ASS ESSEE DESERVES TO BE REJECTED. 5.2.10 IT HAS FURTHER BEEN SUBMITTED THAT THE AFORE SAID DECISION OF HONBLE BOMBAY HIGH COURT WOULD BE DISTINGUISHABLE ON FACTS SINCE IN THAT CASE THE REOPENING WAS DONE BEYOND FOUR YEARS AND T HE MAIN ISSUE WAS FULL AND TRUE DISCLOSURE BY THE ASSESSEE. THE JUDGM ENT ALSO REFERRED TO THE PROPOSITION OF LAW IN THE 2 ND PROVISO TO SECTION 147 PROVIDING THAT REOPENING CANNOT BE DONE ON AN ISSUE WHICH IS THE SUBJECT MAT TER OF APPEAL. THE FULL FACTS OF THAT CASE ARE NOT AVAILABLE. FROM THE FACT S AVAILABLE IN THE ORDER OF THE HONBLE BOMBAY HIGH COURT, IN THAT CASE, THE CL AIM OF BAD DEBT WAS RS.1503 CRORES UNDER SECTION 36(1)(VII) INCLUDING W RITE-OFF ON FEES FOR RS.62.09 CRORES. EXCLUDING THE FIGURE OF RS.62.09 C RORES, THE BALANCE FIGURE OF BAD DEBTS WAS RS.1441 CRORES. THE ASSESSEE PROVI DED FULL DETAILS THROUGH SEVERAL SUBMISSIONS. THE ASSESSING OFFICER CONSIDERED THESE SUBMISSIONS, DISALLOWED THE CLAIM OF BAD DEBTS TO T HE EXTENT OF RS.769.75 CRORES AND ALLOWED THE CLAIM TO THE EXTENT OF RS.67 2 CRORES. THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE ASSE SSING OFFICER SOUGHT TO REOPEN THE ASSESSMENT ON THE ISSUE OF THE SAME BAD DEBTS EXAMINED BY 23 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 THE AO AGAINST WHICH APPEAL HAD BEEN FILED BEFORE C IT(A) AND CONSIDERED BY THE CIT(A) WHILE PASSING THE APPELLATE ORDER. ON THIS BASIS THE HONBLE HIGH COURT QUASHED THE REOPENING OF THE ASSESSMENT. HOWEVER, IN THE PRESENT CASE, THE FACTS ARE COMPLETELY DIFFERENT. T HE TOTAL CLAIM OF BAD DEBT WAS RS.1649.92 CRORES. THE ASSESSING OFFICER, IN A DETAILED ORDER EXHAUSTIVELY DEALT WITH AMOUNT OF CLAIM OF RS.1157. 66 CRORES AND DISALLOWED THE SAME. HE WAS SILENT ON THE BALANCE AMOUNT OF CLAIM OF RS.492.26 CRORES. AS IN THE ABOVE CASE DECIDED BY T HE HONBLE BOMBAY HIGH COURT DISCUSSED IN THE PRECEDING PARAGRAPH, TH E ASSESSING OFFICER DID NOT AFFIRMATIVELY ALLOW DEDUCTION OF BAD DEBT CLAIM OF RS.492.26 CRORES BY APPLYING HIS MIND. IN FACT, HAD HE APPLIED HIS MIND TO THE BALANCE AMOUNT OF RS.492.26 CRORES, GOING BY THE TENOR OF THE ANALYSI S AND REASONING GIVEN IN THE ASSESSMENT ORDER, HE WOULD HAVE CERTAINLY DISAL LOWED THE WHOLE AMOUNT OF RS.492.26 CRORES PARTICULARLY WHEN ADMITT EDLY THE ASSESSEE HAD NOT FURNISHED ANY DETAILS IN RESPECT OF THE ITEMS O F BAD DEBTS OF RS.492.26 CRORES. UNLIKE IN THE CASE DECIDED BY THE HONBLE B OMBAY HIGH COURT WHERE FULL DETAILS WERE FURNISHED AND EXAMINED BY T HE AO, IN THE CASE IN HAND, DETAILS HAVE NOT BEEN FURNISHED IN RESPECT OF ALL THE DEBTORS, IN RESPECT OF WHICH BAD DEBT HAS BEEN CLAIMED. THE ASS ESSEE FILED APPEAL AGAINST THE DISALLOWANCE OF RS.1157.66 CRORES ONLY. 5.2.11 REGARDING DELETION OF ADDITION OF AMOUNT OF RS.1157.66 CRORES BY THE FIRST APPELLATE AUTHORITY, IT HAS BEEN SUBMI TTED THAT LD. CIT(A) ONLY DEALT WITH THE LEGAL ISSUES AND ALLOWED THE APPEAL OF THE ASSESSEE. THE DISCUSSION WAS LIMITED TO THE DISALLOWANCE OF RS.11 57.66 CRORES ONLY. THERE 24 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 WAS NO MENTION WHATSOEVER ABOUT THE BALANCE CLAIM O F BAD DEBT OF RS.492.26 CRORES. SO, THE AMOUNT OF RS 492.26 CRORE S WAS NEVER THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). THE SAI D PROPOSITION IS FURTHER SOUGHT TO BE FORTIFIED BY SUBMITTING THAT THE FIGUR ES OF RS.1157.66 CRORES COMPRISED-OFF OF LARGE NUMBERS OF INDIVIDUAL ITEMS OF DEBTS FOR WHICH PARTICULARS WERE FILED AND WHICH WERE CONSIDERED ON MERITS AND LISTED IN THE ASSESSMENT ORDER. WHEN THE ASSESSEE FILED APPEAL AG AINST THE DISALLOWANCE OF RS.1157.66 CRORES, ACTUALLY IT FILE D APPEAL IN RESPECT OF INDIVIDUAL ITEMS OF DISALLOWANCE LISTED IN THE ASSE SSMENT ORDER AND THOSE ITEMS OF ADDITION ALONE WERE THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) IN TERMS OF THE 2 ND PROVISO TO SECTION 147. THE BALANCE AMOUNT OF RS.492.26 WAS NOT IN CONTEMPLATION OF THE ASSESSING OFFICER; ADMITTEDLY NO DETAILS WERE FILED. IT IS NOT KNOWN HOW MANY ITEMS WERE CONTAINED IN THE BALANCE AGGREGATE AMOUNT OF RS.492.26 CRORES AND WH AT WERE THE INDIVIDUAL AMOUNTS AND NAMES AND ADDRESSES OF THE D EBTORS. THEY COULD NOT BE A HOMOGENOUS LOT. THEY WOULD HAVE DIFFERENT CHARACTERISTICS. IN THE ABSENCE OF THESE PRIMARY DETAILS, IT WOULD NOT BE P OSSIBLE TO CONSIDER THE ALLOWABILITY OR DISALLOWABILITY OF THESE INDIVIDUAL ITEMS OF PURPORTED BAD DEBTS. IT FOLLOWS THAT WITHOUT THESE DETAILS IN THE RECORD, THESE ITEMS COULD NOT BE THE SUBJECT MATTER OF CONSIDERATION BEFORE T HE CIT(A). HENCE, THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN WRIT P ETITION NO. 1765 OF 2011(SUPRA) IS NOT APPLICABLE TO THIS CASE. THAT DE CISION WAS CONFINED TO THE FACTS OF THAT CASE. IT SIMPLY APPLIED THE 2 ND PROVISO TO SECTION 147. IN OUR CASE, THE ASSESSEE DID NOT FILE ANY WRIT PETITION A GAINST THE REOPENING OF THE 25 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ASSESSMENT AND CAME THROUGH THE REGULAR CHANNEL OF APPEAL. SINCE THAT WRIT PETITION WAS FILED BY THE ASSESSEE ONLY AND TH E DECISION WAS IN ITS FAVOR, IT COULD HAVE FILED A WRIT PETITION HERE ALSO WHICH IT DID NOT DO, APPARENTLY KNOWING THAT FACTS ARE DISTINGUISHABLE. OUR ATTENTION IS DRAWN TO 2 ND PROVISO TO SECTION 147 WHICH READS AS UNDER: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSES S OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUB JECT MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESC APED ASSESSMENT. THE LD. SR. COUNSEL SUBMITTED THAT THE IMPLICATION OF THIS PROVISION AS DISCUSSED BY THE LEARNED AUTHOR IN KANGA AND PALKH IVALAS THE LAW AND PRACTICE OF INCOME TAX [10 TH EDITION, VOLUME II, PAGE NO. 2193] WOULD BE AS UNDER: - 29. THIRD PROVISO- THE FINANCE ACT, 2008 INSERTED THE SECOND PROVISO WITH EFFECT FROM APRIL 1 2008. THIS HAS NOW BECOME THE THIRD PROVISO AFTER THE SECOND PROVISO WAS INSERTED ON JULY 1, 2012 BY FINANCE ACT, 2012. THIS PROVISO ENABLE THE AO TO ASSESS OR REASSESS THE INCOME WHICH IS NOT THE SUBJECT MATTER OF AN APPEAL, REFERENCE OR REVISION. THEREFORE, IF AN ASSESSEE HAS DISPUTE ON ISSUES (A) ,(B),(C) AND (D) AND ISSUES (B) AND (D) ARE PENDING CONSIDERATION IN APPEAL, THE AO CAN ASSESS OR REASSESS THE INCOME PERTAINING TO ISSUES (A) AND (C). THIS VIEW WAS TAK EN BY THE BOMBAY HIGH COURT [CIT V. SEKSARIA COTTON MILLS LTD. 124 ITR 570] AND IS NOW CODIFIED IN THE THIRD PROVISO. THE ORIGINAL ORDER PASSED BY THE ACIT HAS MERGED WITH T HE ORDER OF THE CIT(A) WHO HAS CONSIDERED THE VERY ISSUE. IF THE DEPARTMENT WAS AG GRIEVED, IT COULD HAVE FILED AN APPEAL CHALLENGING THE APPELLATE ORDER AND NOT RESO RTED TO REOPENING. THE MOOT POINT IS THAT THE ORDER OF ASSESSMENT MERG ES WITH THE APPELLATE ORDER AND THE AO CANNOT ASSESS OR REASSESS THE INCO ME WHICH WAS THE SUBJECT MATTER OF APPEAL. THE REMEDY FOR THE DEPAR TMENT IS TO GO IN APPEAL AGAINST THE APPELLATE ORDER OF THE CIT(A). IN OUR CASE, THE APPELLATE ORDER AGAINST THE ORIGINAL ASSESSMENT ORDER DATED 29/12/2 006 WAS PASSED BY THE 26 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 CIT(A) ON 31/07/2008. THE ISSUE OF PURPORTED BAD DE BT CLAIMS OF RS.492.26 CRORES WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE LD. CIT(A). THE CIT(A) GAVE RELIEF TO THE ASSESSEE BY DELETING THE ENTIRE ADDITION OF RS.1157.66 CRORES. THE REVENUE FILED APPEAL AGAINST THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.1157.66 CRORES. IT COULD NOT FIL E APPEAL TO ITAT IN RESPECT OF THE BAD DEBT CLAIM OF RS.492.26 CRORES BECAUSE T HAT WAS NOT A SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). THE HONBLE ITA T IN ITS COMBINED ORDER DATED 03/11/2017 IN ITA NO.6137/ MUM/2008 FOR AY 20 04-05 RESTORED THE MATTER TO THE FILE OF LD. ASSESSING OFFICER TO EXAM INE THE CLAIM AFRESH IN THE LIGHT OF THE DECISIONS OF THE HONBLE SUPREME COURT RENDERED IN TRF LTD. V/S CIT [2010 323 ITR 397] AND VIJAYA BANK LTD. V/ S CIT, [2010 323 ITR 166]. 5.2.12 PROCEEDING FURTHER, LD. COUNSEL SUBMITTED TH AT THE ABOVE SEQUENCE OF EVENTS WOULD SHOW THE ORDER OF THE ASSE SSING OFFICER WHICH MERGED WITH THE ORDER OF THE CIT(A) DATED 31/07/200 8 WAS IN RESPECT OF DISALLOWANCE OF BAD DEBTS OF RS.1157.66 CRORES ONLY . THE PURPORTED CLAIM OF BAD DEBTS WAS NOT THE SUBJECT MATTER OF APPEAL B EFORE THE CIT(A). THEREFORE, WHEN THE ASSESSING OFFICER PASSED THE RE ASSESSMENT ORDER DATED 25/02/2009 THE CIT(A) HAD ALREADY PASSED THE APPELLATE ORDER DATED 31/07/2018. THAT ORDER DID NOT DEAL WITH THE CLAIM OF BALANCE BAD DEBT OF RS.492.26 CRORES. HENCE THE RE-ASSESSMENT ORDER DID NOT REASSESS ANY INCOME WHICH WAS SUBJECT MATTER OF APPEAL BEFORE TH E CIT(A) AND HENCE, WOULD NOT VIOLATE THE 2 ND PROVISO TO SECTION 147 OF THE ACT. 27 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 5.2.13 ON THE ISSUE THAT WHETHER LD. AO COULD ISSUE THE NOTICE U/S 148 ON 26/06/2008 WHEN THE APPEAL WAS PENDING BEFORE LD .CIT(A), IT WAS SUBMITTED THAT APPELLATE ORDER WAS PASSED ON 31/07/ 2008. THE 2 ND PROVISO TO SEC.147 SPEAKS ONLY THAT THE ASSESSING OFFICER C ANNOT PASS ANY REASSESSMENT ORDER ON MATTER COVERED BY THE ORDER O F THE CIT(A). THE RELEVANT POINT OF TIME WAS THE DATE OF PASSING THE REASSESSMENT ORDER. AT THAT TIME ONLY IT WAS TO BE SEEN WHETHER THE ASSESS ING OFFICER CONTRAVENED THE PROVISIONS OF THE 2 ND PROVISO TO SECTION 147. THE TIME OF MERE ISSUE OF NOTICE U/S 148 WAS NOT RELEVANT. AFTER ISSUE OF NOT ICE U/S 148, THE ASSESSEE WOULD BE PROVIDED WITH THE REASONS AND AFTER CONSID ERING THE OBJECTION OF THE ASSESSEE, THE PROCEEDINGS MAY EVEN BE DROPPED. HERE, THE ISSUE OF NOTICE U/S 148 WAS NOT CHALLENGED IN A WRIT PETITIO N. THE ASSESSEE RAISED HIS OBJECTIONS WHICH WERE DEALT WITH BY THE ASSESSI NG OFFICER IN THE REASSESSMENT ORDER. THE ASSESSEE DID NOT RAISE ANY OBJECTION INVOKING THE PROVISIONS OF 2 ND PROVISO TO SECTION 147. THE NOTICE U/S 148 REMAINE D VALID AS WELL AS THE SUBSEQUENT PROCEEDINGS CONDUCTED IN THE NORMAL COURSE, RESULTING IN THE PASSING OF THE REASSESSMENT ORDER. THE LD. COUNSEL OF THE ASSESSEE RAISED A QUESTION THAT THE CIT(A) HAD THE POWER TO ENHANCE THE ASSESSMENT. BUT AS THE GROUND OF APPEAL BEFORE THE CIT(A) AND THE APPELLATE ORDER WOULD SHOW THE BAD DEBT CLAIM OF RS .492.26 CRORES WAS NEVER IN CONTEMPLATION DURING THE APPELLATE PROCEED INGS AND WAS NEVER THE SUBJECT MATTER OF APPEAL. HENCE, THE QUESTION RAISE D IS PURELY HYPOTHETICAL. HENCE GOING BY THE PLAIN LANGUAGE OF 2 ND PROVISO TO SECTION 147, THE ASSESSING OFFICER HAS NOT CONTRAVENED THE PROVISION S OF 2 ND PROVISO TO 28 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 SECTION 147 OF THE ACT. ACCORDINGLY, THE REOPENING OF THE ASSESSMENT ON THIS ISSUE IS VALID. 5.2.14 REGARDING ASSESSEES ELIGIBILITY TO CLAIM EX EMPTION U/S 10(23G), IT WAS SUBMITTED THAT THE CASE WAS REOPENED UPON FO RMATION OF BELIEF THAT THE ASSESSEE WAS NOT AN INFRASTRUCTURE CAPITAL COMP ANY OR AN INFRASTRUCTURE CAPITAL FUND AND HENCE, THE CLAIM OF EXEMPTION UNDE R SECTION 10(23G) WAS WRONGLY ALLOWED. THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE BASIS OF THE FINDING IN THE SUBSEQUENT ASSESSME NT ORDER FOR ASSESSMENT YEAR 2005-06 TO THE EFFECT THAT THE ASSESSEE IS NEI THER AN INFRASTRUCTURE CAPITAL FUND NOR AN INFRASTRUCTURE CAPITAL COMPANY. HENCE, THE EXEMPTION WAS WRONGLY ALLOWED. THE LD. SR. COUNSEL SUBMITTED THAT LD. AO WAS WELL WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT OF IMPUGNED AY ON THE BASIS OF FINDING GIVEN IN ANOTHER AY. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN RAYMOND WOLLEN MILLS LTD. V. ITO [236 ITR 34], HONBLE BOMBAY HIGH COURT IN RABO INDIA FINANCE LTD. V. DCIT 356 ITR 200 & MULTI SCREEN MED IA PRIVATE LTD. V. UOI AND ANR. 324 ITR 54. 5.2.15 IT HAS FURTHER BEEN SUBMITTED THAT IF THE RE OPENING IS HELD VALID ON ONE OF THE SEVERAL REASONS, THEN THE ENTIRE REOPENI NG IS HELD TO BE VALID. IT IS SUBMITTED THAT LD. AO HAD GIVEN FIVE REASONS FOR RE OPENING THE ASSESSMENT AND THE REOPENING IS VALID ON ALL THE REASONS. HOWE VER, EVEN IF REOPENING IS HELD TO BE VALID EVEN ON ONE REASON, THE WHOLE REOP ENING WOULD BE VALID. THIS HAS BEEN EXPLAINED, ON THE BASIS OF CASE LAWS, BY THE LEARNED AUTHOR 29 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 IN CHATURVEDI & PITHISARIAS INCOME TAX LAW [6 TH EDITION,2015, VOLUME 6, PAGE 8989]. THE RELEVANT EXTRACTS ARE REPRODUCED BE LOW: EXISTENCE OF EVEN ONE OF THE REASONS TAKEN IS SUFF ICIENT TO SUSTAIN VALID INITIATION.- THOUGH ALL THE REASONS GIVEN BY THE ASSESSING OFFIC ER FOR REOPENING AN ASSESSMENT MAY NOT BE TENABLE, IF AT LEAST ONE OF THE GROUNDS IS SUCH AS TO LEAD TO A PRIMA FACIE REASONABLE BELIEF THAT INCOME HAS ESCAPED ETC., THE JURISDICTION OF THE OFFICER TO INITIATE REASSESSMENT PROCEEDINGS CANNOT BE SUCCESSFULLY QUE STIONED. [THANTHI TRUST V. ITO (1973), 91 ITR 261(MAD.) IF A NOTICE IS ISSUED ON MORE THAN ONE GROUND AND O NE OF THE GROUNDS IS SUFFICIENT TO UPHOLD THE VALIDITY OF THE NOTICE, THEN EVEN IF THE OTHER GROUNDS ARE NOT SUSTAINABLE, IT WILL NOT MAKE THE NOTICE BAD. [JAMESON & MAGRUDAR CO. PR .LTD. V. ITO (1987), 167 ITR 77,82 (CAL.). ALSO SEE THANTHI TRUST V. ITO (1989), 177 ITR 307, 316(MAD). THUS, IT IS NOT FOR THE HIGH COURT TO EXAMINE THE V ALIDITY OF A NOTICE UNDER SECTION 148 IN REGARD TO TWO ITEMS, IF THE HIGH COURT COMES TO THE CONCLUSION THAT THE NOTICE IS VALID AT LEAST IN RESPECT OF THE REMAINING ITEM.{ITO V. MEWA LAL DWARKA PRASAD, (1989), 176 ITR 529,533 (SC) ON MERITS 5.3.1 DRAWING OUR ATTENTION TO STATUTORY PROVISION S OF SECTION 35DDA, LD. SR. COUNSEL SUBMITTED THAT A PLAIN READING OF T HE SECTION MAKES IT CLEAR THAT ANY EXPENDITURE INCURRED BY WAY OF PAYMENT OF ANY SUM TO THE EMPLOYEES IN CONNECTION WITH A VOLUNTARY RETIREMEN T SCHEME SHALL BE AMORTIZED OVER A PERIOD OF FIVE YEARS AND ONLY 1/5 TH OF THE AMOUNT PAID SHALL BE ALLOWED AS DEDUCTION IN THE CURRENT PREVIOUS YEA R IN COMPUTING THE PROFITS AND GAINS OF THE BUSINESS OF THIS YEAR. THE BALANCE AMOUNT SHALL BE DEDUCTED IN EQUAL INSTALMENTS FOR EACH OF THE FOUR SUCCEEDING PREVIOUS YEARS. SINCE THE ENTIRE PAYMENT OF RS.191 CRORES HA S BEEN PAID IN CONNECTION WITH THE VOLUNTARY RETIREMENT SCHEME, ON LY 1/5 TH OF THE SAID AMOUNT WOULD BE AVAILABLE FOR DEDUCTION IN IMPUGNED AY. THE LD. SR. COUNSEL WOULD SUBMIT THAT A CARDINAL PRINCIPLE OF I NTERPRETATION OF STATUTES IS THAT THE PLAIN AND LITERAL INTERPRETATION HAS TO BE APPLIED IN INTERPRETING A 30 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 TAXING STATUTE, HOWEVER HARDSHIP IT MAY APPEAR TO C AUSE TO THE SUBJECT. THERE IS NO CONSIDERATION OF EQUITY IF THE LANGUAGE OF THE PROVISION IS PLAIN AND CLEAR. THE PRINCIPLE OF STRICT INTERPRETATION O F TAXING STATUTES WAS BEST ENUNCIATED BY ROWLATT J. IN HIS CLASSIC STATEMENT ( VIDE CAPE BRANDY SYNDICATE V. IRC [1921] 1 KB 64, 71 CITED WITH APPR OVAL IN ITO V. T.S. DEVINATHA NADAR [1968] 68 ITR 252 SC; AIR 1968 SC 6 23 (PAGE 267 OF [1968} 68 ITR):- IN A TAXING ACT, ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THE RE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING TO BE IMPLI ED, ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF HO NBLE MADRAS HIGH COURT RENDERED IN CIT V. MICROMAX SYSTEMS P. LTD. [2005), 277 ITR 409(MAD) FOR THE AFORESAID PRINCIPLE OF INTERPRETATION. 5.3.2 PROCEEDING FURTHER ON THE SAME LINES, IT HAS BEEN THE SUBMISSIONS THAT PAYMENTS IN RESPECT OF LEAVE ENCAS HMENT, GRATUITY AND PENSION, IN THE ORDINARY COURSE, MAY BE GOVERNED BY DIFFERENT RULES AND BE SUBJECT TO FULFILMENT OF CERTAIN CONDITIONS LIKE NO TICE PERIOD, DIFFERENT CLEARANCES ETC. WHICH MAY NOT BE APPLICABLE FOR THI S VOLUNTARY RETIREMENT SCHEME, WHICH IS A PACKAGE. HENCE IT WOULD BE WRONG TO BREAK THIS PACKAGE INTO SEPARATE ITEMS AND TREAT EACH ITEM SEP ARATELY. THIS WOULD LEAVE THE FIELD WIDE OPEN TO CONSIDER OTHER ITEMS A LSO SEPARATELY UNDER CERTAIN OTHER LAWS. SUCH A BIFURCATION IS NOT PERMI SSIBLE WHEN THE MATTER IS COVERED UNDER SECTION 35DDA. THEREFORE, THE INTERPR ETATION OF SECTION 35DDA AS PROPOSED BY LD. AR, WOULD REQUIRE AMENDMEN T IN SECTION 31 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 35DDA. A CASUS OMISSUS CANNOT BE SUPPLIED BY THE COURT. THE OMISSION IN A STATUTE CANNOT BE SUPPLIED BY CONSTRUCTION. IT IS THE FUNCTION OF THE LEGISLATORS TO FILL THE GAPS OR OMISSIONS. IT HAS F URTHER BEEN SUBMITTED THAT SECTION 35DDA IS A SPECIAL PROVISION WHICH WOULD OV ERRIDE THE GENERAL PROVISIONS. 5.3.3 REGARDING BAD DEBTS CLAIM OF RS.492.26 CRORE S, IT HAS BEEN SUBMITTED THAT EVEN BASIC INFORMATION OF THESE DEBT S IS NOT AVAILABLE AND THE ASSESSEE SHOULD BE DIRECTED TO PROVIDE THE COMP LETE DETAILS AND DEMONSTRATE FULFILMENT OF CONDITIONS AS STIPULATED IN SECTION 36(2). THE LD. SR. COUNSEL WOULD SUBMIT THAT THE MATTER MAY BE REM ANDED BACK TO LD. AO FOR RE-ADJUDICATION IN ACCORDANCE WITH GUIDELINES L AID DOWN BY HONBLE SUPREME COURT IN TRF LTD. [SUPRA] AND VIJAYA BANK LTD. [SUPRA] AND AS PER THE DIRECTIONS GIVEN BY THE HONBLE ITAT IN ITS ORDER DATED 03/11/2017 IN ITA NO. 6137/ MUM/2008 AY 2004-05. 5.3.4 REGARDING ASSESSEES ELIGIBILITY TO CLAIM DE DUCTION U/S 10(23G), THE LD. SR. COUNSEL FAIRLY CONCEDED THAT THE ISSUE STOOD AGAINST THE REVENUE BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005-06, HOWEVER, TO KEEP THE ISSUE ALIVE, THE LD. SR. COUNSEL PLACES RELIANCE ON THE ELABORATE ORDER OF LD. AO HOLDING THAT THE ASSESSING IS NOT A N INFRASTRUCTURE CAPITAL COMPANY AND HENCE NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23G) OF THE ACT. REBUTTAL OF CASE LAWS BY LD. AR 5.4.1 DISTINGUISHING THE CASE LAWS BEING RELIED UP ON BY THE REVENUE, THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE DEC ISIONS OF HONBLE 32 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 BOMBAY HIGH COURT IN ECGC CORPORATION LTD. [350 ITR 651], RABO INDIA FINANCE LTD. [356 ITR 200], MULTISCREEN MEDIA PVT. LTD. [324 ITR 54], ELEGANZA JEWELLERY LTD. [WP NO.2763 OF 2013] & HONBLE SUPREME COURT IN RAYMOND WOOLEN MILLS LTD. [236 ITR 34] HAS ALREADY BEEN CONSIDERED AND DISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN R ECENT DECISION TITLED AS INTEGRA GARMENTS & TEXTILES LTD. [2019 102 TAXMANN. COM 69] RENDERED ON SIMILAR FACTUAL MATRIX. ON THE CONTRARY, RELIANC E HAS BEEN PLACED ON JUDICIAL PRONOUNCEMENTS AS ALREADY TABULATED BY US IN PARA 4.1.3 TO SUPPORT THE SUBMISSIONS. 5.4.2 OUR ATTENTION IS DRAWN TO THE FACT THAT DECI SION OF HONBLE APEX COURT RENDERED IN ACIT V/S RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500, AS RELIED UPON BY LD. SR. COUNSEL FOR REVENUE, WAS RENDERED IN A CASE WHERE REGULAR ASSESSMENT WAS NOT FRAMED BUT TH E RETURN WAS PROCESSED U/S 143(1) AND THEREFORE, THE CLAIM OF TH E ASSESSEE COULD NOT HAVE BEEN EXAMINED. SIMILARLY, THE DECISION OF HON BLE SUPREME COURT RENDERED IN ALA FIRM V/S CIT [189 ITR 285] DEAL WITH THE PROVISIONS OF SECTION 147(B) CONTRARY TO THE FACTS OF THE PRESENT CASE WHEREIN LD. AO HAS EITHER ALLOWED OR PARTIALLY ALLOWED THE CLAIMS AFTE R CONSIDERATION OF ALL THE MATERIAL WITH DUE APPLICATION OF MIND. THE CASE LAW OF HONBLE SUPREME COURT IN BIJU PATNAIK 188 ITR 247 DEALS WITH A SITUATION WHEREIN THE REOPENING WAS UPHELD U/S 147(A) BECAUSE THERE WAS F AILURE TO DISCLOSE THE CORRECT FACTS ON THE PART OF THE ASSESSEE, WHICH IS NOT THE ALLEGATION OF REVENUE HERE. 33 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 OUR FINDINGS AND CONCLUSION 6.1.1 WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS, WRITTEN SYNOPSIS FILED BY RESPECTIVE COUNSELS AND D ELIBERATED ON JUDICIAL DECISIONS AS CITED BEFORE US. THE UNDISPUTED POSITI ON THAT EMERGES IS THAT FACT THE REGULAR ASSESSMENT WAS FRAMED U/S 143(3) O N 29/12/2006. THE CASE HAS BEEN REOPENED BY ISSUANCE OF NOTICE U/S 14 8 ON 26/06/2008 WHICH IS WITHIN A PERIOD OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEARS. THE STATUTORY REQUIREMENT TO REOPEN THE ASSE SSMENT, IN SUCH CASE, AS CONTAINED IN SECTION 147 (AS IT STOOD AT THE REL EVANT POINT OF TIME I.E. ON THE DATE OF ISSUE OF NOTICE U/S 148) WOULD BE AS FO LLOWS: - INCOME ESCAPING ASSESSMENT. 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE TH E LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTI ON SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECT ION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR TH AT ASSESSMENT YEAR: PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPE D ASSESSMENT. EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGEN CE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE W ITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SH ALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT, NAMELY : 34 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ( A ) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF ANY OTHER PERSON IN R ESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED TH E MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX; ( B ) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY T HE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOS S, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN; ( C ) WHERE AN ASSESSMENT HAS BEEN MADE, BUT ( I ) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED ; OR ( II ) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSI VE RELIEF UNDER THIS ACT; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; EXPLANATION 3. FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDE R THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSUE COMES TO HIS NOT ICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB -SECTION (2) OF SECTION 148.] 6.1.2 THE PERUSAL OF ABOVE PROVISIONS WOULD REVEAL THAT LD. ASSESSING OFFICER IS EMPOWERED TO REOPEN THE ASSESSMENT PROVI DED HE HAS REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSESSMENT IN T HE HANDS OF THE ASSESSEE. THE LD. AO IS EMPOWERED NOT ONLY TO ASSES S / REASSESS THOSE INCOME WHICH HAS ESCAPED ASSESSMENT BUT ALSO THOSE INCOME WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF P ROCEEDINGS. THE FIRST PROVISO PUTS AN EMBARGO ON THE POWER OF LD. AO TO R EOPEN THE ASSESSMENT IN CASES WHERE THE ASSESSMENT WAS ALREADY COMPLETED U/S 143(3) AND THE REOPENING WAS SOUGHT TO BE DONE BEYOND A PERIOD OF 4 YEARS. HOWEVER, THE SAID PROVISO IS NOT RELEVANT / APPLICABLE HERE SINC E THE REOPENING, IN THE PRESENT CASE, HAS ADMITTEDLY BEEN DONE WITHIN A PER IOD OF 4 YEARS FROM THE 35 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 END OF RELEVANT ASSESSMENT YEAR. FOR THE SAME REASO N, EXPLANATION-1 WOULD NOT BE APPLICABLE. 6.1.3 THE SECOND PROVISO RESTRICTS THE POWER OF LD . AO TO ASSESS OR REASSESS THOSE INCOMES WHICH ARE ALREADY THE SUBJEC T MATTERS OF ANY FURTHER APPEAL, REFERENCE OR REVISION. 6.1.4 CLAUSE (C) OF EXPLANATION-2 CREATES A DEEMIN G FICTION WHEREIN IN CERTAIN SITUATION, THE INCOME IS DEEMED TO HAVE ESC APED ASSESSMENT. THESE SITUATIONS ARE - (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED ; OR (II) SUCH INCOME HAS BEEN ASSESSED A T TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; 6.1.5 THEREFORE, THE PRIMARY REQUIREMENT, IN THE P RESENT CASE, TO ACQUIRE VALID JURISDICTION UNDER LAW WOULD BE THAT LD. ASSESSING OFFICER HAD REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSE SSMENT IN THE HANDS OF THE ASSESSEE. 6.1.6 EXPLANATION-3 EMPOWER LD. AO TO ASSESS / REA SSESS INCOME FROM ISSUES WHICH COMES TO THE NOTICE OF LD. AO IN THE COURSE OF PROCEEDINGS UNDER THIS SECTION NOTWITHSTANDING THE FACT THAT THE REASONS FOR SUCH ISSUES WAS NOT INCLUDED IN THE REASONS RECORDE D UNDER SUB-SECTION (2) OF SECTION 148. THIS EXPLANATION WOULD ALSO NOT BE APPLICABLE IN THE PRESENT CASE SINCE THE ADDITIONS HAVE BEEN MADE ONLY AGAINS T THOSE ISSUES FOR WHICH REASONS WERE RECORDED BY LD. AO TO REOPEN THE ASSESSMENT. 36 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 6.2 PROCEEDING FURTHER, WE DEEM IT FIT TO REPRODUCE THE REASONS AS RECORDED BY LD. AO ON 26/06/2008 TO REOPEN THE ASSE SSMENT OF THE ASSESSEE, WHICH READ AS UNDER: - REASONS FOR REOPENING THE ABOVE-MENTIONED CASE IS REOPENED U/S. 147 OF TH E INCOME-TAX ACT, 1961 FOR THE FOLLOWING REASONS. THE ASSESSEE WAS ALLOWED A DEDUCTION OF RS.12912.59 LAKHS AS PROVISION FOR DOUBTFUL DEBTS U/S.36(1)(VIIA). SINCE THE BAD DEBTS ARE ALLOWABLE ONLY AFTER ADJUSTING AGAINST THE PROVISION FOR BAD AND DOUBTFUL DEBTS ALLOWED U/S.36(1)(VIIA), THE RE WAS EXCESS ALLOWANCE OF BAD DEBTS LEADING TO UNDER ASSESSMENT OF INCOME TO THE EXTENT OF RS.12912.59 LAKHS INVOLVING SHORT LEVY OF TAX OF RS.4632.39 LAKHS. THEREFORE, I HAVE REASO N TO BELIEVE THAT AMOUNT OF RS.12912.59 LAKHS HAS ESCAPED ASSESSMENT. 2. ON PERUSAL OF ANNEXURE VIIA ENCLOSED ALONG WITH THE TAR REVEALED THAT AN AMOUNT OF RS.1,97,18,380/- WAS SHOWN AS CURRENT YEARS UNPAID LIABILITY (UNPAID BONUS) REMAINED TO BE ADDED BACK. ASSESSEE HAS CLAIMED THE ABOVE REFERRED BONUS AS DEDUCTION ON PAYMENT BASIS. OMISSION TO DO SO HAD RESULTED IN UNDER ASSESSMENT OF INCOME OF RS.1,97,18,380/- WITH SHORT LEVY OF TAX OF RS.70,73,969/- AND INTEREST U/S.2348 OF RS.23,34,410/-. THEREFORE, I HAVE REASON TO BELIEVE THAT AMOUNT OF RS.1,97,18,380/- HAS ESCA PED ASSESSMENT. 3. ASSESSEE HAD PAID AN AMOUNT OF RS.1,91,00,00,000 /- TOWARDS VRS PAYMENT. AS PER SECTION 35DDA, THE DEDUCTION ADMISSIBLE WOULD BE RS .38,20,00,000/-. THE ASSESSEE- HOWEVER BIFURCATED THE TOTAL AMOUNT TO TWO PARTS AN D CLAIMED 100% DEDUCTION OF RS.13,84,00,000/- AND ON THE BALANCE AMOUNT OF RS.1 ,77,16,00,000/- APPLIED THE PROVISIONS OF SECTION 35DDA. THE DEDUCTION CLAIMED THUS COMES TO RS.4,92,70,000/- WHICH IS NOT CORRECT AS THE ASSESSEE IS ENTITLED TO A DEDUCTION OF RS.38,20 ,00,000/- BEING L/5 TH OF RS.1,91,00,00,000/-. SINCE THE DEDUCTION ALLOWED IS RS.49,27,00,000/-, T HERE IS AN UNDER ASSESSED INCOME OF RS.11,07,00,000/-. THE SHORT LEVY OF TAX ON THIS AC COUNT WORKS OUT TO RS.3,97,13,625 + INTEREST U/S.234B OF RS.1,31,05,496/-. THEREFORE, I HAVE REA SON TO BELIEVE THAT AN AMOUNT OF RS.11.07 CRORES HAS ESCAPED ASSESSMENT. 4. THE ASSESSEE HAD CLAIMED BAD DEBTS WRITTEN OFF T O THE TUNE OF RS.1,649.92 CRORES IN P&L ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDING S FOR THE RELEVANT ASSESSMENT YEAR, AFTER EXAMINING THE ALLOWABILITY OF THE SAME, THE A.O HAS DISALLOWED BAD DEBTS WRITTEN OFF TO THE TUNE OF RS.11,57,66,77,475/- FOR THE DETAILED REASONS GI VEN IN THE RELEVANT ASSESSMENT ORDER. IT IS OBSERVED FROM THE ASSESSMENT RECORD AND ASSESSMENT ORDER THAT AO WHILE ALLOWING BALANCE AMOUNT OF RS.492.26 CRORES AS BAD DEBTS, HAS NOT BR OUGHT ON RECORD ANY DETAILS OF SUCH BAD DEBTS. EVEN BASIC DETAILS LIKE NAMES OF PARTIES AGA INST WHOM THE DEBT ARE SHOWN AS BAD & DOUBTFUL, TOTAL AMOUNT OF BAD DEBTS, ETC. HAVE NOT BEEN FILED BY THE ASSESSEE. 37 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT FOR THE ASSESSMENT YEAR 2005-06, AGAIN AFFORDED AN OPPORTUNITY TO THE ASSESSEE TO FI LE COMPLETE DETAILS OF BAD DEBTS ALLOWED DURING 2004-05 AND WAS REQUESTED TO PROVE THAT THE DEBTS HAVE ACTUALLY BECOME BAD. THE ASSESSEE COULD NOT FURNISH THE REQUIRED DETAILS (RE F: ORDER SHEET ENTRIES DTD. 19.12.07 & 20.12.07). MOREOVER, IT HAS BEEN FOUND THAT THE BAD DEBTS HAVE BEEN CLAIMED OVER AND ABOVE THE BAD DEBTS AS PER NPA RETURN WHICH IS REQUIRED T O BE EXAMINED AND VERIFIED. THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS.492.26 CRORES HAS ESCAPED ASSESSMENT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN T HE A.Y. 2005-06, IT WAS FOUND THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/S. 10 (23G) OF THE I.T. ACT FOR THE FOLLOWING REASONS. EXEMPTION U/S.10(23G) IS AVAILABLE TO INFRASTRUCTU RE CAPITAL COMPANY AND INFRASTRUCTURE CAPITAL FUND ESTABLISHED FOR THE PURPOSE OF MOBILIZ ING RESOURCES FOR FINANCING INFRASTRUCTURE FACILITIES AS PER FINANCE BILL, 1996 AND CBDT CIRCU LAR NO.762 DTD.18.02.98. WHILE SCRUTINIZING THE CASE OF THE ASSESSEE FOR THE A.Y.2005-06, IT HAS BEEN FOUND THAT NEITHER ICICI IS NEITHER AN INFRASTRUCTURE CAPITAL COMPANY NOR INFRASTRUCTURE CAPITAL FUND, ESTABLISHED FOR MOBILIZING RESOURCES FOR FINANCING INFRASTRUCTU RE FACILITIES WITHIN THE MEANING OF FINANCE BILL & CBDT CIRCULAR AS REFERRED ABOVE. THEREFORE, THE A SSESSEE IS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/S. 10(23G) FOR THE DETAILED REASONS AND DISCUSSION MADE IN THE ASSESSMENT ORDER FOR THE A. Y.2005-06. THEREFORE NET AMOUNT OF EXEMP TION TO BE WITHDRAWN AND INCLUDED IN THE INCOME WORKS OUT TO RS.45.92 CRORES. ' THEREFORE, I HAVE REASON TO BELIEVE THAT AN AMOUNT OF RS.45.92 CRORES HAS ESCAPED ASSESSMENT. IT IS DISCERNIBLE FROM THE RECORDED REASONS THAT RE ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED ON ACCOUNT OF FOLLOWING REASONS : - (I) DEDUCTION ALLOWED U/S 36(1)(VIIA) AMOUNTING TO RS.12912.50 LACS NOT ADJUSTED WHILE COMPUTING BAD DEBTS U/S 36(1)(VII) (II) UNPAID BONUS OF RS.197.18 LACS REMAINED TO BE ADDED BACK WHEREAS DEDUCTION OF THE SAME WAS ALLOWED TO THE ASSESSEE ON PAYMENT BASIS. (III) UNDER ASSESSMENT OF INCOME TO THE EXTENT RS.1 1.07 CRORES ON ACCOUNT OF EXCESS DEDUCTION OF RS.11.07 CRORES U/S 35DDA TOWAR DS VRS PAYMENT (IV) BAD DEBTS OF RS.492.26 CRORES ALLOWED WITHOUT ANY DOCUMENTARY EVIDENCES. (V) EXEMPTION U/S 10(23G) NOT ALLOWABLE AS THE BANK WAS NEITHER INFRASTRUCTURE CAPITAL COMPANY NOR INFRASTRUCTURE FUND ESTABLISHED FOR MOBILIZING RESOURCES AS FOUND WHILE SCRUTINIZING THE RETURN FOR AY 2005-06. 38 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 6.3 THE LD. COUNSEL FOR ASSESSEE HAS DRAWN OUR ATTE NTION TO THE FACT THAT THE REASSESSMENT PROCEEDINGS HAVE BEEN TRIGGERED ME RELY ON REVENUE AUDIT OBJECTION. TO SUBSTANTIATE THE SAME, THE COPY OF OBJECTIONS RAISED BY REVENUE AUDIT HAS BEEN PLACED ON RECORD. AFTER PERU SING THE SAME, WE CONCUR WITH THE SUBMISSIONS OF LD. AR THAT ISSUE NO S. (I) TO (III) AS LISTED ABOVE STEM FROM OBJECTIONS RAISED BY REVENUE AUDIT. THE REMAINING ISSUES I.E. ISSUE NO. (IV) & (V), PRIMA-FACIE, STEM FROM FINDINGS REACHED UPON BY LD. AO WHILE COMPLETING THE ASSESSMENT FOR AY 2005-06. 6.4 THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT TRI GGERING OF REASSESSMENT PROCEEDINGS MERELY ON AUDIT OBJECTION WOULD MAKE REASSESSMENT PROCEEDINGS BAD. THE SAME HAS BEEN COU NTERED BY LD. COUNSEL FOR REVENUE THAT THERE WAS NO SUCH EMBARGO UNDER LAW THAT THE REASSESSMENT PROCEEDING COULD NOT BE INITIATED ON T HE BASIS OF REVENUE AUDIT OBJECTION PROVIDED THE SAME WERE APPRECIATED BY LD. AO WITH DUE APPLICATION OF MIND TO REACH A PRIMA-FACIE OPINION THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. WE CONCUR WITH THE SUBMISSIONS OF LD. COUNSEL FOR REVENUE, IN THIS REG ARD, SINCE AS ALREADY NOTED BY US IN PRECEDING PARAGRAPHS, THE ONLY REQUI REMENT TO REOPEN THE REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE WAS T HAT LD. AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSE SSMENT IN THE HANDS OF THE ASSESSEE. SO LONG AS THIS SATISFACTION OF LD. A O EMANATES FROM THE RECORD, THE REASSESSMENT PROCEEDINGS WOULD BE PERFE CTLY VALID IN THE EYES 39 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 OF LAW. THE HONBLE BOMBAY HIGH COURT IN THE CASE O F ICICI HOME FINANCE CO. LTD. V/S ACIT [25 TAXMAN.COM 241] HAS HELD AS UNDER: - 6. THE POWER TO REOPEN A COMPLETED ASSESSMENT UNDER SECTION 147 OF THE ACT HAS BEEN BESTOWED ON THE ASSESSING OFFICER, IF HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR. HOWEVER, THIS BELIEF THAT INCOME HAS ESCAPED ASSESSMENT HAS TO BE THE REASONABLE BELIEF OF THE ASSESSING OFFICER HIMSELF AND CANNOT BE AN OPINION AND/OR BELIEF OF SOME OTHER AUTHORITY. IN FACT, THE SUPREME COURT IN THE MATTER OF INDIANS & EASTERN NEWSPAPER SOCIETY V. CIT [1979] 119 ITR 996/ 2 TAXMAN 197 HAS HELD THAT WHE THER AN ASSESSMENT HAS ESCAPED ASSESSMENT OR NOT MUST BE DETERMINED BY THE ASSESSING OFFICER HIMSELF. THE ASSESSING OFFICER CANNOT BLINDLY FOLLOW THE OPI NION OF AN AUDIT AUTHORITY FOR THE PURPOSE OF ARRIVING AT A BELIEF THAT INCOME HAS ESC APED ASSESSMENT. IN THE PRESENT FACTS, IT WOULD BE NOTICED THAT THE REASONS FOR WHI CH THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006-2007 IS SOUGHT TO BE REOPENED BY COMMUNIC ATION DATED 12.10.2011 ARE IDENTICAL TO THE OBJECTION OF THE AUDIT AUTHORITY D ATED 29.12.2009. THE REASONS DO NOT RELY UPON ANY TANGIBLE MATERIAL IN THE AUDIT REPORT BUT MERELY UPON AN OPINION AND THE EXISTING MATERIAL ALREADY ON RECORD. THIS ITSELF IN DICATES THAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER BEFORE HE ISSUED THE IMPUGNED NOTICE. ON THIS GROUND ALONE, THE ASSUMPTION OF JURISDICTION B Y THE ASSESSING OFFICER CAN BE FAULTED. 7. HOWEVER, AS SUBMISSIONS WERE MADE ON OTHER ISSUES ALSO WE ARE EXAMINING THEM ALSO. IT IS A SETTLED POSITION IN LAW THAT WHERE AS SESSMENT SOUGHT TO BE REOPENED IS BEFORE THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEN IN SUCH CASES THE POWER TO REOPEN AN ASSESSMENT IS VER Y WIDE. HOWEVER, EVEN THOUGH SUCH A POWER IS VERY WIDE YET SUCH A POWER WOULD NO T JUSTIFY A REVIEW OF THE ASSESSMENT ORDER ALREADY PASSED. THE SUPREME COURT IN THE MATTER OF THE CIT V. KELVINATOR INDIA LTD. [2010] 320 ITR 561/ 187 TAXMAN 312 HAS OBSERVED TH AT THE POWER TO REASSESS IS CONCEPTUALLY DIFFERENT FROM A POWER TO REVIEW. THE ASSESSING OFFICER UNDER THE SAID ACT HAS ONLY POWER TO REASSESS ON FU LFILLMENT OF CERTAIN PRECONDITION NAMELY, HE MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND THAT THERE MUST BE TANGIBLE MATERIAL TO COME TO THE CONC LUSION THAT THERE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT. THE APEX COURT CAUTIONED THAT IN THE GARB OF REOPENING AN ASSESSMENT REVIEW SHOULD NOT TAKE PLACE. THIS COURT FOLLOWING THE APEX COURT IN THE MATTER OF CARTINI INDIA LTD. V. ADDL. C.I.T. [2009] 314 ITR 275/ 179 TAXMAN 157 (BOM.) HAS ALSO HELD THAT EVEN WHERE REASSESSMENT IS SOUGH T TO BE DONE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THERE MUST BE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND SUCH REASON TO BELIEVE S HOULD NOT BE ON ACCOUNT OF MERE CHANGE OF OPINION. THEREFORE, WHERE FACTS HAVE BEEN VIEWED DURING THE ORIGINAL PROCEEDING AND AN ASSESSMENT ORDER HAS BEEN PASSED THEN IN SUCH CASES, REOPENING OF AN ASSESSMENT ON THE SAME FACTS WITHOUT ANYTHING MORE WOULD BE A REVIEW AND NOT PERMITTED UNDER THE GARB OF REASSESSMENT. THIS WOUL D BE A MERE CHANGE OF OPINION IN THE ABSENCE OF ANY TANGIBLE MATERIAL AND IS NOT SUF FICIENT TO ASSUME JURISDICTION TO ISSUE THE IMPUGNED NOTICE. IN FACT, OUR COURT IN THE MATT ER OF IDEA CELLULAR LTD V. DY. CIT 40 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 [2008] 301 ITR 407 (BOM.) HAS HELD THAT ONCE ALL TH E MATERIAL WITH REGARD TO PARTICULAR ISSUE IS BEFORE THE ASSESSING OFFICER AND HE CHOOSE S NOT TO DEAL WITH THE SAME, IT CANNOT BE SAID THAT HE HAD NOT APPLIED HIS MIND TO ALL THE MATERIAL BEFORE HIM. FURTHER, AS OBSERVED BY THE FULL BENCH OF DELHI HIGH COURT I N THE MATTER OF C.I.T. V. KELVINATOR OF INDIA LTD. [2002] 256 ITR 1/ 123 TAXMAN 433, WHEN THE ENTIRE MATERIAL IS PLACED BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSES SMENT AND HE PASSES AN ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT A PRESUMPTION CAN BE RAISED THAT HE APPLIED HIS MIND TO ALL THE FACTS INVOLVED IN THE ASSESSMENT. 8. THEREFORE, IN THE PRESENT FACTS ONE WOULD HAVE TO EXAMINE THE CONTENTION OF THE PETITIONER THAT THE IMPUGNED NOTICE IS WITHOUT JURI SDICTION AS THE SELF SAME FACTS WERE NOT ONLY BEFORE THE ASSESSING OFFICER BUT HE HAD ALSO V IEWED THE VERY ISSUES ON WHICH THE ASSESSMENT IS SOUGHT TO BE REOPENED. SO FAR AS, THE ISSUE IN RESPECT OF PROVISIONS CLAIMED AS DEDUCTION FOR ARRIVING AT TAXABLE PROFIT AGGREGATING TO RS. 52.87 CRORES IS CONCERNED, THE SAME WAS NOT ONLY DISCLOSED IN THE N OTES TO ACCOUNT FILED WITH THE RETURN OF INCOME BUT ALSO IN RESPONSE TO SPECIFIC QUERIES RAISED DURING THE ASSESSMENT PROCEEDING. IT WAS REITERATED AT THE HEARING THAT O N THE AFORESAID ACCOUNT OF PROVISION, THE TAX HAD ALREADY BEEN PAID IN THE EARLIER YEARS AND THE AMOUNTS WERE MERELY WRITTEN BACK IN THIS YEAR TO THE EXTENT THEY WERE IN EXCESS OF THE PROVISIONS REQUIRED. SO FAR AS, FAILURE TO DEDUCT TDS ON ADVERTISEMENT AND SALES PR OMOTION ARE CONCERNED LEADING TO DISALLOWANCE OF THE ENTIRE AMOUNT OF RS. 22.48 CROR ES UNDER SECTION 40(A)(IA) THE SAME WAS ALSO SUBJECT TO SCRUTINY BY THE ASSESSING OFFIC ER DURING THE ASSESSMENT PROCEEDINGS. IN FACT, THE CLAUSE 17(F) OF THE TAX A UDIT REPORT SUBMITTED ALONGWITH RETURN OF INCOME CLEARLY BRINGS OUT THE FACT THAT WHERE TA X HAS NOT BEEN DEDUCTED, THEN THE ENTIRE AMOUNT OF PAYMENT HAS BEEN OFFERED FOR DISAL LOWANCE UNDER SECTION 40(A)(IA). IN FACT, BY LETTERS DATED 10.11.2008 AND 26.12.2008 IN RESPONSE TO SPECIFIC QUERIES OF THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS THE PETITIONER HAD POINTED OUT ALONGWITH DETAILS THE EXPENSES IN RESPECT OF WHICH THE TAX HAD NOT BEEN DEDUCTED AND WHICH WERE OFFERED TO TAX. SO FAR AS, THE REASON TO REOPEN THE ASSESSMENT ON THE GROUND THAT THE PETITIONER HAD DECLARED SHORT TERM CAPITAL GAINS OF RS. 3.63 CRORES IN RESPECT OF INCOME EARNED OUT OF INVESTMENTS HAD TO BE TAXED/CLASSIFIED AS BUSINESS INCOME IS CONCERNED, IT IS NOT DISPUTED BEFORE US T HAT THE TREATMENT GIVEN WAS CONSISTENT WITH THE EARLIER YEAR PRACTICE AND ACCEP TED BY THE RESPONDENT. FURTHER, IT IS NOT DISPUTED BEFORE US THAT THE SHORT TERM CAPITAL GAINS HAVE BEEN ASSESSED TO THE MAXIMUM MARGINAL RATE AND EVEN IF CONSIDERED AS BUS INESS INCOME, THE TAX EFFECT WOULD BE THE SAME. CONSEQUENTLY, THERE COULD BE NO REASONABLE BASIS TO HAVE A BELIEF THAT THERE IS ANY ESCAPEMENT OF INCOME. 9. THEREFORE, IN VIEW OF THE ABOVE, WE ARE OF THE VIE W THAT THE IMPUGNED NOTICE IS WITHOUT JURISDICTION AND THE IMPUGNED ORDER DEALING WITH THE OBJECTION OF THE PETITIONER IS NON SPEAKING ORDER IN AS MUCH AS IT DOES NOT DEAL W ITH ANY OF THE OBJECTIONS RAISED BY THE PETITIONER IN ITS OBJECTIONS. 10. IN THE CIRCUMSTANCES, THE IMPUGNED NOTICE DATED 24 .03.2011 ISSUED UNDER SECTION 148 OF THE ACT AS WELL AS THE IMPUGNED ORDER DATED 07.12.2011 REJECTING THE OBJECTION TO INITIATION OF REOPENING THE ASSESSMENT FOR THE ASSE SSMENT YEAR 2006-2007 ARE QUASHED AND SET ASIDE. 41 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 6.5 ANOTHER PLEA RAISED BY LD. COUNSEL FOR ASSESSEE IS THAT REASSESSMENT PROCEEDINGS HAVE BEEN TRIGGERED ON THE BASIS OF FIN DINGS IN SUCCEEDING AY I.E. 2005-06 AND THEREFORE, APPLYING THE SAME TO IM PUGNED AY WOULD AMOUNT TO REVIEW OF THE ORDER WHICH IS NOT PERMISSI BLE UNDER LAW. WE CONCUR WITH THIS SUBMISSION PROVIDED THE ISSUE WAS ALREADY EXAMINED BY LD. AO IN THE REGULAR ASSESSMENT PROCEEDINGS. TO RE ITERATE THE SETTLED POSITION OF LAW, REVIEW OF ORDERS BY REVENUE AUTHOR ITIES IS NOT PERMISSIBLE UNDER LAW AND REVIEW IN THE GARB OF REASSESSMENT IS NOT PERMISSIBLE. FURTHER, AS SETTLED BY NUMEROUS JUDICIAL PRONOUNCEM ENTS, THE REASSESSMENT PROCEEDINGS COULD NOT BE TRIGGERED MER ELY ON THE BASIS OF CHANGE OF OPINION. IN CONTRAST, WHEN NO OPINION WAS FORMED BY LD. AO ON ANY ISSUE DURING ORIGINAL ASSESSMENT PROCEEDINGS AN D THE SAME WAS ALTOGETHER SKIPPED, THERE WOULD BE NO BAR TO REACH THE REQUISITE SATISFACTION ON THE BASIS OF FINDINGS IN SUBSEQUENT ASSESSMENT Y EAR. IN SUCH A CASE, DEEMING FICTION OF EXPLANATION-2 WOULD COME INTO PL AY AND THE INCOME SHALL BE DEEMED TO HAVE ESCAPED ASSESSMENT IN CASES WHERE IN (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR ( III ) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF UNDER THIS ACT ; OR ( IV ) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; THE PLEA OF LD. COUNSEL FOR REVENUE IS ACCEPTABLE TO TH AT EXTENT. THE DECISION OF HONBLE APEX COURT IN RAYMOND WOOLLEN MILLS LTD. V. ITO [236 ITR 34], HONBLE BOMBAY HIGH COURT IN RABO INDIA FINANCE LTD. V. DCIT 356 ITR 200 & MULTI SCREEN MEDIA PRIVATE LTD. V. UOI AND AN R. 324 ITR 54 42 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 SUPPORT THE PROPOSITION THAT AS LONG AS THERE WAS S ATISFACTION OF LD. AO QUA REOPENING THE ASSESSMENT, THE MATERIAL GATHERED IN THE COURSE OF ASSESSMENT PROCEEDINGS OF ANOTHER YEAR COULD BECOME THE BASIS FOR REOPENING OF THE ASSESSMENT. 6.6 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. [320 ITR 561] HAS CLEARLY SETTLED THE LEGAL POSITION THAT LD.AO WAS NOT EMPOWERED TO REVIEW THE ALREADY CONCLUDED I SSUES U/S 143(3) AND REVIEW IN THE GARB OF REASSESSMENT WAS NOT PERMISSI BLE UNDER THE LAW. FURTHER, MERE REASONS TO SUSPECT COULD NOT SUBSTITUTE REASONS TO BELIEVE . THE HONBLE APEX COURT IN THE CITED CASE HAS SUCCIN CTLY PUT THE LEGAL PROPOSITION IN THE FOLLOWING MANNER: - ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS T HE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERT AIN PRECONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTE NDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSE SSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPI NION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENC E, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THE RE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE APEX COU RT IN CIT VS. FORAMER FRANCE [2003 264 ITR 566]. SIMILAR VIEW HAS BEEN EXPRESSED BY OUR JURISDICTIONAL BOMBAY HIGH COURT RENDERED IN ASIAN PAINTS LTD. VS. DCIT [308 ITR 195] WHEREIN IT HAS BEEN OBSERVED AS UNDER: - 9. IT IS CLEAR FROM THE OBSERVATIONS MADE ABOVE THA T THE FULL BENCH OF THE DELHI HIGH COURT HAS TAKEN A VIEW THAT IN A SITUATION WHERE AC CORDING TO THE ASSESSING OFFICER HE FAILED TO APPLY HIS MIND TO THE RELEVANT MATERIAL I N MAKING THE ASSESSMENT ORDER, HE CANNOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPEN T HE ASSESSMENT BY TAKING RECOURSE TO THE PROVISIONS OF SECTION 147. WE FIND, OURSELF, IN RESPECTFUL AGREEMENT WITH THE VIEW TAKEN BY THE FULL BENCH OF THE DELHI HIGH COURT. 43 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 10. IT IS FURTHER TO BE SEEN THAT THE LEGISLATURE H AS NOT CONFERRED POWER ON THE ASSESSING OFFICER TO REVIEW ITS OWN ORDER. THEREFOR E, THE POWER UNDER SECTION 147 CANNOT BE USED TO REVIEW THE ORDER. IN THE PRESENT CASE, THOUGH THE ASSESSING OFFICER HAS USED THE PHRASE 'REASON TO BELIEVE', ADMITTEDLY BETWEEN THE DATE OF THE ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FO RMATION OF OPINION BY THE ASSESSING OFFICER, NOTHING NEW HAS HAPPENED, THEREF ORE, NO NEW MATERIAL HAS COME ON RECORD, NO NEW INFORMATION HAS BEEN RECEIVED, IT IS MERELY A FRESH APPLICATION OF MIND BY THE SAME ASSESSING OFFICER TO THE SAME SET OF FACTS AND THE REASON THAT HAS BEEN GIVEN IS THAT THE SOME MATERIAL WHICH WAS AVAILABLE ON RE CORD WHILE ASSESSMENT ORDER WAS MADE WAS INADVERTENTLY EXCLUDED FROM CONSIDERATION. THIS WILL, IN OUR OPINION, AMOUNT TO OPENING OF THE ASSESSMENT MERELY BECAUSE THERE IS C HANGE OF OPINION. THE FULL BENCH OF THE DELHI HIGH COURT IN ITS JUDGMENT IN THE CASE OF KELVINATOR [2002] 256 ITR 1 REFERRED TO ABOVE, HAS TAKEN A CLEAR VIEW THAT REOP ENING OF ASSESSMENT UNDER SECTION 147 MERELY BECAUSE THERE IS A CHANGE OF OPINION CAN NOT BE ALLOWED. IN OUR OPINION, THEREFORE, IN THE PRESENT CASE ALSO, IT WAS NOT PER MISSIBLE FOR RESPONDENT NO. 1 TO ISSUE NOTICE UNDER SECTION 148. SIMILAR IS THE OBSERVATION OF HONBLE BOMBAY HIGH C OURT IN THE CASE OF PLUS PAPER FOOD PAC LTD. V/S ITO [374 ITR 485] & PR.CIT V/S CENTURY TEXTILES AND INDUSTRIES LTD. [412 ITR 228]. 6.7 ENUMERATING THE TERM REASONS TO BELIEVE, HON BLE SUPREME COURT IN THE CASE OF ACIT V/S RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 HELD AS UNDER: - 16. SECTION 147 AUTHORISES AND PERMITS THE ASSESSIN G OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEV E THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD REASON IN T HE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. T HE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESSI NG OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WI TH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE DELHI HIGH COURT IN C ENTRAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991 (191) ITR 662], FOR INITIATIO N OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT O F THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCO ME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUI RED IS REASON TO BELIEVE, BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE ST AGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD 44 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIA LS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS I S SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUB JECTIVE SATISFACTION (SEE ITO V. SELECTED DALURBAND COAL CO. PVT. LTD. [1996 (217) I TR 597 (SC)] ; RAYMOND WOOLLEN MILLS LTD. V. ITO [ 1999 (236) ITR 34 (SC)]. 6.8 PROCEEDING FURTHER, HONBLE BOMBAY HIGH COURT I N THE CASE OF EXPORT GUARANTEE CORPORATION OF INDIA LTD. V/S ADDL. CIT [ 350 ITR 651] HAS HELD AS UNDER: - 8. TO HOLD THAT THE ASSESSING OFFICER MUST BE DEEMED TO HAVE ACCEPTED WHAT HE HAS PLAINLY OVERLOOKED OR IGNORED IN THE ASSESSMENT ORD ER WOULD BE TO STRETCH THE INTERPRETATION OF SECTION 147 TO A POINT WHERE THE PROVISION WOULD CEASE TO HAVE MEANING AND CONTENT. SUCH AN EXERCISE OF EXCISION B Y JUDICIAL INTERPRETATION IS IMPERMISSIBLE. WHEN AN ASSESSMENT IS SOUGHT TO BE R EOPENED WITHIN A PERIOD OF FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR, T HE TEST TO BE APPLIED IS WHETHER THERE IS TANGIBLE MATERIAL TO DO SO. WHAT IS TANGIBLE IS SOMETHING WHICH IS NOT ILLUSORY, HYPOTHETICAL OR A MATTER OF CONJECTURE. SOMETHING W HICH IS TANGIBLE NEED NOT BE SOMETHING WHICH IS NEW. AN ASSESSING OFFICER WHO HA S PLAINLY IGNORED RELEVANT MATERIAL IN ARRIVING AT AN ASSESSMENT ACTS CONTRARY TO LAW. IF THERE IS AN ESCAPEMENT OF INCOME IN CONSEQUENCE, THE JURISDICTIONAL REQUIREMENT OF SECT ION 147 WOULD BE FULFILLED ON THE FORMATION OF A REASON TO BELIEVE THAT INCOME HAS ES CAPED ASSESSMENT. THE REOPENING OF THE ASSESSMENT WITHIN A PERIOD OF FOUR YEARS IS IN THESE CIRCUMSTANCES WITHIN JURISDICTION. 6.9 THE OTHER JUDICIAL DECISIONS AS CITED BY BOTH T HE LEARNED COUNSELS AND NOT SPECIFICALLY REFERRED TO IN THE PRECEDING PARAG RAPHS, ALSO BROADLY LAY DOWN THE MORE OR LESS SAME LEGAL PROPOSITIONS. 6.9 KEEPING IN MIND THE FACTUAL MATRIX OF THE CASE AND ABOVE LEGAL PROPOSITIONS, WE HEREINAFTER PROCEED TO ADJUDICATE EACH OF THE ISSUES, ON LEGAL GROUNDS AS WELL AS ON MERITS, IN SUCCEEDING P ARAGRAPHS. 7.1.1 DEDUCTION ALLOWED U/S 36(1)(VIIA) AMOUNTING TO RS.12912.50 LACS NOT ADJUSTED WHILE COMPUTING BAD DEBTS U/S 36( 1)(VII) 45 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ON LEGAL GROUNDS, THE LD. AR HAS SUBMITTED THAT LD. AO ALLOWED THE DEDUCTION OF BAD DEBTS U/S 36(1)(VII) AFTER DUE CON SIDERATION DURING REGULAR ASSESSMENT AND TO REVISIT THE SAME IN REASSESSMENT PROCEEDINGS WOULD AMOUNT TO CHANGE OF OPINION. OUR ATTENTION IS DRAWN TO THE FACT THAT BAD DEBTS U/S 36(1)(VII) WERE ALLOWABLE ONLY AFTER ADJU STING THE OPENING CREDIT BALANCE OF PROVISION FOR BAD AND DOUBTFUL DEBTS MAD E U/S 36(1)(VIIA). THE ATTENTION HAS FURTHER BEEN DRAWN TO THE FACT THAT A SSESSEE HAD COMPUTED THE FIGURES OF BAD DEBTS AFTER ADJUSTING OPENING PR OVISIONS FOR BAD & DOUBTFUL DEBTS FOR AY 2003-04 FOR RS.21.80 CRORES, THE COMPUTATION OF WHICH WAS VERY MUCH AVAILABLE BEFORE LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS. THE COMPUTATION HAS ALSO BEEN PLACED O N PAGE-5 OF THE BANKS PAPER-BOOK. 7.1.2 UPON CAREFUL CONSIDERATION, WE CONCUR WITH T HE AFORESAID SUBMISSIONS OF THE ASSESSEE. THE COMPUTATION OF BAD -DEBTS U/S 36(1)(VII) WAS VERY MUCH AVAILABLE BEFORE LD. AO. IT IS EVIDEN T FROM COMPUTATION OF INCOME AS PLACED ON RECORD THAT THE BAD-DEBTS FIGUR ES WERE ARRIVED AY AFTER ADJUSTING CREDIT BALANCE OF PROVISIONS U/S 36(1)(VI IA) FOR AY 2003-04 FOR RS.21.80 CRORES. IN FACT, THIS FIGURE HAS BEEN REVI SED TO RS.31.05 CRORES IN ORIGINAL ASSESSMENT ORDER DATED 29/12/2006. A SPECI FIC QUERY WAS RAISED BY LD. AO VIDE NOTICE DATED 17/10/2005 QUESTION NO. 35 REQUIRING ASSESSEE TO FURNISH DETAILED WORKING FOR DEDUCTION U/S 36(1)(VI I), SPECIAL RESERVE U/S 36(1)(VIII) AND U/S 36(1)(VIIA) ALONG WITH JUSTIFIC ATION. THE SAID FACTS WOULD REVEAL THAT THE STATED ISSUE WAS DEALT WITH BY LD. AO WITH DUE APPLICATION OF 46 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 MIND. THE LD.AO WAS CONVINCED WITH ASSESSEES METHO DOLOGY OF ARRIVING AT BAD-DEBTS CLAIM AND FORMED AN OPINION ABOUT ASSESSE ES CLAIM. 7.1.3 PROCEEDING FURTHER, AS ALREADY NOTED, THIS I SSUE STEM OUT OF OBJECTION RAISED BY THE REVENUE AUDIT WHEREIN IT HA S BEEN STATED THAT THE DEDUCTION OF BAD DEBTS WAS ALLOWED WITHOUT ADJUSTIN G CLOSING PROVISION FOR BAD DEBTS FOR RS.129.12 CRORES. HOWEVER, THE ASSESS EE VIDE SUBMISSIONS DATED 22/12/2008 OPPOSING THE REOPENING, HAD DRAWN ATTENTION TO THE STATUTORY PROVISIONS OF SECTION 36(I)(VII) & 36(I)( VIIA) TO SUBMIT THAT THE COMPUTATION MADE BY THE ASSESSEE WAS AS PER LAW. RE LIANCE WAS PLACED ON THE DECISION OF MUMBAI TRIBUNAL RENDERED IN OMAN INTERNATIONAL BANK V/S DCIT & CBDT INSTRUCTION NO. 17/2008 DATED 26/11/2008 FOR THE SUBMISSIONS THAT CREDIT BALANCE WOULD BE THE OPENIN G BALANCE I.E. THE BALANCE BROUGHT FORWARD AS ON 1 ST APRIL OF THE RELEVANT ACCOUNTING YEAR. THE SAID SUBMISSIONS WOULD BE FURTHER FORTIFIED BY THE FACT THAT NO SUCH ADJUSTMENT HAS BEEN MADE IN THE REASSESSMENT ORDER BY LD. AO. 7.1.4 THE AFORESAID FACTUAL MATRIX WOULD LEAD US T O CONCLUDE THAT AN OPINION WAS ALREADY FORMED BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS AND THE REASSESSMENT PROCEEDINGS WERE T RIGGERED MERELY ON THE BASIS OF REVENUE AUDIT OBJECTIONS. THE REOPENIN G WAS DONE ON THE SAME SET OF FACTS AS AVAILABLE DURING ORIGINAL ASSE SSMENT PROCEEDINGS. THE RATIO OF DECISION OF HONBLE BOMBAY HIGH COURT REND ERED IN ICICI HOME FINANCE CO. LTD. [210 TAXMAN 67] WOULD SQUARELY APPLY TO THIS ISSUE. THEREFORE, WE HOLD THAT THAT THERE WAS NO INDEPENDE NT APPLICATION OF MIND BY LD. AO WHILE TRIGGERING REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE 47 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 AND ASSESSMENT PROCEEDINGS WAS NOTHING BUT MERE CHA NGE OF OPINION. NO MATERIAL FACTS WERE BROUGHT ON RECORD WHILE RECORDI NG THE REASONS TO ESTABLISH THAT THERE WAS POSSIBLE ESCAPEMENT OF INC OME IN THE HANDS OF THE ASSESSEE AND NO PRIMA-FACIE CASE WAS MADE OUT BY LD. AO TO TRIGGER REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. THIS BEING SO, WE HAVE NO HESITATION IN HOLDING THAT THE STATED ISSUE COUL D NOT BE A VALID REASON TO INVOKE REASSESSMENT PROCEEDINGS AGAINST THE ASSESSE E. THE ISSUE, ON MERITS, WOULD REQUIRE NO INDULGENCE SINCE NO ADJUST MENT / ADDITIONS HAVE BEEN MADE IN THE QUANTUM ASSESSMENT ORDER ON THIS A CCOUNT. 7.2.1 UNPAID BONUS OF RS.197.18 LACS REMAINED TO B E ADDED BACK THE UNDISPUTED FACT THAT EMERGES IS THAT THIS AMOUN T, THOUGH REPORTED TO BE DISALLOWABLE U/S 43B IN THE TAX AUDIT REPORT, HAD R EMAINED TO BE ADDED BACK ERRONEOUSLY. ON MERITS, THE ADDITION OF THE SA ME HAS BEEN ACCEPTED BY THE ASSESSEE. THE ONLY PLEA RAISED BY LD. COUNSE L FOR ASSESSEE IS THAT THIS WAS A COMPUTATIONAL ERROR AND A RECTIFIABLE ER ROR U/S 154 AND THEREFORE, PROCEEDINGS U/S 147 COULD NOT BE RESORTED TO BY THE REVENUE WHERE THE RECTIFICATION WAS SUFFICIENT TO CORRECT THE ERROR. UPON PERUSAL, WE ARE NOT CONVINCED WITH THE SAID LOGIC FIRSTLY BECAUSE THERE WAS NO BAR UNDER LAW TO RESORT TO REASSESSMENT PROCEEDINGS IN SUCH CASES OF OMISSIONS. RATHER, EXPLANATION-2 CREATES A DEEMING FICTION OF ESCAPEME NT OF INCOME WHEREIN THERE WAS AN UNDERASSESSMENT OF INCOME. SECONDLY, A S EVIDENT FROM RECORDED REASONS, THIS WAS NOT THE ONLY REASON TO T RIGGER REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. THIRDLY, IT WAS N OT A MERE PLAIN COMPUTATIONAL ERROR RATHER AN OMISSION OF SUCH A NA TURE WHICH COULD NOT BE 48 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 TERMED AS MISTAKE APPARENT FROM RECORD. IT IS ALSO PERTINENT TO NOTE THAT NO SUCH ADJUSTMENT WAS MADE BY THE ASSESSEE IN ITS COM PUTATION OF INCOME AND LD. AO HAD NO OCCASION TO CONSIDER THE SAME AND THE SAID OMISSION COULD NOT BE SAID TO BE A FAULT ON THE PART OF LD. AO. FOR THE SAME REASONS, THE DECISION OF HONBLE BOMBAY HIGH COURT IN HINDUSTAN UNILEVER LTD. V/S DCIT [325 ITR 102] AS RELIED UPON BY LD. AR, WOULD BE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE CASE. RESULTANTL Y, WE UPHOLD THE VALIDITY OF REASSESSMENT PROCEEDINGS ON THIS ISSUE. THE ISSUE, ON MERITS, AS ALREADY STATED, WOULD REQUIRE NO INDULGENCE SINCE THE SAID ADDITIONS HAVE ALREADY BEEN ACCEPTED BY THE ASSESSEE IN VIEW OF THE FACT T HAT DEDUCTION OF THE SAME HAS ALREADY BEEN ALLOWED IN SUBSEQUENT AY 2005 -06 ON PAYMENT BASIS. 7.3.1 UNDER ASSESSMENT OF INCOME TO THE EXTENT RS. 11.07 CRORES ON ACCOUNT OF EXCESS DEDUCTION OF RS.11.07 CRORES U/S 35DDA TOWARDS VRS PAYMENT ON LEGAL GROUNDS, THE LD. AR HAS RAISED THE PLEA OF CHANGE OF OPINION BY DRAWING OUR ATTENTION TO THE FACT THAT FULL DISCLOS URE OF THE ISSUE WAS MADE BEFORE LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS . THE LD. AO ACCEPTED THE ASSESSEES CLAIM AFTER DUE EXAMINATION OF FACTS AND EXPLANATIONS OFFERED BY THE ASSESSEE WITH RESPECT T O FULL CLAIM OF DEDUCTION ON ACCOUNT OF LEAVE ENCASHMENT, GRATUITY AND PENSIO N. IT HAS FURTHER BEEN SUBMITTED THAT REOPENING HAS BEEN DONE MERELY AT TH E BEHEST OF REVENUE AUDIT OBJECTIONS WHICH MERELY EXPRESSES AN OPINION OF THE AUDIT PARTY. OUR ATTENTION IS ALSO DRAWN TO THE FACT THAT DEDUCTION WAS ALLOWED IN FULL DURING 49 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 REGULAR ASSESSMENT PROCEEDINGS WHEREAS THE SAME WAS RESTRICTED TO 20% IN REASSESSMENT PROCEEDINGS ON SAME SET OF FACTS WH ICH WOULD BE NOTHING BUT REVIEW OF THE ORDER. THE PLEA OF LD. COUNSEL FO R REVENUE REVOLVED AROUND THE FACT THAT MATTER ESCAPED ATTENTION OF LD . AO IN THE REGULAR ASSESSMENT PROCEEDINGS AND NO OPINION WAS FORMED ON THIS ISSUE IN THE ORIGINAL ORDER. 7.3.2 WE HAVE CONSIDERED THE SAME. UPON CAREFUL CO NSIDERATION OF PAGE NO. 4 OF ASSESSEES PAPER-BOOK, IT IS EVIDENT THAT ITEM-WISE BREAK UP OF VOLUNTARY RETIREMENT EXPENDITURE WAS PLACED ON R ECORD BY THE ASSESSEE DURING REGULAR ASSESSMENT PROCEEDINGS AND THE EXTEN T TO WHICH DEDUCTION WAS CLAIMED AGAINST EACH AND EVERY ITEM OF THE EXPE NDITURE WAS ALSO BIFURCATED. THE LD. AO, ON THE COURSE OF ORIGINAL A SSESSMENT PROCEEDINGS, VIDE NOTICE DATED 17/10/2005 RAISED A SPECIFIC QUER Y VIDE QUESTION NO. 39 AND ASKED THE ASSESSEE TO FILE BRIEF NOTE ON VRS EX PENDITURE OF RS.49.27 CRORES CLAIMED U/S 35DDA. THE ASSESSEE, VIDE SUBMIS SIONS DATED 02/11/2006 SUBMITTED THE REQUISITE DETAILS AS ASKED FOR BY LD. AO. THEREAFTER, THE ASSESSEES CLAIM WAS ACCEPTED AND N O ADJUSTMENT WAS MADE ON THIS ACCOUNT. ON THE BASIS OF CHRONOLOGY OF THESE EVENTS, WE ARE OF THE CONSIDERED OPINION THAT THE STATED ISSUE WAS DULY CONSIDERED BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS AND RECONS IDERATION OF THE ISSUE ON SAME SET OF FACTS WOULD BE NOTHING BUT MER E CHANGE OF OPINION AND REVIEW OF ORDER WHICH IS IMPERMISSIBLE UNDER L AW. THEREFORE, WE HOLD THAT LD. AO HAD NO JURISDICTION TO INVOKE REASSESSM ENT PROCEEDINGS ON THIS ISSUE. 50 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 7.3.3 ALTHOUGH AFTER HAVING REACHED SUCH A CONCLUS ION, THE ADJUDICATION OF ISSUE, ON MERITS, WOULD BECOME MERE LY ACADEMIC IN NATURE. HOWEVER, FOR THE SAKE OF COMPLETENESS, WE DELVE INT O THE SAME. THE LD. DR HAS RAISED A PLEA THAT SECTION 35DDA WAS A SPECI FIC PROVISION AND THE DEDUCTION WAS TO BE ALLOWED IN ACCORDANCE WITH THE PROVISION OF THAT SECTION ONLY. PITTIED AGAINST THE SAME IS THE ARGUMENT OF T HE LD. AR THAT THESE THREE COMPONENTS WERE STATUTORY PAYMENTS AND INCORPORATED IN THE INDIVIDUAL CONTRACTS OF EMPLOYMENT BY VIRTUE OF WHICH THE EMPL OYEES WERE ENTITLED TO THE SAID PAYMENT WHENEVER THEY RESIGN OR RETIRE. TH E SAME IS SOUGHT TO BE FORTIFIED BY THE FACT THAT THE ASSESSEE, FOR THE VE RY SAID REASON, ADDED BACK THE AMOUNT OF RS.25.60 CRORES ON ACCOUNT OF VRS EXP ENDITURE U/S 43B WHILE COMPUTING ITS INCOME FOR THE YEAR. THEREFORE, IT HAS BEEN SUBMITTED THAT THE EVENT WHICH TRIGGERED THESE PAYMENTS WAS R ETIREMENT AND THOUGH THE EMPLOYEES RETIRED CONSEQUENT TO EXERCISING THE OPTION UNDER ERO SCHEME, THE PAYMENTS WERE INDEPENDENTLY MADE AND DI D NOT FALL WITHIN THE SCOPE OF SECTION 35DDA. 7.3.4 WE HAVE CAREFULLY CONSIDERED THE SAME. IT IS NOTED THAT THE ASSESSEE HAS INCURRED TOTAL EXPENDITURE OF RS.191 C RORES ON ACCOUNT OF VRS EXPENDITURE. THE SAID AMOUNT OF RS.191 CRORES W AS AMORTIZED IN THE BOOKS OF ACCOUNTS OVER A PERIOD OF 5 YEARS STARTING FROM AUGUST 1, 2003. ACCORDINGLY, THE PROPORTIONATE AMOUNT OF 8 MONTHS P ERIOD ENDING ON 31/03/2004 AMOUNTING TO RS.25.60 CRORES WAS CHARGED IN THE PROFIT & LOSS ACCOUNT. THE SAID AMOUNT, IN THE COMPUTATION OF INC OME HAS BEEN ADDED BACK U/S 43B. THE PROVISIONS OF SECTION 43B STARTS WITH NON-OBSTANTE 51 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 CLAUSE AND PROVIDES FOR CERTAIN DEDUCTIONS TO THE A SSESSEE ONLY ON ACTUAL PAYMENT BASIS. THE AFORESAID AMOUNT OF RS.191 CROR ES INCLUDES NOT ONLY THE 3 COMPONENTS VIZ. LEAVE ENCASHMENT, GRATUITY AN D PENSION BUT ALSO ALL THE OTHER COMPONENTS OF VRS EXPENDITURE. HENCE, THE AMORTIZATION OF RS.25.60 CRORES INCLUDE ALL THE COMPONENTS OF VRS E XPENDITURE. THEREFORE, THE ARGUMENT THAT THE 3 COMPONENTS WERE STATUTORY P AYMENTS IN CONTRAST TO OTHER COMPONENTS, WOULD NOT BE A CORRECT PROPOSITIO N. 7.3.5 THE ONLY PROVISIONS UNDER WHICH THE SAID DED UCTION HAS BEEN CLAIMED AS WELL AS ALLOWED IS SECTION 35DDA. THE RE LEVANT PROVISIONS OF SECTION 35DDA READ AS UNDER: - AMORTISATION OF EXPENDITURE INCURRED UNDER VOLUNTAR Y RETIREMENT SCHEME. 35DDA. (1) WHERE AN ASSESSEE INCURS ANY EXPENDITURE IN ANY PREVIOUS YEAR BY WAY OF PAYMENT OF ANY SUM TO AN EMPLOYEE IN CONNECTION WIT H HIS VOLUNTARY RETIREMENT, IN ACCORDANCE WITH ANY SCHEME OR SCHEMES OF VOLUNTARY RETIREMENT, ONE-FIFTH OF THE AMOUNT SO PAID SHALL BE DEDUCTED IN COMPUTING THE PROFITS AND GAINS OF THE BUSINESS FOR THAT PREVIOUS YEAR, AND THE BALANCE SHALL BE DEDUCTED IN EQUAL INSTALMENTS FOR EACH OF THE FOUR IMMEDIATELY SUCCEEDING PREVIOUS YEARS. A PERUSAL OF THE SAME WOULD ESTABLISH THAT THE ASSE SSEE IS ENTITLED TO AMORTIZE VRS EXPENDITURE ONLY TO THE EXTENT OF 1/5 TH OF THE AMOUNT PAID IN CONNECTION WITH VOLUNTARY RETIREMENT SCHEME. THE BA LANCE WOULD BE ALLOWABLE IN EQUAL INSTALLMENTS OF EACH OF THE 4 SU CCEEDING YEARS. 7.3.6 A COMBINED READING OF THE ABOVE FACTS WOULD LEAD US TO A CONCLUSION THE ONLY PROVISIONS UNDER WHICH THE SAID DEDUCTION HAS BEEN CLAIMED AS WELL AS ALLOWED TO THE ASSESSEE IS SECTI ON 35DDA WHICH PROVIDES FOR DEDUCTION ONLY TO THE EXTENT OF 1/5 TH IN THE FIRST YEAR. THE PROVISIONS OF STATUTE BEING EXPRESSLY CRYSTAL CLEAR , WE HOLD THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION ONLY TO TH E EXTENT OF 1/5 TH ONLY 52 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 DURING IMPUGNED AY AGAINST AGGREGATE PAYMENT OF RS. 191 CRORES. THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN BHOR INDUSTRIES LIMITED 264 ITR 180, IN OUR CONSIDERED OPINION, WOULD NOT APPLY-FIRSTLY BECAUSE ADMITTEDLY THE SAID DECISION IS PRIOR TO IN TRODUCTION OF SECTION 35DDA AND SECONDLY, NO SUCH DISALLOWANCE U/S 43B WA S THERE AND THEREFORE, THE SAID CASE IS FACTUALLY DISTINGUISHAB LE. THEREFORE, WE REVERSE THE STAND OF LD. FIRST APPELLATE AUTHORITY, IN THIS REGARD AND RESTORE THE STAND OF LD. AO. HOWEVER, IT IS MADE VERY CLEAR THAT OUR ADJUDICATIO N OF THE ISSUE, ON MERITS, WOULD COME INTO PLAY ONLY IF OUR STAND, ON LEGAL GR OUNDS, IS SUBSEQUENTLY REVERSED BY ANY HIGHER JUDICIAL AUTHORITY. 7.4.1 BAD DEBTS OF RS.492.26 CRORES ALLOWED WITHOU T ANY DOCUMENTARY EVIDENCES THIS LD. COUNSEL FOR ASSESSEE HAS RAISED THE PLEA O F CHANGE OF OPINION AS WELL AS DOCTRINE OF MERGER TO SUBMIT THAT THE ISSUE WAS EXTENSIVELY EXAMINED DURING REGULAR ASSESSMENT PROCEEDINGS AND THE SAID ISSUE WAS ALREADY SUBJECT MATTER OF FURTHER APPEAL. IT HAS AL SO BEEN SUBMITTED THAT NEW TANGIBLE MATERIAL CAME INTO THE POSSESSION OF L D. AO TO TAKE A DIFFERENT STAND IN THE MATTER. ON MERITS, IT HAS BEEN SUBMITT ED THAT AO DID NOT DISPUTE THE EXISTENCE OF DEBTS OR WRITE-OFF OF THE BAD-DEBTS IN THE BOOKS OF ACCOUNTS AND THEREFORE, THE DECISION OF HONBLE SUP REME COURT IN TRF LIMITED [323 ITR 397] AND VIJAYA BANK [323 ITR 166] WOULD APPLY. 7.4.2 THE PLEA OF LD. COUNSEL FOR REVENUE REVOLVES AROUND THE FACT THAT NO OPINION WAS FORMED ON THIS ISSUE IN REGULAR ASSESSMENT 53 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 PROCEEDINGS SINCE EVEN BASIS DETAILS WERE NOT AVAIL ABLE ON RECORD. IT HAS ALSO BEEN SUBMITTED THAT PLEA OF DOCTRINE OF MERGE WAS NEVER RAISED IN THE OBJECTION BEFORE LOWER AUTHORITIES. THE DECISION OF HONBLE BOMBAY HIGH COURT IN ASSESSEES WRIT PETITION NO. 1765 OF 2011 DATED 09/11/2011 WAS SOUGHT TO BE DISTINGUISHED ON FACTUAL MATRIX. 7.4.3 UPON CAREFUL CONSIDERATION OF MATERIAL ON RE CORD, WE FIND THAT THE ASSESSEE HAD FILED STATEMENT OF BAD DEBTS ALONG WIT H ITS COMPUTATION OF INCOME DURING REGULAR ASSESSMENT PROCEEDINGS. THE P ERUSAL OF THE SAME WOULD REVEAL THAT THE ASSESSEE WORKED OUT BAD DEBTS FOR RS.1683.96 CRORES AND AFTER ADJUSTING THE PROVISIONS / WRITE-O FF, CLAIMED NET BAD-DEBTS OF RS.1659.17 CRORES DURING IMPUGNED AY. THE SAME I S ALSO EVIDENT FROM NOTE NO.3(A) FORMING PART OF COMPUTATION OF INCOME. THE LD. AO, VIDE NOTICE DATED 17/10/2005 QUESTION NO.2 DIRECTED THE ASSESSE E TO FILE THE REQUISITE DETAILS IN RESPECT OF THIS CLAIM. THE ASSESSEE WAS, INTER-ALIA, DIRECTED TO FURNISH THE DETAILS OF BAD DEBTS INDICATING THE NAM E AND COMPLETE ADDRESS OF THE PARTIES, AMOUNTS ADVANCED, DURATION OF THE D EBTS OUTSTANDING, STEPS TAKEN TO RECOVER THE BAD ETC. IN RESPECT OF BAD DEB TS EXCEEDING RS.50,000/. THE ASSESSEE, VIDE SUBMISSIONS DATED 09/11/2006, INTER-ALIA, SUBMITTED THAT THE BAD DEBTS WERE ALLOWABLE U/S 36(1)(VII) AN D THE WRITE-OFF FULFILLED THE CONDITIONS LAID DOWN U/S 36(2). IT WAS SUBMITTED TH AT BAD DEBTS WERE IDENTIFIED BY THE ASSESSEE BANK BY FOLLOWING AN ELA BORATE SYSTEM OF IDENTIFYING BAD CASES. IN FURTHER SUBMISSIONS DATED 16/11/2006, THE ASSESSEE FURNISHED DETAILS OF BAD DEBTS EXCEEDING R S.5 CRORES WRITTEN-OFF DURING THE YEAR ALONG WITH 3 BOX FILES CONTAINING D OCUMENTARY EVIDENCES IN 54 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 SUPPORT OF BAD DEBTS WRITTEN OFF PERTAINING TO 23 C OMPANIES. IT WAS SUBMITTED THAT ALL DOCUMENTS IN RESPECT OF BAD DEBT S WRITTEN-OFF OVER RS.10 CRORES WERE FURNISHED AND FURTHER TIME WAS SOUGHT T O FURNISH THE EVIDENCES WITH RESPECT TO BALANCE BAD DEBTS CLAIM. IN CONTINU ATION OF THE SAME, THE ASSESSEE VIDE SUBMISSIONS DATED 20/12/2006 FURNISHE D ONE MORE BOX FILE CONTAINING BAD DEBTS DOCUMENTS IN SUPPORT OF THE CL AIM. 7.4.4 THE LD. ASSESSING OFFICER EXHAUSTIVELY DEALT WITH THE ISSUE OF BAD DEBTS CLAIM IN PARA-11 (FROM PAGE NOS. 31 TO 80 ) OF THE QUANTUM ASSESSMENT ORDER U/S 143(3) PASSED ON 29/12/2006. AFTER CONSIDERING THE LEGAL POSITION, LD.AO CATEGORIZED BAD-DEBTS UNDER V ARIOUS HEADS AND GAVE FINDINGS UNDER EACH AND EVERY HEAD. FINALLY, AT PAR A 11.99 OF THE ORDER, AN ADDITION MADE ON ACCOUNT OF BAD DEBTS WAS SUMMARIZE D IN THE FOLLOWING MANNER: - 11.99 THE TOTAL ADDITIONS IN RESPECT OF BAD DEBTS W RITTEN-OFF ARE SUMMARIZED AS UNDER:- A-1 CORE HEALTHCARE LTD. 135,73,60,036 A-2 BELLARY STEEL & ALLOYS LTD. 112,76,33,429 A-3 UNIWORTH LTD. 83,64,29,010 A-4 UNIWORTH TEXTILE LTD 8,38,03,869 A-5 BPL LTD 22,38,72,371 A-6 BPL REGRIGERATOR 30,89,75,495 A-7 BIRLA VXL LIMITED 45,66,29,701 A-8 JORD ENGINEERS INDIA 26,88,45,831 A-9 AAFLOAT TEXTILES (AKAI IMPEX LIMITED) 21,95,64, 375 A-10 SANGHI SPINNERS (I) LTD 70,50,81,168 A-11 GUJARAT TELEPHONE CABLES LTD 39,81,37,186 A-12 GUJARAT OPTICAL COMMUNICATION LTD 10,89,42,542 A-13 TITAGARH INDUSTRIES 21,60,50,136 A-14 MH MILLS AND INDUSTRIES LTD 11,86,88,587 A-15 BALAJI INDUSTRIAL CORPN 7,11,11,649 A-16 RAMA NEWSPRINT AND PAPERS 25,00,00,000 A-17 GAYATRI SUGA COMPLEX LTD 12,61,88,068 A-18 SHREE DIGVIJAY CEMENT CO LTD 15,00,00,000 A-19 GSL (INDIA) LTD 60,43,28,255 A-20 IG PETROCHEMICALS LTD 40,19,32,175 A-21 SUDERSHAN DRUGS & INTERMEDIARIES LTD. (SDIL) 1 1,42,66,668 55 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 11.1100 FOR THE REASONS DISCUSSED ABOVE, PENALTY PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE I.T.ACT READ WITH EX PLANATION THERETO FOR FURNISHING INACCURATE PARTICULARS INCOME OF THE ASSESSEE BANK S INCOME AND CONCEALMENT OF INCOME ( ADDIITON RS.1157,66,77,475/-). 12. DEDUCTION U/S 36(1)(VII) 12.1 IN VIEW OF THE ABOVE DISALLOWANCES / ADDITIONS IN RESPECT OF BAD / DOUBTFUL DEBTS WRITTEN OFF, THE ALLOWABLE DEDUCTION U/S 36(1)(VII) IS WORKED OUT AS UNDER: - 1. TOTAL AMOUNT WRITTEN OFF AS BAD DEBTS RS.1683 ,69,54,466 LESS : 1.AMOUNTS DISALLOWED IN A.Y.2003-04 RS.31 ,01,59,219 (SUBJECT TO REVISION) 2.WRITE OFF THROUGH SPECIFIC PROVISION RS.2,71,47,000 RS.33,77,06,219 THE AMOUNT RESTRICTED AS PER PROVISO TO SECTION 36(1)(VII) BEFORE THE DISALLOWANCE OF RS.1157,66,77,475/- RS.1649,92 ,48,247 THE PERUSAL OF ABOVE WORKING / COMPUTATIONS WOULD R EVEAL THAT THE ISSUE OF DISALLOWANCE OF BAD DEBTS WAS EXTENSIVELY EXAMINED BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS WITH DUE APPLICATION OF MIND. THE LD. AO NOT ONLY IDENTIFIED THE BAD DEBTS UNDER EACH CATEGO RY BUT ALSO REVISED THE GROSS FIGURES OF BAD-DEBTS. SPECIFIC ADDITIONS WERE MADE IN CASES WHERE REQUISITE DOCUMENTS / EVIDENCES WERE NOT FURNISHED BY THE ASSESSEE. THIS IS FURTHER FORTIFIED BY THE FACT THAT LD. AO, WHILE COMPUTING THE INCOME OF THE A-22 SURYAVANSHI TEXTILES LTD 26,69,51,781 TOTAL (A - 1 TO A - 22 ) RS .841,47,92,332 B. CASES OF BAD DEBTS WRITTEN OFF ABOVE RS.1 CRORE WHERE NO SUBMISSION / DOCUMENTS WERE SUBMITTED RS.95,87,62,854 C. BAD DEBTS WRITTEN OFF- CASES DISALLOWED I N THE PREVIOUS YEAR RS.17,77,83,703 D. CASES WITHOUT SUPPORTING EVIDENCES RS.107,6 2,59,035 E. LOSS ON SALE OF ASSETS ACQUIRED IN SATISFACTION OF CLAIMS RS.30,07,25,994 F. DOUBTFUL DEBTS RAPG SUNDRY DEBTORS & OTHERS RS.3 4,59,54,799 G. BAD DOUBTFUL DEBTS WRITTEN OFF-OTHERS RS.18 ,31,98,455 H. DETAILS OF WRITE OFF AGST FEES INCOME [WRO/COG] RS.11,92,00,303 TOTAL [A TO H] RS.1157,66,77,475 56 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ASSESSEE (ON PAGE 87 OF THE ORDER) SPECIFICALLY COM PUTED THE FIGURE OF BAD DEBTS OF RS.492.25 CRORES AS ALLOWABLE TO THE ASSES SEE. THEREFORE, THE ALLEGATION OF THE REVENUE THAT THE ISSUE OF BAD DEB TS OF BALANCE AMOUNT OF RS.492.25 CRORES REMAINED TO BE EXAMINED / VERIFIED IN REGULAR ASSESSMENT PROCEEDINGS, WOULD NOT HAVE ANY SOUND BASIS. SECOND LY, NO NEW TANGIBLE MATERIAL CAME INTO THE POSSESSION OF LD. AO AND FUR THER DISALLOWANCE WAS MADE ON SAME SETS OF FACTS. THIRDLY, THE ISSUE OF B AD-DEBTS WAS ALREADY PENDING BEFORE LD. CIT(A) ON THE DATE WHEN NOTICE U /S 148 WAS ISSUED TO THE ASSESSEE. THE LD. SR. COUNSEL FOR REVENUE PLEAD ED THAT THIS OBJECTION WAS NEVER RAISED BY THE ASSESSEE. HOWEVER, IN OUR C ONSIDERED OPINION, THERE COULD BE NO ESTOPPEL AGAINST LAW AND ANY LIMI TATION IMPOSED BY LAW ON THE POWERS OF LD. AO COULD NOT BE OVERCOME BY AC QUIESCENCE OF THE ASSESSEE. IN VIEW OF OUR FINDING THAT THE MATTER WA S THOROUGHLY EXAMINED BY LD. AO IN REGULAR ASSESSMENT PROCEEDINGS AND ASS ESSEES APPEAL AGAINST THE SAME WAS PENDING, THE OBSERVATION OF HO NBLE BOMBAY HIGH COURT IN ASSESSEES WRIT PETITION (FOR AY 2003-04) NO. 1765 OF 2011 DATED 09/11/2011 WOULD SQUARELY APPLY TO THE FACTS OF THE CASE. THE RELEVANT OBSERVATION OF HONBLE COURT COULD BE EXTRACTED IN THE FOLLOWING MANNER: - 17. IN THIS REGARD, IT NEEDS TO BE NOTICED THAT THE SE COND PROVISO TO SECTION 147 STIPULATES THAT THE ASSESSING OFFICER MAY ASSESS OR RE-ASSESS SUCH INCOME OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTER OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPE D ASSESSMENT. IN THE PRESENT CASE, IT HAS EMERGED FROM THE AFFIDAVIT IN REPLY OF THE R EVENUE THAT THE ASSESSEE HAD FILED AN APPEAL TO THE CIT(APPEALS) AGAINST THE ORDER OF ASS ESSMENT. PARAGRAPH 4(V) OF THE REPLY STATES THAT BY HIS ORDER DATED 29 SEPTEMBER 2 010, THE CIT (APPEALS) PARTLY ALLOWED THE APPEAL FILED BY THE PETITIONER BY ACCEP TING THE CLAIM UNDER SECTION 36(1)(VII) AND SECTION 36(1)(VIII) AND BY ALLOWING A PROPORTIO NATE DEDUCTION UNDER SECTION 10(23G) ON THE BASIS OF THE RATIO ADOPTED IN THE EARLIER AS SESSMENT YEARS. THAT BEING THE POSITION, IN VIEW OF THE CLEAR PROVISIONS OF THE SE COND PROVISO TO SECTION 147, THE 57 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ASSESSING OFFICER CANNOT PURPORT TO RE-OPEN THE ASS ESSMENT IN RESPECT OF A MATTER WHICH SQUARELY FORMED THE SUBJECT MATTER OF THE APP EAL BEFORE THE CIT(APPEALS). UNDER SECTION 251, THE POWERS OF THE CIT(APPEALS) ARE WID E. THE CIT(APPEALS) IS ENTITLED WHILE DISPOSING OF AN APPEAL AGAINST AN ORDER OF AS SESSMENT TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. CONSEQUENTLY, IT W AS OPEN TO THE REVENUE IN THE APPEAL BEFORE THE APPELLATE AUTHORITY TO URGE THAT THE CLAIM TO A WRITE OFF UNDER SECTION 36(1)(VII) OUGHT TO HAVE BEEN DIS-ALLOWED TO THE EX TENT TO WHICH INCOME HAD BEEN CLAIMED TO BE EXEMPT UNDER SECTION 10(23G). THE OBJ ECT AND PURPOSE UNDERLYING THE SECOND PROVISO TO SECTION 147 IS THAT UPON AN ASSES SMENT BEING RE-OPENED, THE ASSESSING OFFICER IS ENTITLED TO ASSESS OR RE-ASSES S SUCH INCOME WHICH IS CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT. HOWEVER, MATTERS WHICH ARE THE SUBJECT MATTER OF AN APPEAL, REFERENCE OR REVISION, ARE EXCEPTED FROM THE JURISDICTION OF THE ASSESSING OFFICER. IN THE PRESENT CASE, THE EXERCISE OF THE P OWER TO RE-OPEN THE ASSESSMENT ON THE FIRST AND THIRD GROUND, BOTH OF WHICH RELATES TO TH E WRITE OFF OF BAD DEBTS UNDER SECTION 36(1)(VII) IS IN EXCESS OF JURISDICTION, ONCE THE W RITE OFF FORMED THE SUBJECT MATTER OF AN APPEAL BEFORE THE CIT(APPEALS) AND WHICH RESULTED I N AN ORDER OF 29 SEPTEMBER 2010 OF THE APPELLATE AUTHORITY. THE POWER TO REOPEN AN ASS ESSMENT CANNOT BE EXERCISED TO RE- OPEN WHAT FORMED THE SUBJECT MATTER OF AN APPEAL TO THE CIT (APPEALS). 7.4.5 THEREFORE, ON THE FACTS AND CIRCUMSTANCES, W E HOLD THAT THIS ISSUE WAS ALREADY BEEN SUBJECTED TO EXAMINATION / V ERIFICATION BY LD. AO AND AN OPINION WAS FORMED DURING REGULAR ASSESSMENT PROCEEDINGS. THEREFORE, TO TRIGGER THE REASSESSMENT PROCEEDINGS FOR RE-EXAMINATION OF THE SAME WOULD BE NOTHING BUT A REVIEW OF THE ORDER , WHICH IS IMPERMISSIBLE. THEREFORE, REOPENING COULD NOT BE UP HELD ON THIS ISSUE ON ACCOUNT OF CHANGE OF OPINION AS WELL AS ON ACCOUNT OF DOCTRINE OF MERGER. 7.4.6 ALTHOUGH AFTER HAVING DECIDED THE ISSUE ON L EGAL GROUNDS IN ASSESSEES FAVOR, THE ADJUDICATION OF THE SAME ON M ERITS WOULD BECOME MERELY ACADEMIC IN NATURE. HOWEVER, FOR THE SAKE OF COMPLETENESS, WE DELVE INTO THE SAME. WE FIND THAT THE ASSESSEE CONT ESTED THE ISSUE OF ADDITIONS, AS MADE BY LD. AO IN REGULAR ASSESSMENT, WITH SUCCESS BEFORE LD. FIRST APPELLATE AUTHORITY. THE REVENUE PREFERRE D APPEAL AGAINST THE SAME 58 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 BEFORE THIS TRIBUNAL VIDE ITA NO. 6137/MUM/2018 ORD ER DATED 03/11/2017 WHEREIN THE MATTER, VIDE PARA 34 OF THE ORDER, WAS RESTORED BACK TO THE FILE OF LD. AO WITH CERTAIN DIRECTIONS. SINCE A VIEW HAS ALREADY BEEN TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL ON THIS ISSUE , RESPECTFULLY FOLLOWING THE SAME, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF LD. AO ON SIMILAR LINES. HOWEVER, IT IS MADE VERY CLEAR THAT OUR ADJUDICATIO N OF THE ISSUE, ON MERITS, WOULD COME INTO PLAY ONLY IF OUR STAND, ON LEGAL GR OUNDS, IS SUBSEQUENTLY REVERSED BY ANY HIGHER JUDICIAL AUTHORITY. 7.5.1 EXEMPTION U/S 10(23G) NOT ALLOWABLE AS THE B ANK WAS NEITHER INFRASTRUCTURE CAPITAL COMPANY NOR INFRASTRUCTURE F UND ESTABLISHED FOR MOBILIZING RESOURCES AS FOUND WHILE SCRUTINIZING TH E RETURN FOR AY 2005-06. AS STATED EARLIER, THIS ISSUE STEM FROM FINDINGS IN AY 2005-06. SIMILAR ARGUMENTS OF CHANGE OF OPINION AND DOCTRINE OF MERG ER HAS BEEN RAISED BY LD. COUNSEL FOR ASSESSEE. 7.5.2 UPON PERUSAL, WE FIND THAT THE ASSESSEE DURI NG REGULAR PROCEEDINGS, HAD FILED ALONG WITH ITS COMPUTATION O F INCOME, COMPLETE DETAILS OF INCOME ELIGIBLE FOR EXEMPTION U/S 10(23G ). BY WAY OF NOTE NO. 11(B) ATTACHED TO AND FORMING PART OF COMPUTATION O F INCOME, THIS FACT WAS CLEARLY SPELT OUT BY THE ASSESSEE. A SPECIFIC QUERY , IN THIS REGARD, WAS RAISED BY LD. AO VIDE NOTICE DATED 17/10/2005 QUEST ION NO. 4 ASKING ASSESSEE TO FILE THE COMPLETE DETAILS / EVIDENCES I N SUPPORT OF THE SAID CLAIM. THE ASSESSEE, VIDE SUBMISSIONS DATED 17/07/2 006 SUBMITTED THE REQUISITE DETAILS AS ASKED FOR BY LD. AO. THEREAFTE R, THE ASSESSEES 59 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 ELIGIBILITY TO CLAIM THE SAME WAS EXHAUSTIVELY DEAL T WITH BY LD. AO VIDE PARAGRAPH-5 (PAGE NOS. 2 TO 7) WHILE FRAMING ASSESS MENT ORDER U/S 143(3) ON 29/12/2006. IN FACT, AN ADDITION OF RS.64.69 CRO RES WAS MADE BY LD. AO IN THE REGULAR ASSESSMENT PROCEEDINGS WHICH WAS SUB JECT MATTER OF FURTHER APPEAL BEFORE FIRST APPELLATE AUTHORITY. THEREFORE, THE RECONSIDERATION OF THE STATED ISSUE ON SAME SET OF FACTS WOULD BE NOTHING BUT MERE CHANGE OF OPINION WHICH IS IMPERMISSIBLE UNDER LAW. THIS ISSU E WAS DULY CONSIDERED BY LD. AO DURING REGULAR ASSESSMENT PROCEEDINGS AND THEREFORE, THE RATIO OF DECISION OF HONBLE APEX COURT RENDERED IN CIT VS. KELVINATOR OF INDIA LTD. [320 ITR 561] WOULD APPLY TO THE FACTS OF THE CASE. SECONDLY, THE ARGUMENT OF DOCTRINE OF MERGER AS ADVANCED BY LD. A R WOULD ALSO BE APPLICABLE TO THE FACTUAL MATRIX. THEREFORE, WE HOL D THAT LD. AO HAD NO JURISDICTION TO INVOKE REASSESSMENT PROCEEDINGS ON THIS ISSUE. 7.5.3 SO FAR AS THE MERITS OF THE CASE ARE CONCERN ED, IT IS ADMITTED POSITION THAT THE ISSUE STOOD SQUARELY COVERED IN A SSESSEES FAVOR BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R AY 2005-06 ITA NOS.5276/MUM/2013 ORDER DATED 03/11/2017 WHEREIN C O-ORDINATE BENCH AT PARA-71 HAS HELD THAT THE ASSESSEE WAS ELIGIBLE TO CLAIM EXEMPTION U/S 10(23G) OF THE ACT. THEREFORE, THE ISSUE ON MERITS AS ADJUDICATED BY LD. FIRST APPELLATE AUTHORITY, WOULD REQUIRE NO INTERFE RENCE, ON OUR PART. CONCLUSION 8. GROUND NO.1 & 2 OF REVENUES APPEAL, ALTHOUGH AL LOWED, WOULD BECOME INFRUCTUOUS IN VIEW OF ASSESSEES LEGAL GROU NDS. GROUND NO. 3 & 4 STANDS DISMISSED. GROUND NO. 5 & 6 ARE GENERAL IN N ATURE. 60 ICICI BANK LIMITED ASSESSMENT YEAR-2004-05 9. GROUND NO. 1 & 2 OF ASSESSEES CROSS-OBJECTIONS STAND PARTLY ALLOWED TO THE EXTENT INDICATED IN THE ORDER. GROUND NO. 3 IS GENERAL IN NATURE. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JULY, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/07/2019 SR.PS:-JAISY VARGHESE ! '! / COPY OF THE ORDER FORWARDED TO : 1. !% / THE APPELLANT 2. &'!% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. ( )& * , * , / DR, ITAT, MUMBAI 6. ) ,-. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI