DCIT, Bangalore V. M/s ING Vysya Bank Ltd., Bangalore

ITA 55/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73376 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 11-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT
• Keywords: Reopening of assessment; Business expenditure; Bad and doubtful debts; Difference of opinion; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 263

Judgement Text

ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE CBENCH, BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO. 55/BANG/2013 (ASSESSMENT YEAR: 2005-06) DY. COMMISSIONER OF INCOME TAX, CIRCLE 11 (4) NO.14/3, 5 TH FLOOR, NRUPATHUNGA ROAD, BANGALORE 560001 VS. M/S ING VYSYA BANK LTD ING VYSYA HOUSE, NO.22 MG ROAD, BANGALORE 560001 PAN: AABCT 0529 M (APPELLANT) (RESPONDENT) C.O. NO.86/BANG/2013 (ARISING OUT OF ITA NO.55/BANG/2013) (ASSESSMENT YEAR: 2005-06) M/S ING VYSYA BANK LTD ING VYSYA HOUSE, NO.22 MG ROAD, BANGALORE 560001 PAN: AABCT 0529 M VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11 (4) NO.14/3, 5 TH FLOOR, NRUPATHUNGA ROAD, BANGALORE 560001 (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: MS. PRISCILLA SINGSIT, CIT (DR) ASSESSEE BY: SHRI S. ANANTHAN, CA DATE OF HEARING: 22/01/2014 DATE OF PRONOUNCEMENT: 24/01/2014 O R D E R PER BENCH: THIS APPEAL AT THE INSTANCE OF THE REVENUE AND THE CROSS OBJECTION PREFERRED BY THE ASSESSEE ARE DIRECTED AG AINST THE CIT (A)S ORDER DATED 28.09.2012. THE RELEVANT ASSESSME NT YEAR IS 2005-06. ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 2 OF 12 2. IN THE REVENUES APPEAL, THE EFFECTIVE GROUNDS R AISED ARE AS FOLLOWS: 2. THE CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT RS.82,56,319 WAS AN ALLOWABLE EXPENDITURE. 3. THE CIT (A) ERRED IN HOLDING THAT THE EXPENDITUR E INCURRED AND PENDING VERIFICATION/CLASSIFICATION WA S CALLED AS PROVISION BUT ACTUALLY REPRESENTS MONEY UTILISED OUT OF THE IMPREST ACCOUNT. 4. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE AM OUNT OF RS.30,36,603 WAS AMOUNT WRITTEN OFF IN THE BOOKS OF ACCOUNTS BUT CLAIMED UNDER A WRONG CLASSIFICATIO N AS PROVISION FOR EXPENSES. 3. IN THE CROSS OBJECTION, THE GROUNDS RAISED BY TH E ASSESSEE READ AS FOLLOWS: 1. THE LEARNED CIT (A) AND ASSESSING OFFICER FAILE D TO APPRECIATE THAT THE RE-OPENING OF ASSESSMENT U/S 14 7 OF THE INCOME TAX ACT, 1961 IS ILLEGAL AND AGAINST THE LAW AND THE FACTS. 1.1 THE LEARNED CIT (A) FAILED TO APPRECIATE THAT T HE RE-OPENING WAS BASED ON CHANGE OF OPINION. 1.2 THE LEARNED CIT (A) FAILED TO APPRECIATE THAT T HE RE-OPENING WAS BASED ON THE SAME MATERIALS FURNISHED BY THE RESPONDENT AND NOT BASED ON ANY NEW MATERIAL. 4. THERE IS A DELAY OF 46 DAYS IN FILING THE CROSS OBJECTION BY THE ASSESSEE BANK. THE ASSESSEE HAS FILED PETITION FOR CONDONING THE DELAY ALONG WITH THE AFFIDAVIT OF THE DEPUTY HE AD TAXATION OF THE ASSESSEE BANK STATING THE REASONS FOR DELAY IN FILING THE CROSS OBJECTION. ON PERUSAL OF THE CONDONATION PETITION A ND THE AFFIDAVIT, WE DEEM IT FIT AND PROPER TO CONDONE THE DELAY OF 46 DAYS IN FILING THE CROSS OBJECTION AND WE PROCEED T O DISPOSE OFF THE MATTER ON MERITS. ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 3 OF 12 5. WE SHALL FIRST CONSIDER THE REVENUE APPEAL. ITA NO. 55/BANG/2013 (REVENUES APPEAL) 6. BRIEF FACTS IN RELATION TO THE REVENUES APPEAL ARE AS FOLLOWS: THE ASSESSEE IS A COMMERCIAL BANK HAVING ITS HEAD OFFICE IN BANGALORE. FOR THE ASSESSMENT YEAR 2005-06, THE ASS ESSEE BANK FILED ITS RETURN OF INCOME ON 31/10/2005 DECLARING A LOSS OF RS.60,49,60,880/-. THE RETURNS WERE SUBSEQUENTLY RE VISED ON 19/10/2006 AND 29/03/2007. THE REVISED RETURN FILE D ON 29 TH MARCH, 2007 DECLARED TOTAL LOSS OF RS.80,68,69,670/ -. THE RETURN OF INCOME WAS TAKEN UP FOR SCRUTINY AND THE ASSESSM ENT U/S 143(3) OF THE ACT WAS COMPLETED ON 31.12.2008 DETER MINING THE TOTAL INCOME AT RS.20,18,00,626/-. SUBSEQUENTLY NOT ICE U/S 148 WAS ISSUED AND THE RE-ASSESSMENT ORDER U/S 147 R.W. S. 143(3) OF THE ACT WAS PASSED DETERMINING THE TOTAL INCOME AT RS.21,10,93,548/-. IN COMPLETING THE RE-ASSESSMENT, THE ASSESSING OFFICER DISALLOWED PROVISION FOR BRANCH E XPENSES AMOUNTING TO RS.92,92,922/-. 6.1 AGGRIEVED BY THE REASSESSMENT, THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A), ASSESSEE RAISED OBJECTION WITH ISSUE OF JURISDICTION OF REOP ENING THE ASSESSMENT U/S 147 AND ALSO ON MERITS. THE CIT (A) ALLOWED THE APPEAL ON MERITS, HOWEVER, REJECTED THE PLEA OF THE ASSESSEE THAT THE RE-ASSESSMENT IS INVALID. THE RELEVANT FINDINGS OF THE CIT (A) ON MERITS ARE EXTRACTED BELOW: ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 4 OF 12 4.5 I HAVE CAREFULLY CONSIDERED THE ELABORATE SUBMISSIONS MADE BY THE APPELLANT. IT MAY BE SEEN FROM THE SUBMISSIONS OF THE APPELLANT IN THIS REGAR D THAT THOUGH THE APPELLANT CLAIMED THE AMOUNTS SPENT ON IMPREST ACCOUNT CALLED AS PROVISION BUT THE SAME REPRESENTS THE EXPENDITURE ACTUALLY INCURRED AND TH E AMOUNTS ARE ELIGIBLE FOR CLAIMING DEDUCTION IN VIEW OF THE FACT THAT APPELLANT IS FOLLOWING MERCANTILE SYS TEM OF ACCOUNTING. OUT OF THE AMOUNT OF RS.92,92,922/-, THE AMOUNT OF RS.82,56,319/- REPRESENTS VARIOUS EXPENSES LIKE ADVERTISEMENT, TRAVELING, PRINTING AN D STATIONERY ETC., AND THESE EXPENSES ARE INCURRED AS PER THE INTERNAL CIRCULAR OF THE BANK DATED 18.07.2 003. THE APPELLANT HAS GOT MORE THAN 350 BRANCHES AND SUCH PETTY EXPENSES WERE INCURRED BY ALL THOSE BRANCHES AND THE VOUCHERS/BILLS WERE PREPARED AND SENT TO THE CENTRALIZED PAYMENT UNIT (CPU). THE EXPENDITURE INCURRED IS PENDING VERIFICATION/ CLASSIFICATION BY THE CPU WAS CALLED AS PROVISION B UT ACTUALLY REPRESENTS THE UTILIZATION MONEY OUT OF TH E IMPREST ACCOUNT. THEREFORE, I AM SATISFIED THAT THE AMOUNT OF RS.82,56,319/- IS AN ALLOWABLE EXPENDITUR E WHILE COMPUTING THE TOTAL INCOME. THEREFORE, THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. AS REGAR DS THE WRITE OFF OF RECEIVABLES FROM VYSYA BANKS HOUSI NG FINANCE LTD (VBHFL), THE SAME IS ALLOWABLE AS A BAD DEBT U/S 36(1)(VII) OF THE ACT. THE AMOUNT OF RS.10,36,603/- WAS WRITTEN OFF BY THE APPELLANT IN THE BOOKS OF ACCOUNTS BUT CLAIMED THE SAME UNDER WRONG CLASSIFICATION OF PROVISIONS OF EXPENSES. IN VIEW O F THE SUBMISSIONS MADE BY THE APPELLANT THE SAID AMOUNT I S ELIGIBLE FOR DEDUCTION AND THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 6.2 THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LEARNED DR RELIED ON THE GROUNDS RAISED AND THE ORD ER OF THE ASSESSING OFFICER. THE LEARNED AR ON THE OTHER HAND RELIED ON THE FINDINGS OF THE CIT (A). ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 5 OF 12 6.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL ON RECORD. THE CIT (A) HAS CATEGORICAL LY CAME TO A FINDING THAT OUT OF THE AMOUNT OF RS.92,92,922/- TH E AMOUNT OF RS.82,56,319/- REPRESENTS VARIOUS EXPENSES LIKE ADV ERTISING, TRAVELING, PRINTING AND STATIONERY ETC., AND THE EX PENSES ARE NOT CONTINGENT LIABILITY. IT WAS FURTHER HELD BY THE CI T (A) THAT THESE EXPENSES THOUGH CALLED PROVISION; IT ACTUALLY REPRE SENTS UTILIZATION OF MONEY AND IS PENDING VERIFICATION/CL ASSIFICATION BY THE CENTRAL PAYMENT UNIT OF THE HEAD OFFICE OF THE ASSESSEE BANK. THESE FINDINGS OF THE CIT (A) HAVE NOT BEEN D ISPELLED BY THE REVENUE. THEREFORE, WE HOLD THAT THAT THE LIABILITY OF RS.82,56,319/- IS NOT A CONTINGENT LIABILITY AS MAD E OUT BY THE ASSESSING OFFICER, BUT THE LIABILITY ACTUALLY INCUR RED OUT OF THE IMPREST ACCOUNT. IT IS ORDERED ACCORDINGLY. 6.3.1 AS REGARD DISALLOWANCE OF RS.10,36,603/-, WE NOTICE THAT THE ASSESSEE BANK HAS WRITTEN OFF RECEIVABLE DUE FR OM VYSYA BANK HOUSING FINANCE LTD (VBHFL) AMOUNTING TO RS.10,36,603/- IN ITS BOOKS OF ACCOUNTS AND HAD CRE DITED THE ACCOUNT OF VBHFL. HOWEVER, THE EXPENDITURE HAS BEEN WRONGLY TERMED AS PROVISIONS FOR BRANCH EXPENSES IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE BANK. THE SAID EXPENDITURE IS NOTHING BUT BAD DEBTS WHICH HAS BEEN WRITTEN OFF IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE AND THE SAME IS ALLOWABLE AS A DEDUCTION U/S 36(1)(VII) OF THE ACT. THE WRONG CLAS SIFICATION OF THE EXPENDITURE IS IMMATERIAL AND THE SAME CANNOT CHANG E THE NATURE OF THE EXPENDITURE. FOR THE AFORESAID REASON S, WE HOLD THAT A SUM OF RS.10,36,603/- IS TO BE ALLOWED AS DE DUCTION U/S 36(1)(VII) OF THE ACT. THEREFORE, THE CIT (A) FINDI NGS ON MERITS IS AFFIRMED. ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 6 OF 12 6.4 HENCE, THE REVENUE APPEAL IS DISMISSED. C.O. NO.86/BANG/2013 (BY THE ASSESSEE) 7. THE CIT (A) HAS DISMISSED THE ASSESSEE PLEA AGAI NST RE- OPENING OF THE ASSESSMENT BY GIVING THE FOLLOWING R EASONS: 3.4 I HAVE CAREFULLY CONSIDERED THE OBJECTIONS RAISED BY THE APPELLANT. IT IS THE CONTENTION OF TH E APPELLANT THAT THE INFORMATION REGARDING THE ISSUE OF PROVISION ON IMPREST ACCOUNT WAS SUBMITTED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER CONSIDERED THE SAME AS ALLOWABLE, HENCE NO DISALLOWANCE WAS MADE, THEREFORE, IT WAS ARGUED THAT THERE WAS A CHANGE OF OPINION AND THE ASSESSMENT WAS REOPENED NOT DUE TO ANY REASON TO BELIEVE AND THE RE-ASSESSMENT WAS MADE. THE APPELLANT FILED VERY ELABORATE SUBMISSIONS IN THIS REGARD HOWEVER I AM NOT CONVINCED WITH THE REASONS. THE TERM REASON TO BELIEVE HAS TO BE UNDERSTOOD I N A PROPER PERSPECTIVE. IT MAY BE SEEN FROM THE ORIGI NAL ASSESSMENT ORDER THAT THE ISSUE WAS NOT DISCUSSED IN THE ASSESSMENT ORDER HENCE THE CONTENTION THAT THERE WAS A OPINION FORMED BY THE ASSESSING OFFICER WHICH WAS SUBSEQUENTLY CHANGED DUE TO SUSPICION IS INCORRECT AND NOT BASED ON ANY MATERIAL. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAD PROPERLY EXERCISED THE POWERS U/S 147/148 OF THE ACT AND ASSUMED JURISDICTION. HENCE THE GROUNDS OF APPEAL RAISED IN THIS REGARD ARE DISMISSED. 7.1. THE ASSESSEE BANK BEING AGGRIEVED HAS FILED TH IS CROSS OBJECTION. THE LEARNED AR REITERATED THE SUBMISSION S MADE ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 7 OF 12 BEFORE THE INCOME TAX AUTHORITIES, WHEREAS THE LEAR NED DR SUPPORTED THE FINDINGS OF THE CIT (A). 7.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIAL ON RECORD. SECTION 147 OF THE ACT MAND ATES THAT THE ASSESSING OFFICER MUST HAVE REASONS TO BELIEVE TH AT THE INCOME HAS ESCAPED ASSESSMENT BEFORE PROCEEDING TO ISSUE R E- ASSESSMENT NOTICE U/S 148 OF THE ACT. JUDICIAL PRON OUNCEMENTS HAVE HELD THAT THE FOLLOWING ELEMENTS MUST EXISTS C UMULATIVELY TO QUALIFY AS REASONS TO BELIEVE FOR THE PURPOSE OF INITIATION OF RE- ASSESSMENT PROCEEDINGS: SOME MATERIAL OR MATERIALS TO ESTABLISH THAT INCOME HAS ESCAPED ASSESSMENT; A NEXUS BETWEEN SUCH MATERIAL AND THE BELIEF OF ESC APEMENT OF INCOME FROM ASSESSMENT AS ENVISAGED U/S 147; AN APPLICATION OF MIND BY THE LEARNED ASSESSING OFFICER TO SUCH MATERIAL; AND AN INFERENCE BASED ON REASON DRAWN TENTATIVELY BY THE OFFICER THAT INCOME HAS ESCAPED ASSESSMENT. 7.3 IN THE INSTANT CASE THE RE-ASSESSMENT NOTICE U/ S 148 HAS BEEN ISSUED TO THE ASSESSEE BANK ON 31.03.2010 RECO RDING THE FOLLOWING REASONS: ASSESSEE ING VYSYA BANK LTD. IS A BANKING COMPANY. DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 200 5- 06, ASSESSEE COMPANY CREATED PROVISION ON IMPREST ACCOUNT AT VARIOUS BRANCHES OF THE COMPANY TO THE EXTENT OF RS.92.92 LAKHS AND THE SAID PROVISION HAS BEEN CHARGED TO P&L ACCOUNT. AS THE SAID IMPREST ACCOUNT IS ONLY A PROVISION THE SAME IS NOT AN ALLO WABLE EXPENDITURE. THEREFORE, I HAVE THE REASON TO BELIEV E THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF THE PROVISION OF SECTION 147 OF THE IT ACT. ACCORDINGLY NOTICE U/S 148 OF THE IT ACT IS ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 8 OF 12 REQUIRED TO BE SERVED ON THE ASSESSEE FOR THE A.Y 2 005- 06. 7.4 PRIOR TO ISSUANCE OF NOTICE, ASSESSMENT U/S 143 (3) WAS COMPLETED ON 31.12.2008. IN THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER VIDE HIS LETTER DATED 17.07.2 007 CALLED FOR DETAILS WITH REFERENCE TO THE PROVISION FOR EXPENSE S DEBITED TO THE TUNE OF RS.92.92 LAKHS (PAGE 4 OF THE ASSESSEES PA PER BOOK). THE ASSESSEE BANK FILED ITS REPLY ON 11.01.2008. THE AS SESSING OFFICERS QUESTION AND THE ASSESSEE REPLY ARE REPRO DUCED BELOW: 16. WITH REFERENCE TO PROVISION FOR EXPENSES DEBI TED TO THE TUNE OF RS.92.92 LAC, TO FURNISH DETAILED BR EAK- UP TOGETHER WITH JUSTIFICATION AS TO WHY THE EXPENS ES THEREIN SHOULD NOT BE DISALLOWED AS A CONTINGENT LIABILITY. SUBMISSION THE PROVISION FOR EXPENSES RS.92.92 LACS PERTAINS T O PROVISION FOR EXPENSES ON TRAVEL ETC. AND OTHER UNP AID EXPENSES BY VARIOUS BRANCHES ACCRUED AS ON 31.03.2005. IT IS SUBMITTED THAT THE EXPENDITURE IS NOT IN THE NATURE OF A CONTINGENT LIABILITY AND HAS CRYSTALLIZED DURING THE RELEVANT ASSESSMENT YEAR. AS MENTIONED ABOVE, THE BANK EMPLOYS THE MERCANTILE SYSTEM OF ACCOUNTING. THE BANK HAS INCURRED AND ACCRUED FOR THE ABOVE EXPENDITURE DURING THE YEAR. IT IS SUBMITTED THAT THE ABOVE EXPENDITURE HAS BEEN ASCERTAINED BASED ON ACTUAL INCURRENCE AND IS IN TH E NATURE OF A REGULAR BUSINESS EXPENDITURE. IT IS FUR THER SUBMITTED THAT IT IS AN ALLOWABLE EXPENDITURE FOR T HE COMPUTATION OF TAXABLE INCOME AS PER THE METHOD OF ACCOUNTING EMPLOYED AND THE SAME SHOULD BE ALLOWED AS A DEDUCTION. 7.5. FROM THE ABOVE IT IS CLEAR IN THE COURSE OF TH E SCRUTINY ASSESSMENT PROCEEDINGS COMPLETED U/S 143(3) OF THE ACT (ASSESSMENT ORDER DATED 31.12.2008), THE ASSESSING OFFICER HAD OCCASION TO CONSIDER THE CLAIM OF EXPENDITURE OF AS SESSEE TO THE ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 9 OF 12 TUNE OF RS.92.92 LAKHS AND AFTER CONSIDERING THE SA ME, ACCEPTED THE CONTENTIONS RAISED BY THE ASSESSEE AND PASSED T HE ASSESSMENT ORDER WITHOUT MAKING ANY DISALLOWANCE IN THIS REGARD. THEREFORE, IT CAN BE CONCLUDED THAT THE RE- OPENING OF THE ASSESSMENT WAS ON COUNT OF MERE CHANGE OF OPINION B Y THE ASSESSING OFFICER. THE LAW DOES NOT PROVIDE FOR REO PENING OF THE ASSESSMENT ON MERE REASON TO SUSPECT THAT THE INC OME HAS ESCAPED ASSESSMENT. THE INFORMATION/MATERIALS WERE PROVIDED BY THE ASSESSEE WITH REGARD TO EXPENSES AMOUNTING T O RS.92.92 LAKH AND SAME WERE EXAMINED BY THE LEARNED ASSESSIN G OFFICER IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS. IN ADDITION TO THE INFORMATION PROVIDED BY THE ASSESSEE WHICH IS A LREADY ON RECORD AT THE TIME OF SCRUTINY ASSESSMENT, THERE IS NO NEW MATERIAL WHICH HAD COME INTO THE POSSESSION OF THE ASSESSING OFFICER THAT COULD LEAD TO THE BELIEF THAT THE INCO ME HAS ESCAPED ASSESSMENT. THEREFORE, IT CAN BE SAFELY CONCLUDED T HAT THE REOPENING OF ASSESSMENT WAS BASED ON CHANGE OF OPI NION BY THE ASSESSING OFFICER. THE COURTS ON VARIOUS OCCASION H AVE HELD THAT THE RE-OPENING OF THE ASSESSMENT ON A MERE CHANGE O F OPINION IS NOT VALID. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERNATIONAL LTD (2012) 25 TAXMANN.COM 200 (D ELHI) AFTER CONSIDERING PRECEDENT ON THE SUBJECT, HELD AS FOLLO WS: 12. . THE SAID OBSERVATIONS HAVE BEEN RIGHTLY HELD TO BE CONTRARY TO THE FULL BENCH DECISION OF THE DELHI HI GH COURT IN KELVINATOR OF INDIA LIMITED (SUPRA) IN EICHER LIMITED (SUPRA). THE SAID DECISION IN EICHER LIMITED (SUPRA) MAKES REFERENCE TO THE DECISION OF KLM ROYAL DUTCH AIRLINES VS. ASSISTANT COMMISSIONER OF INCOME TAX [2007] 292 ITR 49 (DELHI). KLM ROYAL CASE (SUPRA) DEALS WITH SOME OTHER ISSUES ON WHICH WE DO NOT EXP RESS OR MAKE ANY OBSERVATION APPROVING OR DISAPPROVING. SOME OF THESE ASPECTS HAVE BEEN CONSIDERED AND EXPLAINED IN OTHER DECISIONS IN LIGHT OF THE JUDGMENT OF THE SUP REME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 10 OF 12 13. IT IS, THEREFORE, CLEAR FROM THE AFORESAID POSITIO N THAT: (1) REASSESSMENT PROCEEDINGS CAN BE VALIDLY INITIATED IN CASE RETURN OF INCOME IS PROCESSED UND ER SECTION 143(1) AND NO SCRUTINY ASSESSMENT IS UNDERTAKEN. IN SUCH CASES THERE IS NO CHANGE OF OPINION; (2) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E THE ASSESSMENT ORDER ITSELF RECORDS THAT THE ISSUE WAS RAISED AND IS DECIDED IN FAVOUR OF THE ASSESSEE . REASSESSMENT PROCEEDINGS IN THE SAID CASES WILL BE HIT BY PRINCIPLE OF CHANGE OF OPINION. (3) REASSESSMENT PROCEEDINGS WILL BE INVALID IN CAS E AN ISSUE OR QUERY IS RAISED AND ANSWERED BY THE ASSESSEE IN ORIGINAL ASSESSMENT PROCEEDINGS BUT THEREAFTER THE ASSESSING OFFICER DOES NOT MAKE ANY ADDITION IN THE ASSESSMENT ORDER. IN SUCH SITUATION S IT SHOULD BE ACCEPTED THAT THE ISSUE WAS EXAMINED BUT THE ASSESSING OFFICER DID NOT FIND ANY GROUND O R REASON TO MAKE ADDITION OR REJECT THE STAND OF THE ASSESSEE. HE FORMS AN OPINION. THE REASSESSMENT WILL BE INVALID BECAUSE THE ASSESSING OFFICER HAD FORMED AN OPINION IN THE ORIGINAL ASSESSMENT, THOUG H HE HAD NOT RECORDED HIS REASONS. 14. IN THE SECOND AND THIRD SITUATION, THE REVENUE IS NOT WITHOUT REMEDY. IN CASE THE ASSESSMENT ORDER IS ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE Y ARE ENTITLED TO AND CAN INVOKE POWER UNDER SECTION 263 OF THE ACT. THIS ASPECT AND POSITION HAS BEEN HIGHLIGHTED IN CIT VS. DLF POWERS LIMITED (2012) 17 TAXMANN.COM 269 (DELHI) , AND BLB LIMITED VS. ACIT (2012) 206 TAXMAN 37/19 TAXMANN.COM 115 (DELHI) (MAG.). IN THE LAST DECISION IT HAS BEEN OBSERVED: 13. REVENUE HAD THE OPTION, BUT DID NOT TAKE RECOURSE TO SECTION 263 OF THE ACT, INSPITE OF AUDI T OBJECTION. SUPERVISORY AND REVISIONARY POWER UNDER SECTION 263 OF THE ACT IS AVAILABLE, IF AN ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AN ERRONEOUS ORDER CONTRARY TO LAW THAT HAS CAUSED PREJUDICED CAN BE CORRECT, WHEN JURISDICTION UNDER SECTION 263 IS INVOKED. 15. THUS WHERE AN ASSESSING OFFICER INCORRECTLY OR ERRONEOUSLY APPLIES LAW OR COMES TO A WRONG CONCLUS ION AND INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT , RESORT TO SECTION 263 OF THE ACT IS AVAILABLE AND S HOULD BE ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 11 OF 12 RESORTED TO. BUT INITIATION OF REASSESSMENT PROCEED INGS WILL BE INVALID ON THE GROUND OF CHANGE OF OPINION. 7.6 FURTHER IN THE CASE OF CIT VS. P.G. FOILS LTD ( 2013) 33 TAXMANN.COM 485 (GUJ.), HON'BLE GUJARAT HIGH COURT HAVE REJECTED THE REVENUES SUBMISSION THAT IF THE ASSES SING OFFICER HAS NOT CARRIED OUT PROPER INQUIRIES, IT WOULD BE A CASE OF INCOME ESCAPING ASSESSMENT AND REOPENING WOULD BE PERMISSI BLE, EVEN THOUGH THE ASSESSING OFFICER MAY HAVE RAISED QUERIE S DURING THE ASSESSMENT PROCEEDINGS, BUT HE DID NOT COME TO ANY DEFINITE CONCLUSION IN THE ASSESSMENT ORDER WITH RESPECT TO THESE ISSUES. THE RELEVANT FINDING OF THE HON'BLE HIGH COURT READ AS FOLLOWS: 6. LEARNED COUNSEL FOR THE REVENUE, HOWEVER, SUBMITTED THAT THE ASSESSING OFFICER MAY HAVE RAISED QUERIES DURING THE ASSESSMENT PROCEEDINGS, BUT, HE DID NOT COME TO ANY DEFINITE CONCLUSION IN THE ASSESSMENT ORDER WITH RESPECT TO THESE ISSUES. HE SUBMITTED THAT IF THE ASSESSING OFFICER HAD NOT CARRIED OUT PROPER INQUIRIES, IT WOULD BE A CASE OF INCOME ESCAPING ASSESSMENT AND REOPENING WOULD BE PERMISSIBLE. 7. WITH BOTH THESE SUBMISSIONS, WE HAVE SERIOUS DISAGREEMENT. MERELY BECAUSE AFTER RAISING QUERIES WITH RESPECT TO A PROPOSED ADDITION, THE ASSESSING OFFICER IN THE FINAL ORDER OF ASSESSMENT DOES NOT G IVE ANY REASON FOR NOT MAKING ANY ADDITIONS, WOULD NOT MEAN THAT THE ISSUE WAS NOT SCRUTINIZED. THIS IS PRECISELY WHAT THIS COURT HAS HELD IN THE DECISION IN CASE OF GUJARAT POWER CORPN. LTD V. ASSTT. CIT (201 3) 350 ITR 266 (2012) 211 TAXMAN 63/26 TAXMANN.COM 51. 7.7. IN THE INSTANT CASE SINCE THE ISSUE OF DISALL OWANCE OF EXPENDITURE WAS EXAMINED IN THE COURSE OF SCRUTINY ASSESSMENT ITA NO.55 AND CO 86 OF 2013 ING VYSYA BANK LTD BANG ALORE PAGE 12 OF 12 PROCEEDINGS, THE REOPENING OF THE ASSESSMENT BY ISS UANCE OF NOTICE U/S 148 IS ONLY A CHANGE OF OPINION AND HENC E IN VIEW OF THE ABOVE JUDGMENTS OF THE HON'BLE HIGH COURTS, WE STRIKE DOWN THE RE-ASSESSMENT AS INVALID. IT IS ORDERED ACCORDI NGLY. 8. IN THE RESULT CROSS OBJECTION FILED BY THE ASSES SEE IS ALLOWED, THE APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 24 TH JANUARY, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE