ACIT, Bhubaneswar V. M/s. Neelachal Gramya Bank, Bhubaneswar

ITA 58/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3699 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: B K MOHAPATRA
• Keywords: Reopening of assessment; Search and seizure; Audit objection; Tangible material; Bad and doubtful debts; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 28; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO . 58 /CTK/201 5 ASSESSMENT YEAR : 2008 - 09 ACIT, CIRCLE - 2(1), BHUBANESWAR VS. M/S. NEELACHAL GRAMYA BANK, 190/702, KOKILA RESIDENCY, ANANTA VIHAR, AIRPORT AREA POST OFFICE, POKHARIPUT, BHUBANESWAR. PAN/GIR NO . AAALN 0450 F (APPELLANT) .. ( RESPONDENT ) C.O.NO.13/CTK/2015 (ARISING OUT OF ITA NO.58 /CTK/2015 ) ASSESSMENT YEAR: 2008 - 09 M/S. NEELACHAL GRAMYA BANK, 190/702, KOKILA RESIDENCY, ANANTA VIHAR, AIRPORT AREA POST OFFICE, POKHARIPUT, BHUBANESWAR VS. ACIT, CIRCLE - 2(1), BHUBANESWAR PAN/GIR NO. AAALN 0450 F (APPELLANT) .. ( RESPONDENT ) ASSESSEE BY : SHRI B.K.MOHAPATRA , AR RE V ENUE BY : SHRI KUNAL SINGH, DR DATE OF HEARING : 11 /07 / 2017 DATE OF PRONOUNCEMENT : 12 /07 / 2017 2 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 O R D E R PER N.S.SAINI, AM THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE ID CIT(A) - II, BHUBANESWAR DATED 20.11.2014, FOR THE ASSESSMENT YEAR 2008 - 09. 2. GROUND NO.1 OF APPEAL OF THE REVENUE READS AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN DECIDING THAT THE ACTION OF THE AO OF REOPENIN G THE ASSESSMENT U/S.147 IS CLEARLY INVALID.' 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAIL BANKING BUSINESS. IT FILED THE RETURN OF INCOME ON 27.10.2008 AT AN INCOME OF RS.12,97,610/ - . THE SAME WAS ASSESSED AT RS.15,32,790/ - U/S. 143(3) OF THE ACT ON 23.11.2010. 4. SUBSEQUENTLY, THE ASSESSING OFFICER OBSERVED FROM SCHEDULE - 18 OF NOTES ON ACCOUNT TO THE AUDITED STATEMENT OF ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE'S NON PERFORMANCE ASSETS (NPS) ARE AS UNDER: 'PROVISION TOWARDS NPAS AS ON 31.3.2007 : RS.2906.56 LAKHS PROVISION MADE DURING F.Y. 2007 - 08 TOWARDS NPSS : RS.1128.70 LAKHS PROVISION TOWARDS NPAS AS ON 31.3.2008 :RS.4034.28 LAKHS 5. THE ASSESSING OFFICER OBSERVED THAT A FRESH PROVISION OF RS.42.14 LAKHS WAS MADE BY THE ASSESSEE IN THE FINANCIAL YEAR 2007 - 08 UNDER THE HEAD 'OTHER LIABILITIES AND PROVISION OTHER'. HE OBSERVED THAT TOTAL PROVISIONS MADE DURING THE FINANCIAL YEAR 2007 - 08 WAS RS.1128.70 LAKHS PLUS RS.42.14 LAKHS AGGREGATING TO RS.11,70,84,000/ - , WHICH ACCORDING TO 3 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 THE ASSESSING OFFICER, WAS NOT ALLOWABLE FOR DEDUCTION U/S.36(L)(VII) OF THE ACT AS EXPENDITURE. BASED ON THIS, THE ASSESSING OFFICER RECORDED THE REASONS THAT INCOME CHARGEABL E TO TAX HAS BEEN UNDER ASSESSED AND, THEREFORE, ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/S.148 OF THE ACT ON 10.12.2012 AND PASSED ORDER U/S.144 R.W.S. 147 OF THE ACT ON 18.2.2014. 6. THE ASSESSEE CHALLENGED REOPENING OF ASSESSMENT BEFORE THE CIT(A) AND SUBMITTED AS UNDER: '(A) THE APPELLANT WAS A REGIONAL RURAL BANK (RRB) AND THEREFORE A DEEMED COOPERATIVE SOCIETY FOR THE PURPOSE OF THE ACT U/S 22 OF THE RRB ACT. ALSO, THE APP ELLANT WAS ENTITLED TO A DEDUCTION U/S 80P OF THE INCOME - TAX ACT SINCE IT WAS NOT A 'COOPERATIVE BANK' AS DEFINED IN THE EXPLANATION TO THE SECTION 80P READ WITH PART V OF THE BANK REGULATION ACT, 1949 AND SECTION 2(D) AND 2(U) OF THE NATIONAL BANK FOR AGR ICULTURAL AND RURAL DEVELOPMENT (NABARD) ACT, 1981 AND ADDITIONALLY DID NOT FALL UNDER THE PURVIEW OF SECTION 80P(4) OF THE ACT. B) THE ACCOUNTS OF THE APPELLANT HAD BEEN STATUTORILY AUDITED BY AUDITORS APPOINTED BY NABARD AND FURTHER ITS ACTIVITIES INCLUDING THE MAINTENANCE OF RECORDS, DOCUMENTS VOUCHERS, ETC. WERE REGULATED, MONITORED AND INSPECTED BY NABARD AND THE RESERVE BANK OF INDIA (RBI). C) THE EARLIER ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT HAD BEEN PASSED BY THE AO AFTER DUE EXAMINATION OF ALL PARTICULARS AND MATERIAL FACTS DISCLOSED FULLY AND TRULY BY THE APPELLANT VIDE AND ALONGSIDE THE RETURN OF INCOME FILED AND STATEMENTS OF ACCOUNTS AUDITED U/S 44AB OF THE ACT. THE MATERIAL FACTS AND PARTICULARS SO DISCLOSED INCLUDED THE IMPUGNED CLAIM OF PROVISIONS FOR BAD AND DOUBTFUL DEBTS. THE APPELLANT IMPLICITLY AVERRED THROUGH THIS SUBMISSION THAT THERE WAS NO FRESH MATERIAL ON RECORD TO REOPEN THE ASSESSMENT PROCEEDINGS BASED ON AN 'AUDIT OBJECTION', AS THE AO HAD DONE. D) MOREOVER, THE APPELLANT AVERRED THAT THE CLAIM OF RS. 11,70,84,000 MADE TOWARDS PROVISIONS FOR BAD AND DOUBTFUL DEBTS FELL WITHIN THE PURVIEW OF SECTION 36(L)(VIIA)(A) OF THE ACT, AND THE TAX AUDIT REPORT PREPARED U/S 44AB HAD REPORTED THE AMOUNT DISAL LOWABLE UNDER THE SAID SECTION 36(L)(VIIA)(A) TO BE RS. NIL. [NB: ALTHOUGH THERE APPEARS TO BE NO SPECIFIC COLUMN IN FORM 3CD RELATING TO SECTION 44AB TOWARDS THE SAME, THE APPELLANT IS PRESUMABLY REFERRING TO THE CLAUSEL7(K) WHERE AGAINST THE ENTRY HEAD ' PARTICULAR OF ANY LIABILITY OF A CONTINGENT NATURE' THE APPELLANT HAS 4 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 REPORTED RS. NIL]. THEREFORE, ONCE AGAIN, THE APPELLANT'S IMPLICIT POSITION WAS THAT THERE WAS NO FRESH MATERIAL ON RECORD MANDATING AND VALIDATING THE REOPENING OF ASSESSMENT PROCEEDING S. SINCE THE ABOVE FACTS WERE ALREADY AVAILABLE BEFORE THE AO WHEN HE PASSED THE EARLIER ASSESSMENT ORDER U/S 143(3) ON 23.11.2010. E) THE ASSESSMENT ORDER PASSED U/S 143(3) WAS THEREFORE CORRECT TO THE EXTENT OF THE IMPUGNED CLAIM OF DEDUCTION M ADE TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS AND THE ACT OF REOPENING U/S 147 AND THE ISSUE OF NOTICE U/S 148 WERE ARBITRARY, UNJUSTIFIED, ERRONEOUS AND BAD IN LAW, AND HENCE OUGHT TO HAVE BEEN DROPPED. F) THE IMPUGNED ASSESSMENT ORDER U/S 144 R.W.S. 147 WAS PASSED BY THE AO WITHOUT PROVIDING REASONABLE AND ADEQUATE OPPORTUNITY TO THE APPELLANT AND ON 'MIS - APPRECIATION AND MISCONSTRUING OF FACTS' AND ON ERRONEOUS PREMISES. THE PROVISIONS OF SECT ION 36(L)(VII) HAD BEEN WRONGLY APPLIED BY THE AO, EVEN AS HE HAD COMPLETELY IGNORED AND OVERLOOKED THE APPLICABLE PROVISIONS OF SECTION 36(L)(VIIA)(A) THAT CLEARLY ALLOWED THE IMPUGNED EXPENDITURE AS A DEDUCTIBLE CLAIM. ALSO, THE JUDICIAL CITATIONS RECORD ED BY THE AO IN HIS ASSESSMENT ORDER WERE AVERRED BY THE APPELLANT TO BE IRRELEVANT TO THE FACTS OF THE CASE. 7. DURING THE APPELLATE PROCEEDINGS THE APPELLANT ALSO MADE ADDITIONAL SUBMISSIONS ON 14.11.2014 AND 19.11.2014 WHICH INCLUDED THE FILING OF THE COPIES OF THE STATEMENTS OF ACCOUNTS AND THE AUDIT REPORT U/S 44AB OF THE ACT. THE TEXT OF THE DETAILED SUBMISSIONS MADE ARE REPRODUCED VERBATIM BELOW: IN CONNECTION WITH THE ABOVE MENTIONED CASE, THE FOLLOWING SUBMISSIONS ARE MADE FOR YOUR KIND CONSIDERA TION AND RECORD: GROUND NO.1 & 3 1. THE ASSESSEE. NEELACHAL GRAMYA BANK (FOR SHORT 'NGB', IS A 'REGIONAL RURAL BANK (FOR SHORT 'RRB') UNDER THE REGIONAL RURAL BANKS ACT, 1976 (FOR SHORT 'RRB ACT') AND IS A CO - OPERATIVE SOCIETY UNDER THE INCOME TAX ACT, 1961 (FOR SHORT THE 'I.T.ACT' OR THE 'ACT') AND IS A SCHEDULED BANK AS IN THE SECOND SCHEDULE TO THE RESERVE BANK OF INDIA ACT, 1934 AND IS CARRYING ON THE BUSINESS OF BANKING. 2. IT MAY BE NOTED THAT; I. THE ASSESSEE IS A 'REGIONAL RURAL BANK' AND IS DEEMED TO BE A CO - OPERATIVE SOCIETY FOR PURPOSE OF THE I.T ACT AS PER SECTION 22 OF THE REGIONAL RURAL BANKS ACT, II. THE ASSESSEE IS A SCHEDULED BANK III. THE AS SESSEE IS NOT A 'CO - OPERATIVE BANK' AS PER EXPLANATION TO SECTION 80P OF THE I.T. ACT R.W. PART V OF THE BANKING REGULATION ACT, 1949 AND 5 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 SECTION 2(D) & 2 (U) OF NATIONAL BANK FOR AGRICULTURAL AND RURAL DEVELOPMENT ACT, 1981. IV. THE ASSESSEE DOES NOT FAL L UNDER THE PURVIEW OF SECTION 80P(4) OF THE I.T.ACT AND THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80P OF THE I.T.ACT. 3. THAT THE ACCOUNTS OF THE ASSESSEE IS STATUTORILY AUDITED BY THE AUDITORS APPOINTED BY NATIONAL BANK FOR AGRICULTURAL AND RURAL DEVELOPMENT (FOR SHORT 'NABARD') AND FURTHER ITS ACTIVITIES INCLUDING MAINTENANCE OF RECORDS, DOCUMENTS VOUCHERS ARE REG ULATED/MONITORED AND INSPECTED BY (FOR SHORT 'NABARD / RESERVE BANK OF INDIA('RBI'). 4. THAT FOR THE ASSESSMENT YEAR 2008 - 09, THE INCOME TAX RETURN OF THE ASSESSEE WAS FILED, BY THE DUE DATE U/S. 139(1) OF THE I.T.ACT AT A TOTAL INCOME OF RS.12,97 ,610/ - . 5. THAT DURING THE SCRUTINY ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, THE ASSESSEE, HAS PRODUCED ITS BOOKS OF ACCOUNTS, FILED ITS ANNUAL REPORT CONTAINING AUDITED ACCOUNTS, AUDITORS' REPORT ETC., TAX AUDIT REPORT U/S.44AB OF THE ACT, SUBMISSIONS, VARIOUS DOCUMENTS, DETAILS PARTICULARS IN COMPLIANCE TO NOTICES ISSUED BY THE LEARNED ASSESSING OFFICER (FOR SHORT 'AO') AND IT IS PERTINENT TO NOTE THAT THE ASSESSEE AND HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS INTER ALIA IN RESPECT OF ITS PROVISIONS FOR BAD AND DOUBTFUL DEBTS AND IN THIS REGARD PG 41 OF THE AUDITED ACCOUNTS ALREADY FILED AS ENCLOSURE - 1 KINDLY BE REFERRED TO. 6. THAT THE LEARNED ASSESSING OFFICER AFTER DUE EXAMINATION AND SCRUTINY PASSED ORDERS DT. 23.11.2010 U/S, 143(3) OF THE ACT WHEREIN CERTAIN ADDITIONS/ DISALLOWANCES WERE MADE AND HAD ASSESSED THE TOTAL INCOME AT RS.15,32,790/ - 7. IN THE SAID PG 41 OF THE AUDITED ACCOUNTS IT IS REFLECTED THAT A SUM OF RS.11 ,70,84,000/ - HAS BEEN DEBIT ED TO PROFIT AND LOSS ACCOUNT UNDER 'PROVISION FOR DOUBTFUL DEBTS'. IT MAY BE ADDED THAT, THE ASSESSEE BEING A 'SCHEDULED BANK' AND A REGIONAL RURAL BANK HAVING RURAL BRANCHES, THE ALLOWABILITY OF THE SUCH 'PROVISION FOR DOUBTFUL DEBTS' FALLS UNDER THE PRO VISIONS OF SECTION 36(L)(VIIA)(A) OF THE I.T.ACT. 8. FURTHER, AS NOTHING IS DISALLOWABLE U/S.36(1 )(VIIA)(A) OF THE ACT IN THE ASSESSMENT YEAR 2008 - 09,, IN THE TAX AUDIT REPORT U/S.44AB OF THE ACT FOR THE SAID YEAR, THE AMOUNT DISALLOWABLE UNDER THE SAID SECTION IS ACCORDINGLY . IS STATED TO BE 'NIL'. THE AFORESAID HAS BEEN EXAMINED BY THE LEARNED ASSESSING OFFICER AND ACCORDINGLY THE ORDER U/S.143(3) DATED 23.11.2010 HAS BEEN PASSED. 9. THAT IT IS RELIABLY LEARNT THAT CONSEQUENT TO AND BASED UP ON 'AUDIT OBJECTIONS', THE LEARNED ASSESSING OFFICER VIZ. ASST. COMMISSIONER OF INCOME 6 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 TAX, CIRCLE 2(2), BHUBANESWAR (IN SHORT 'A0'7 'ACIT') HAS ISSUED NOTICE U/S 148 OF THE I.T. ACT, ALLEGING ESCAPEMENT OF INCOME AND IN COMPLIANCE THERETO THE ASSESSEE STA TED THAT THAT THE RETURN FILED U/S. 139 OF THE ACT BE TREATED AS RETURN U/S. 148 OF THE ACT. 10. SUBSEQUENT TO THE AFORESAID RETURN U/S. 148 OF THE ACT, THE LEARNED ACTT INTIMATED THE REASONS FOR THE REOPENING U/S 147 OF THE ACT AND DURING THE COUR SE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSEE APPEARED FROM TIME TO TIME AND ALSO FILED: A. AUDITED ACCOUNTS ALONG WITH AUDIT REPORT AND B. TAX AUDIT REPORT U/S.44AB OF THE ACT FOR THE ASSESSMENT YEAR 2008 - 09 AND EXPLAINED/SUBMITTED TO THE LEARNED ASSESSING OFFICER THAT SINCE THE AFORESAID 'PROVISION FOR DOUBTFUL DEBTS' RS. 11,70,84,000/ - DEBITED TO PROFIT AND LOSS ACCOUNT IS NOT ONLY AS PER PRUDENTIAL NORMS OF PROVISIONING PRESCRIBED BY RBL/NABARD BUT ALSO WIT HIN THE LIMITS AS PER PROVISIONS OF SECTION 36(L)(VIIA)(A) OF THE I.T. ACT AND THEREFORE THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT IS CORRECT TO THAT EXTENT AND HENCE THERE BEING NO ESCAPEMENT OF ANY INCOME, THE ISSUE OF NOTICE U/S. 148 IS OF THE ACT IS ARBITRARY, UNJUSTIFIED, ERRONEOUS AND BAD IN LAW AND HENCE OUGHT TO BE DROPPED. 11. THE LEARNED ASSESSING OFFICER HAS PASSED RE - ASSESSMENT ORDER DATED 18.02.2014 U/S.147/ 144/ OF THE ACT WHEREIN WITHOUT PROVIDING REASONABLE AND ADEQUATE OPPORT UNITY DISALLOWED/ADDED THE AFORESAID 'PROVISION FOR DOUBTFUL DEBTS' OF RS.L 1,70,84,000/ - 36(L)(VII) OF THE I.T.ACT AND HAS REASSESSED THE TOTAL INCOME AT RS.L 1,86,16,790/ - . 12. THE CLAIM OF THE ASSESSEE WITH REGARD TO THE SAID RS.11,70,84,000/ - UND ER 'PROVISION FOR DOUBTFUL DEBTS' IS WITHIN THE LIMITS PRESCRIBED UNDER SECTION 36(L)(VIIA)(A) OF THE I.T.ACT. 13. IT IS PERTINENT TO NOTE THAT THE LEARNED ASSESSING OFFICER IN DISALLOWING /ADDING THE AFORESAID 'PROVISI ON FOR DOUBTFUL DEBTS' OF RS.11 ,70,84,000/ - HAS WRONGLY APPLIED THE PROVISIONS OF SECTION 36(L)(VII) OF THE I.T.ACT AND HAS COMPLETELY IGNORED/OVERLOOKED THE APPLICABLE PROVISIONS VIZ. SECTION 36(L)(VIIA)(A) OF THE I.T.ACT, WHICH IS APPLICABLE TO THE CASE OF THE ASSESSES BEING A 'SCHEDUL ED BANK' AS STATED ABOVE. IN THIS REGARD THE PROVISIONS OF SECTION 36(L)(VII) AND SECTION 36(L)(VIIA)(A) OF THE I.T.ACT ARE GIVEN HEREUNDER: 14. 'OTHER DEDUCTIONS. 36. (I) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CLAUSES SHALL BE ALLOWED IN RES PECT OF THE MATTERS DEALT WITH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 7 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 XXX (VII) SUBJECT TO THE PROVISIONS OF SUB - SECTION (2), THE AMOUNT OF ANY BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR: ------- PROVIDED THAT IN THE CASE OF [AN ASSESSEE] TO WHICH CLAUSE (VIIA) APPLIES, THE AMOUNT OF THE DEDUCTION RELATING TO ANY SUCH DEBT OR PART THEREOF SHALL BE LIMITED TO THE AMOUNT BY WHICH SUCH DEBT OR PART THEREOF EXCEE DS THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFUL DEBTS ACCOUNT MADE UNDER THAT CLAUSE. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ANY BAD DEBT OR PART THEREOF WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE SHALL NOT INCLUDE ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE ACCOUNTS THE ASSESSEE; (VIIA) IN RESPECT OF ANY PROVISION FOR BAD AND DOUBTFUL DEBTS MADE BY - A) A SCHEDULED BANK NOT BEING A BANK INCORPORATED BY OR UNDER THE LAWS OF A COUNTY OUTSIDE INDIA] OR A NAN - SCHEDULED BANK OR A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK, AN AMOUNT NOT EXCEEDING SEVEN AND ONE - HALF PER CEN T OF THE TOTAL INCOME (COMPUTED BEFORE MAKING ANY DEDUCTION UNDER THIS CLAUSE AND CHAPTER VIA) AND AN AMOUNT NOT EXCEEDING TEN PER CENT OF THE AGGREGATE AVERAGE ADVANCES MADE THE RURAL BRANCHES OF SUCH BANK COMPUTED IN THE PRESCRIBED MANNER PROVIDED THAT A SCHEDULED BANK OI A NON - SCHEDULED BANK REFERRED TO IN THIS SUB - CLAUSE SHALL, AT ITS OPTION, BE ALLOWED IN ANY OF THE RELEVANT ASSESSMENT YEARS, DEDUCTION IN RESPECT OF ANY PROVISION MADE BY IT FOR ANY ASSETS CLASSIFIED BY THE RESERVE BANK OF INDIA AS DOU BTFUL ASSETS OR LOSS ASSETS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY IT IN THIS BEHALF, FOR AN AMOUNT NOT EXCEEDING FIVE PER CENT OF THE AMOUNT OF SUCH ASSETS SHOWN IN THE BOOKS OF ACCOUNT OF THE BANK ON THE LAST DAY OF THE PREVIOUS YEAR: PROVIDED FURT HER THAT FOR THE RELEVANT ASSESSMENT YEARS COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2003 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2005, THE PROVISIONS OF THE FIRST PROVISO SHALL HAVE EFFECT IF FOR THE WORDS 'FIVE PER CENT', THE WORDS 'TEN PER CENT' HAD BEEN SUBSTITUTED. PROVIDED ALSO THAT A SCHEDULED BANK OR A NON - SCHEDULED BANK REFERRED TO IN THIS SUB - CLAUSE SHALL, AT ITS OPTION, BE ALLOWED A FURTHER DEDUCTION IN EXCESS OF THE LIMITS SPECIFIED IN THE FOREGOING PROVISIONS, FOR AN AMOUNT NOT EXCEEDING TH E INCOME DERIVED FROM REDEMPTION OF SECURITIES IN ACCORDANCE WITH A SCHEME FRAMED BY THE CENTRAL GOVERNMENT: PROVIDED ALSO THAT NO DEDUCTION SHALL BE ALLOWED UNDER THE THIRD PROVISO UNLESS SUCH INCOME HAS BEEN DISCLOSED IN THE RETURN OF INCOME UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION.' 8 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 EXPLANATION. FOR THE PURPOSES THIS SUB - CLAUSE, 'RELEVANT ASSESSMENT YEARS' MEANS THE FIVE CONSECUTIVE ASSESSMENT YEARS COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2000 AND ENDING BEFORE THE 1ST DAY OF A PRIL, 2005;' (EMPHASIS SUPPLIED BY US) 15. FROM THE ABOVE, IT IS VERY CLEAR THAT THE LEARNED ASSESSING OFFICER HAS WRONGLY APPLIED IHE PROVISIONS OF SECTION 36(L)(VII) OF THE I.T.ACT AND HAS COMPLETELY IGNORED THE APPLICABLE PROVISIONS VIZ. SECTI ON 36(L)(VIIA)(A) OF THE I.T.ACT, WHICH IS APPLICABLE TO THE CASE OF THE ASSESSES BEING A 'SCHEDULED BANK' AS STATED ABOVE AND THUS THE DISALLOWANCE/ ADDITION OF THE AFORESAID 'PROVIS ION FOR DOUBTFUL DEBTS' OF RS.1 1,70,84,000/ - IS A CLEAR ERROR, BAD IN LAW AND LEGALLY UNTENABLE. 16. FURTHER, THE LEARNED ASSESSING OFFICER HAS ERRONEOUSLY AND IRRELEVANTLY CONCLUDED THAT THE SAID AMOUNT OF RS.11,70,84,000/ - IS NOT ACTUAL EXPENDITURE/BAD DEBT, BUT CONTINGENT LIABILITY AND IS NOT AN ELIGIBLE EXPENDITURE U/S 36(L)(VII) OF THE ACT. 17. MOREOVER, THE LEARNED ASSESSING OFFICER HAS ERRONEOUSLY AND IRRELEVANTLY RELIED UPON /APPLIED CASE LAWS WHICH ARE NOT APPLICABLE TO THE FACTS OF CASE OF THE ASSESSEE WHILE MAKING THE AFORESAID ADDITION OF THE AFORESAID RS.1 1,70,84,000/ - IN THE RE - ASSESSMENT ORDER DATED 18.02.2014. 18. THUS THE DISALLOWANCE /ADDITION OF RS. 11,70,84,000/ - UNDER 'PROVISION FOR DOUBTFUL DEBTS' BY THE LEARNED ASSESSING OFFICER BY HOLDING THAT THE SAME IS NOT ALLOWABLE DEDUCTION U/S.36(L)(VII) OF THE ACT ARBITRARY, UNJUSTIFIED, ERRONEOUS, BAD IN LAW AND LEGALLY UNTENABLE. 19. THAT THE CLAIM OF THE ASSESSEE WITH REGARD TO THE SAID RS. 11,70,84,000/ - UNDER 'PROVISION FOR DOUBTFUL DEBTS' BEING WITHIN THE LIMITS PRESCRIBED UNDER SECTI ON 36(1 )(VIIA)(A) OF THE I.T.ACT, THE AFORESAID ADDITION/ DISALLOWANCE OF RS.1 1,70,84,000/ - U/S.36(L)(VII) OF THE ACT IS ARBITRARY, UNJUSTIFIED, ERRONEOUS AND BAD IN LAW AND LEGALLY UNTENABLE. 20. THAT THE LEARNED ASSESSING OFFICER HAS WRONGLY APPLI ED THE PROVISIONS OF SECTION 36(L)(VII) OF THE I.T.ACT AND HAS COMPLETELY IGNORED/OVERLOOKED THE APPLICABLE PROVISIONS VIZ. SECTION 36(L)(VIIA)(A) OF THE I.T.ACT AND HENCE 'THE AFORESAID ADDITION/ DISALLOWANCE OF RS.11 ,70,84,000/ - U/S.36(L)(VII) OF THE ACT IS ARBITRARY, UNJUSTIFIED, UNWARRANTED, ERRONEOUS AND BAD IN LAW AND LEGALLY UNTENABLE. 21. IN VIEW OF THE ABOVE IT IS SUBMITTED THAT THE AFORESAID ADDITION/ DISALLOWANCE OF RS.L 1,70,84,000/ - U/S.36(L)(VII) OF THE ACT BE FULLY DELETED. GROUND NOS .1 & 2: 22. WITHOUT PREJUDICE TO THE PARAS 1 TO 20 ABOVE: 9 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 A. AS ALREADY STATED THE ASSESSEE, DURING THE SCRUTINY ASSESSMENT PROCEEDINGS U/S.143(3) OF THE ACT, HAS PRODUCED I TS BOOKS OF ACCOUNTS, FILED ITS ANNUAL REPORT CONTAINING AUDITED ACCOUNTS, AUDITORS' REPORT ETC., TAX AUDIT REPORT U/S.44AB OF THE ACT ETC,, AND IN PARTICULAR THE ASSESSEE AND HAS DISCLOSED FULLY TRULY ALL MATERIAL FACTS IN RESPECT OF ITS PROVISIONS FOR BAD AND DOUBTFUL DEBTS AND AFTER C ONSIDERING AND AFTER DUE VERIFICATION, THE LEARNED AO HAS PASSED ORDER DT. 23.11.2010 U/S.143(3) OF THE ACT. B. THAT IT IS UNDERSTOOD THAT THE NOTICE U/S. 148 IS ISSUED AFTER THE AUDIT OBJECTIONS ON THE SAID ASSESSMENT ORDER U/S. 143(3) OF THE ACT. C. THAT IT IS PERTINENT TO MENTION HEREIN THAT THE INCOME AS DISCLOSED IN THE PROFIT AND LOSS ACCOUNT AS PER THE METHOD OF ACCOUNTING UNDER ACCRUAL SYSTEM OF ACCOUNTING, AND THE PROVISION FOR BAD AND DOUBTFUL DEBTS WHICH HAS BEEN ACCEPTED BY THE ID AO AFTER D UE VERIFICATION AND IS LEGALLY CORRECT AND INCOME AS STATED BY AO. D. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD DISCLOSED ALL MATERIAL FACTS AND HAS ALSO FURNISHED INFORMATION ASKED FOR BY THE AO DURING ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT AND TAKING INTO ACCOUNT THE SAME AND AFTER DUE CONSIDERATION THE LEARNED AO HAS PASSED THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT. E. SUBSEQUENTLY, THE LEARNED AO, WITHOUT ANY NEW EVIDENCE/ MATERIALS ON RECORD AND PURPORTEDLY ON THE BASIS OF AUDI T OBJECTIONS, CHANGED HIS OPINION AND HAS ISSUED NOTICE U/S. 148 OF THE ACT FOR RE - OPENING THE ASSESSMENTS U/S. 147 OF THE ACT. THE ASSESSEE FILED RETURN IN COMPLIANCE TO THE SAID NOTICE U/S. 148 OF THE ACT. F. THAT THE LEARNED AO HAD NO NEW MATERIAL/ EVIDENCE BEFORE HIM FOR ISSUING NOTICE U/S. 148 OF THE ACT FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT. G. FURTHER, THE REASONS RECORDED AS STATED FOR THE ESCAPEMENT OF INCOME IN THE ORDER OF AO IS ONLY A MERE CHANGE OF OPINION AND THAT TOO AFTER T AKING INTO ACCOUNT THE 'AUDIT OBJECTIONS' IN THIS REGARD. H. DURING THE REASSESSMENT PROCEEDINGS THE LEARNED AO REEXAMINED THE ISSUE AND HAS PASSED REASSESSMENT ORDER DATED 18.02.2014 U/S 14 3(3)/144 OF THE ACT WHEREIN HE HAS NOT ACCEPTED THE ABOVE SAID CORRECT POSITION OF LAW AND HAS MIS - APPLIED THE PROVISIONS OF SEC 36(L)(VII) INSTEAD OF SEC 36(L)(VIIA) AND HAS DISALLOWED/ADDED 'PROVISION FOR DOUBTFUL DEBTS' OF RS. 11,70,84,000/ - . I. IN THE PRESENT CASE THERE IS NO STATEMENT IN THE REASONS DISCLOSED BY THE ASSESSING OFFICER THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR ASSESSMENT YEAR 2008 - 09. 10 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 J. IN VIEW O F THE ABOVE, THE ISSUE OF NOTICE U/S.148 FOR RE - OPENING THE ASSESSMENTS U/S.147 OF THE ACT IS UNJUSTIFIED, ERRONEOUS, BAD IN LAW, AND LEGALLY UNTENABLE AND THEREBY THE ORDER DATED 18.02.2014 OF THE LEARNED AO IS ERRONEOUS, BAD IN LAW. AND LEGALLY UNTENABLE AND LIABLE TO BE QUASHED. THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD (2010) 320 1TR 561 (SC) IS RELIED UPON. QUESTION WHICH AROSE FOR DETERMINATION IN THE INSTANT APPEALS WAS: WHETHER THE CONCEPT OF 'CHANGE OF OPINION' STANDS OBLITERATED WITH EFFECT FROM 1 - 4 - 1989, I.E., AFTER SUBSTITUTION OF SECTION 147 BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987. HELD PRIOR TO THE DIRECT TUX LAWS (AMENDMENT) ACT, 1987, REOPENING COULD BE DONE UNDER TWO CONDITIONS, VIZ., IF (A) THE ITO HAD REASON TO BELIEVE THAT, BY REASON OF THE OMISSION OR FAILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN UNDER SECTION 139 FOR ANY ASSESSMENT YEAR TO THE ITO OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR, INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THAT YEAR, OR (B) THE ITO HAD IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE FULFILMENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 WITH EFFECT FROM 1 - 4 - 1989 THOSE CONDITIONS ARE GIVEN A GO - BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., WHERE THE ASSESSING OFFICER H AS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, THE SECTION CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THEREFORE, POST 1 - 4 - 1989, POWER TO RE - OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELI EVE', FAILING WHICH SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION WHICH CANNOT BE PER SE REASON TO REO PEN. ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFE RENCE BETWEEN POWER T O REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW THE POWER TO REASSESS, BUT THE REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE - CONDITION IS AND IF THE CONCEPT OF 'CH ANGE OF OPINION' IS REMOVED AS CONTENDED ON BEHALF O F THE DEPARTMENT THEN IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CM: OF 'CHANGE OF OPINION 'AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFIC ER: HENCE, AFTER 1 - 4 - 1989, THE ASSESSING OFFICER HAS POW ER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' IN COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, THE PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON TO BELIEVE' ALSO INSERTED THE W ORD 'OPINION' IN SECTION 147. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM / COMPANIES AGAINST OMISSION OF THE WORDS 'REASON TO BELIEVE', THE PARLIAMENT RE - INTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITR ARY POWERS IN THE ASSESSING OFFICER (PARA 4) I. THE FOLLOWING JUDGMENTS ARC ALSO RELIED UPON: 11 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 I. D.T.& T.D.C LTD. VS CIT (2010) 324 1TR 234 (DEL) II. SADHAB ENGINEERING VS DCIT, 2010 9ITI) GJX 378 (GUJ) III. CIT VS. KELVENATOR INDIA LTD. 123 TAXMAN 433 (DELHI FB) 256 ITR 1 IV. CIT VS ALAGENDRAN FINANCE LTD (2007) 162 TAXMAN 465 (SC) V. ASTEROIDS TRADING & INVESTMENT P.LTD. VS. DCIT (2009) 308 ITR 190 (BOM) (NO NEW MATERIAL BROUGHT ON RECORDS - RE - ASSEMMENT ON CHANGE OF OPINION OF OFFICER NOT VALID) VI. ASIAN PAINTS LTD. VS. DCIT (2008) 308 ITR 195 (BOM) VII. AVENTIS PHARMA LTD. VS. ACIT (2010) 323 ITR 570 (BOM) VIII. BHAVESH DEVELOPERS VS. AO [2010] 188 TAXMAN 123 (BOM) IX. IT IS WELL SETTLED THAT WHEN THE ASSESSEE HAD PRODUCED ALL THE MATERIAL AND RELEVANT FACTS AND THEREFORE THE REASSESSMENT PROCEEDINGS CANNOT BE SUSTAINED:. PRAFUL CHUNILAL PATEL VS. M.J. MAKWANA, ACIT (1999) 236 ITR 832 (GUJ) JCIT & ORS VS. GEORGE WILLIAMSON (ASSAM) LTD. (2002) 258 ITR 126 (GUJ) MJ. PHARMACEUTICALS LTD. VS. CIT (2008) 297 ITR 119 (BOM) CIT VS. FORMER FINANCE (2003) 264 ITR 566 (SC) FURTHER, IT IS ALSO WELL SETTLED AUDIT OBJECTION CANNOT BE THE BASIS OF ISSUE OF NOTICE U/SL48 FOR REASSESSMENT PROCEEDINGS: INDIAN & EASTERN NEWSPAPER SOCIETY VS. CIT (1979) 119 ITR 996 (SC). EXCHANGE AHMEDABAD VS. ACIT (1997) 227 ITR 906 (GUJ) CIT VS. LUCUNS TVS LTD. (2001) 249 ITR 306 (SC) PURITY TECH TEXTILES PVT. LTD. V. ACIT (2010) 325 ITR 459 (BOM) ADANI EXPORTS VS. DCIT (1999) 240 ITR 224 (G UJ) ASIAN CERE INFORMATION SERVICES (P)LTD. V. ITO (2007) 293 ITR 271 (BOM) 23. THAT IN VIEW OF THE ABOVE, IT IS THEREFORE SUBMITTED THAT: I. THE ISSUE OF THE AFORESAID NOTICE U/S. 148 OF THE ACT IS BAD AND LEGALLY UNTENABLE AS THE CONDITIONS PROVIDED IN SECTION 147 AND 148 AND AS HAS BEEN JUDICIALLY INTERPRETED HAVE NOT BEEN SATISFIED. II. THE AFORESAID NOTICE U/S. 148 OF THE ACT IS LACK OF/IN EXCESS OF JURISDICTION, ARBITRARY, ERRONEOUS, BAD IN LAW, AND LEGALLY UNTENABLE. 24. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE ORDER DT. 18.02.2014 PASSED BY THE LEARNED AO U/S. 144/147 OF THE ACT IS LIABLE TO BE ANNULLED/QUASHED. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER: 12 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 ' THE ACTION OF THE AO IN REOPENING OF THE PROCEEDINGS U/S 147 R.W.S 148 IS YET ANOTHER INSTANCE OF THE AO'S ACTIONS THAT FALL FOUL OF THE STATUTE , AS THE SAME WAS CARRIED OUT EVEN AS NO FRESH MATERIALS DIFFERENT FROM THOSE AVAILABLE AT THE TIME OF THE ORIGINAL ASSESSMENT PROCEEDINGS WERE BROUGHT ON RECORD TO JUSTIFY THE INITIATION OF THE IMPUGNED REASSESSMENT PROCEEDINGS. THIS REQUIREMENT IS THE ES SENCE OF SEVERAL JUDICIAL RATIOS BY THE HON'BLE COURTS OF THE LAND, SOME WHICH HAVE BEEN CITED BY THE APPELLANT. THE SCHEDULE 18 OF THE NOTES ON ACCOUNTS TO THE AUDITED STATEMENTS OF ACCOUNTS OF THE APPELLANT THAT WAS EMPLOYED BY THE AO AS THE BASIS OF HIS REASONING THAT FORMED THIS BELIEF AND SATISFACTION THAT INCOMES HAD ESCAPED ASSESSMENT WAS AVAILABLE TO HIM DURING THE ORIGINAL ASSESSMENT PROCEEDINGS TOO. 'NOT REFERRING TO THE SAID CORRECT STATE OF AFFAIRS AND INITIATING REASSESSMENT PROCEEDINGS IS BUT UNWARRANTED, MISAPPLIED AND MISDIRECTED TRIGGER HAPPINESS BY THE AO. THERE IS AN IMPUTATION IN THE ARGUMENTS OF THE - APPELLANT THAT THE ACTION OF THE AO WAS TRIGGERED ON ACCOUNT OF AN AUDIT OBJECTION. EVEN SO, THE AO HAS NOT INDEPENDE NTLY CONSIDERED THE MERITS OF SUCH AUDIT OBJECTION, OR THE COMPETENCE OF THE AUDIT TEAM TO RAISE SUCH AN OPINION ON A LEGAL - JUDICIAL AND INTERPRETATIVE ISSUE. THE AO HAS NOT UNDEPENDABLY VERIFIED THE FACTUAL MATRIX, OR APPLIED HIS MIND IN CONSIDERING THE APPELLANT'S SUBMISSIO NS. THE BELIEF OR SATISFACTION OF THE AUDIT TEAM CANNOT BE HELD AS THE BELIEF OR SATISFACTION OF THE AO WITHIN THE DEFINITION OF SECTION 147 OF THE ACT. THIS HAS REMAINED THE CONSISTENT POSITION IN SEVERAL JUDICIAL RATIOS OF THE HON'BLE COURTS OF THE LAND. ANY ALLEGED NON - VERBAL OR TRANS - CORPOREAL - TRANSFERENCE OR OTHER INVISIBLE OR PRESUMED MECHANISM THAT ENABLES SUCH GERMINATION AND CRYSTALLIZATION OF BELIEF AND SATISFACTION IN THE MIND OF THE AO CANNOT BE HELD AS A LEGALLY VALID POSITION. THE ACTION BY TH E AO OF REOPENING THE ASSESSMENT U/S 147 IS CLEARLY INVALID.' 8. LD D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. 9., LD A.R. ON THE OTHER HAND SUBMITTED THAT AFTER PASSING OF THE ORIGINAL ORDER U/S.143(3) ON 23.11.2010, NO FRESH MATERIAL CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER, WHICH COULD TRIGGER THE PROCEEDINGS OF REASSESSMENT BY ISSUE OF NOTICE U/S. 148 OF THE AC T. THE ASSESSING OFFICER FROM THE AUDITED STATEMENT OF ACCOUNT, WHICH WERE FILED ALONGWITH RETURN OF INCOME AND WHICH WAS CONSIDERED BY HIM WHILE PASSING THE ORDER U/S. 143(3) OF THE ACT CAME TO THE CONCLUSION THAT PROVISIONS FOR BAD AND DOUBTFUL DEBTS OF RS. 11,70,84.000/ - WAS NOT ALLOWABLE DEDUCTION TO THE ASSESSEE U/S.36(L)(VII) OF THE ACT. THUS, THE REOPENING OF 13 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 ASSESSMENT HAS BEEN MADE BY THE ASSESSING OFFICER ON THE VERY SAME MATERIALS WHICH WERE EXAMINED AND CONSIDERED BY HIM IN A PROCEEDINGS U/S. 14 3(3) OF THE ACT, WHICH IS NOT PERMISSIBLE IN LAW IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC). HE ARGUED THAT THE CIT(A) HAS RIGHTLY HELD THAT REOPENING OF ASSESSMENT IS INVALID. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 23.11.2010. THE ASSESSING OFFICER THEREAFTER OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE FROM SCHEDULE - 18 OF THE NOTES ON ACCOUNTS THAT THE ASSESSEE HAS CLAIMED PROVISIONS FOR BAD AND DOUBTFUL DEBTS OF RS. 11,70,84,000/ - WHICH WAS NOT ALLOWABLE TO THE ASSESSEE U/S.36(L)(VII) OF THE ACT AND, THEREFORE, HE HAD REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND, ACCORDINGLY, HE ISSUED NOTICE U/S. 148 OF THE ACT TO THE ASSESSEE AND PASSED ORDER U/S. 147/144 OF THE ACT ON 18.2.2014. ON THE ABOVE STATED FACTS, THE CIT(A) HELD THAT REOPENING OF AS SESSMENT U/S. 147 OF THE ACT WAS INVALID AS FROM SCHEDULE - 18 OF NOTE ON ACCOUNTS TO THE AUDITED ACCOUNT OF THE ASSESSEE THAT WAS EMPLOYED BY THE ASSESSING OFFICER AS THE BASIS OF HIS REASONING THAT FORMED THIS BELIEF 14 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 AND SATISFACTION THAT INCOME HAD ESCAP ED ASSESSMENT WAS AVAILABLE TO HIM DURING THE ORIGINAL ASSESSMENT PROCEEDINGS TOO. THERE IS AN IMPUTATION IN THE ARGUMENTS OF THE ASSESSEE THAT THE ACTION OF THE ASSESSING OFFICER WAS TRIGGERED ON ACCOUNT OF AN AUDIT OBJECTION. THE ASSESSING OFFICER HAS NO T INDEPENDENTLY CONSIDERED THE MERITS OF SUCH AUDIT OBJECTION NOR THE COMPETENCE OF THE AUDIT TEAM TO RAISE SUCH AN OBJECTION ON A LEGAL JUDICIAL AND INTERPRETATIVE ISSUE. THE ASSESSING OFFICER HAS NOT INDEPENDENTLY VERIFIED THE FACTUAL MATRIX NOR APPLIED HIS MIND IN CONSIDERING THE ASSESSEE'S SUBMISSIONS. THE BELIEF OR SATISFACTION OF THE AUDIT TEAM CANNOT BE HELD AS THE BELIEF OR SATISFACTION OF THE ASSESSING OFFICER WITHIN THE DEFINITION OF SECTION 47 OF THE ACT. THIS HAS REMAINED THE CONSISTENT POSITION IN SEVERAL JUDICIAL RATIOS OF THE HON'BLE COURTS OF L AND. 11. LD D.R. DURING THE COURSE OF HEARING, COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT AFTER PASSING OF THE ORIGINAL ASSESSMENT ORDER U/S. 143(3) OF THE ACT WHAT NEW MATERIAL CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER, WHICH SHOWED THAT INCOME CHARGEABLE TO TAX OF THE ASSESSEE HAS ESCAPED ASSESSMENT. WE FIND THAT IN THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICER HAS STATED THAT FROM SCHEDULE, - 18 ON NOTES ON ACCOUNTS OF THE ASSESSEE, HE OBSERVED THAT THE ASSESSEE HAS CLAIMED PROVISIONS FOR BAD DEBTS 15 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 OF RS.11,70,84,000/ - , WHICH IS NOT ALLOWABLE TO THE ASSESSEE. THUS, IT IS OBSERVED THAT THE ASSESSING OFFICER FROM THE VERY SAME AUDITED STATEMENT OF ACCOUNT, WHICH WERE AVAILABLE WITH HIM AT THE TIME OF PASSING OF ORIGINAL ASSESSMENT ORDER U/S. 143(3) OF THE ACT, CAME TO THE CONCLUSION THAT PROVISIONS FOR BAD AND DOUBTFUL DEBTS OF RS. 11,70,84,000/ - HAS BEEN ALLOWED AS DEDUCTION IN EXCESS TO THE ASSESS EE. THUS, IN OUR CONSIDERED VIEW, ON THE VERY SAME MATERIALS WHICH WERE AVAILABLE WITH THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT U/S.147 OF THE ACT ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. OUR VIEW FINDS SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD (SUPRA), WHEREIN, IT HAS BEEN HELD THAT THE CONCEPT OF 'CHANGE OF OPINION' MUST BE TREATED AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF I NCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. IN THIS CONTEXT, THE OBSERVATIONS OF HON'BLE APEX COURT AT PAGE 564 ARE VERY RELEVANT, WHICH ARE REPRODUCED AS FOLLOWS: 'THEREFORE, POST - 1S T APRIL, 1989, POWER TO RE - O PEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS 16 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE - OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE - ASSESS. BUT REASSESSMENT HAS TO BE B ASED ON FULFILLMENT OF CERTAIN PRE - CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF O PINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1ST APRIL, 1989, ASSESSING OFFICER HAS POWER TO RE - OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSE SSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. ' 12. THEREFORE, WE HOLD THAT THE REOPENI NG OF ASSESSMENT IS BAD IN LAW AND CONSEQUENTLY, WE CONFIRM THE ORDER OF THE CIT(A) IN QUASHING THE REASSESSMENT ORDER U/S.147 OF THE ACT AND DISMISS GROUND NO. 1 OF APPEAL OF THE REVENUE. 13. IN VIEW OF O UR ABOVE FINDINGS IN GROUND NO.1 OF APPEAL, OTHER GROUNDS OF APPEAL RAISED BY THE REVENUE HAVE BECOME INFRUCTUOUS AND ARE NOT BEING SEPARATELY ADJUDICATED BY US. 14. THE CROSS OBJECTIO N FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE CIT(A). IN VIEW OF OUR DECISION IN REVENUE'S APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND HENCE DISMISSED. 17 ITA NO.58 /CTK/2015 C.O.NO.13/CTK/2015 ASSESSMENT YEAR:2008 - 09 14. IN THE RESULT, APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 12/ 07/2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 12 /07 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. TH E APPELLANT : ACIT 2(1), BHUBANESWAR 2. THE RESPONDENT ; M/S. NEELACHAL GRAMYA BANK, 190/702, KOKILA RESIDENCY, ANANTA VIHAR, AIRPORT AREA POST OFFICE, POKHARIPUT, BHUBANESWAR 3. THE CIT(A) - II , BHUBANESWAR 4. THE PR. CIT - II , BHUBANESWAR 5 . DR, ITAT, CUTTACK 6 . GUARD FILE. //TRUE COPY//