By Ajay R. Singh
Advocate
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[Affirmed SICOM LTD vs. Dy. Commissioner of Income Tax Range 3(3),. [ITA No. 3130/MUM/2011 ; Bench : E ; dated 10/10/2012 ; A Y: 2003- 2004. (Mum). ITAT ]
Reopening – Within 4 years – Change of opinion – reopening not permissible :Sec 148
The
assessee company is engaged in the business of finance, leasing, banking and
investment company (non-banking financial company). The return was filed
declaring total loss of Rs. 84,29,79,390/- for AY 2003-04 . The assessment was
completed for an income of Rs. 30,90,29,470/-
u/s 143(3) of the Act.
Subsequently, the A.O. reopened the assessment by
issuance of notice u/s 148 of the Act on 28-3-2008 after recording the reasons relating to write off of inter corporate deposit (ICD), investment etc.
The assessee vide letter dtd. 18-7-2008 stated that
there has been no failure on their part to disclose all the material facts in
its return of income. However, the WA.O. observed that the assessee failed to furnish
necessary details in respect of nature of assets written off. Therefore, it was
a failure on the part of the assessee to disclose all the material facts in its
return of income.
According to the A.O., the write off of investment wasa
capital loss, and the same couldnot be
allowed as a revenue expenditure. Similarly, ICD and other assets written off
constituted capital loss as these were the capital assets of the assessee,
therefore, they were also not allowable as revenue expenditure and accordingly
the A.O. added the same.
The assessee on the reopening of the assessment submitted
that the assessee in response to the query raised by the A.O. in respect of
write off done in the books of accounts of inter-corporate deposits, other
assets and investment has filed detailed reply dtd. 10-11-2005 supported by the
finding given by the Tribunal in assessee’s own case for the AY’s 1981-82,
1982-83 and 1983-84. It was further submitted that the A.O. after
considering the same has passed the assessment order u/s 143(3) of the Act. It
was further submitted that reopening of
the assessment on the same sets of fact is
not permissible as it amounts to change of opinion.
The ITAT observed that in the course of original
assessment proceeding the A.O. has considered and examined the particular
aspect, the said aspect cannot be made a ground to reopen and initiate
reassessment proceedings. The assessing authority cannot have a fresh look and reopen
an assessment on the ground of change of opinion. The A.O. had considered and
examined whether or not write off of the amount of inter-corporate deposits,
other assets and investments was of revenue nature. The A.O. accepted the stand
of the assessee and has made no addition in the original assessment
proceedings. The reassessment proceeding cannot, therefore, be initiated on the
ground that the said claim of the assessee cannot be allowed as permissible deduction
under the provisions of the Act. In the
present case it is noticeable that the assessee had disclosed fully and truly
all the material facts relevant for the assessment. There is no indication and
it is not alleged that there was “tangible material” to come to the conclusion
that there is escapement of income from assessment. The reassessment proceeding were quashed.
Being aggrieved by the order of ITAT, the Revenue filed
appeal before the Hon. High Court. The High court upheld the Tribunal order and dismissed
the Revenue appeal holding that Revenue has not been able to point out any
fallacy in the reasoning of the Tribunal to come to the conclusion that the
reopening notice is without jurisdiction
