STANDARD CHARTERED INVESTMENTS & LOANS (INDIA) LTD,MUMBAI vs. DCIT 1(3), MUMBAI

Further, the assessee filed its submission before the assessing officer and assessing officer rejected the submissions of the assessee and completed the assessment by making addition M/s Standard Chartered Investments and Loans (India) Ltd. on provision for deprivation on investment and interest income not offered to tax.

Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) and before him made a submission and objected to reopening of the assessment and on merits of the case with regard to additions made by the assessing officer. After considering the detail submissions of the assessee on reopening of the assessment and relying on various case laws, Ld. CIT(A) dismissed the grounds raised by the assessee by the following observations:-

Aggrieved with the above order, assessee is in appeal before us raising the following grounds of appeal:-

At the time of hearing, Ld. AR of the assessee explained the grounds raised by the assessee and in Ground No. 1, assessee has challenged the reopening of the assessment and other two grounds are on merits of the case. Since the Ground No. 1 is on reopening of the assessment which goes to the root of the case, we heard only Ground No. 1 and the other grounds relating to merits of the case are interlinked, we heard first the ground on reopening of the assessment. Accordingly, we take up only the ground on reopening of the assessment and other grounds are not heard and in case the decision goes against the assessee on reopening, we informed on the bench that another opportunity will be given to the assessee to argue on merits of the case.

Learned AR of the assessee brought to our notice the reasons for reopening of the assessment which is reproduced by assessing officer in his order at para 2. He submitted that assessing officer used the word seen from the balance sheet, it shows that assessing officer has considered the information which is already available in the assessment records and there is no fresh material or tangible material available with the assessing M/s Standard Chartered Investments and Loans (India) Ltd. officer to initiate the assessment proceedings. It clearly indicates that the assessing officer has considered all these materials in the original assessment and the same information is now being used to reopen the assessment. Further he brought to our notice page 79 of the paper book in which the assessee accounted non- convertible debentures in current investments, which is as per RBI guidelines. Further he brought to our notice at page no 83 of the paper book, which is notes forming part of financial statements. The above notes are forming part of balance sheet and as per note 9 of the above, assessee has clearly declared that these current investments are purchased by the company is on the records of business with the intention to trade and he also brought to our notice page 75 of the paper book which is profit and loss account for the year in which assessee has declared interest income and profit on sale of nonconvertible debentures as income for the year, he submitted that on one hand assessing officer accepts the income declared by the assessee and when it comes to allowing the expenditure, assessing officer disallows the expenditure claimed by the assessee which is part of the business expenditure.

He brought to our notice page 173 of the paper book which is original assessment passed by the assessing officer under section 143(3) of the Act. In the original assessment order the assessing officer himself notifies that “the return of income was accompanied with computation of income, audit report in form No 3CA, 3CD, 3C EB, audited profit and loss account, balance sheet along with the annexures, TSD certificate et cetera”. Learned AR submitted that the Original assessment was completed after considering the above said documents, now assessing officer in order to reopen the assessment relying on the same documents which was available before the assessing officer to complete the original assessment. He submitted that on verification of the notice issued by the assessing officer and original assessment order it is clear that assessing officer has not brought on record any new tangible material to reopen the assessment and the reasons recorded by the assessing officer indicates that it is change of opinion which is not permissible under section 147 of the Act, for that proposition learned AR relied on the following case law:

Considered the rival submissions and material placed on record, further considered the case law submitted by the assessee. We notice from the records submitted before us that the original assessment was completed on 04.02.2008 and the assessee has filed return of income along with computation of income, audit reports, profit and loss and balance sheet duly audited along with their annexures etc. and the above documents were available before the assessing officer and further assessing officer has M/s Standard Chartered Investments and Loans (India) Ltd. asked information from the assessee and assessee has furnished the detailed information before the assessing officer before completing the original assessment. Before us, learned AR brought to our notice, the information which were already supplied before assessing officer in the original assessment. On careful reading of the reasons to reopen the assessment, the assessing officer has clearly indicated that he has seen the information from the balance sheet and profit and loss available on assessment records. From the record, it also indicates that assessing officer has revisited the assessment records and found that the income has escaped from the assessment and proceeded to issue notice under section 148 of the Act. From the first appellate order, we notice that Ld CIT(A) has observed that it is enough that assessing officer has reason to believe that income has escaped assessment. This is good enough justification for reopening.

From the record, it is clear that the assessee has declared all the information in the balance sheet itself that the current investments were meant for business purpose and all the relevant M/s Standard Chartered Investments and Loans (India) Ltd. interest income and profit on sale of nonconvertible debentures were part of the records submitted in original assessment. Now the same records and information are used by the assessing officer to reassess the income, in our considered view it amounts to change of opinion and change of opinion is not allowed as per the provisions of section 147.

We draw strength from the judgment of Hon’ble High Court in the case of Asian Paints Ltd vrs. DCIT (2009) ITR 195 (Bom), wherein it was held as under:-

It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, 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 formation of opinion by the Assessing Officer, nothing new has happened, therefore, 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 M/s Standard Chartered Investments and Loans (India) Ltd. facts and the reason that has been given is that the some material which was available on record 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 change 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 reopening of assessment under Section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under Section 148. 14. We also draw strength from the decision of Coordinate Bench of ITAT in the case of Kotak Mahindra Asset Management Co. Ltd. vrs. ACIT (ITA No. 1815/Mum/2017), wherein it was held as under:-

Considering the facts of the present case as well as judicial pronouncements as discussed above, we allow the grounds raised by the assessee.