ACIT RG 3(3), MUMBAI vs. SBI GLOBAL FACTORS P.LTD, MUMBAI

आदेश / O R D E R Per Ashwani Taneja (Accountant Member):

3.1. During the course of hearing, Ld. DR has relied upon the order of the AO. On the other, Ld. Counsel of the assessee has argued in detail that the “Reasons” recorded in this case were factually incorrect and legally invalid. Further, original assessment was done in this case u/s 143(3), wherein similar issue has already been dealt by the AO and addition was made which were contested before Ld. CIT(A), wherein the additions made were deleted. Thus, original assessment order was merged with the order of Ld. CIT(A). In view of these facts, it is a clear case of change of opinion, which is not permitted under the law.

3.2. We have gone through the orders of the lower authorities, documentary evidences submitted before us and submissions made by both the sides. It is noted from the perusal of the 3 SBI Global Factors P. Ltd. assessment order that “Reasons” have been recorded on the ground that provisions for non-performing assets has been made in excess of the RBI guidelines by an amount of Rs.64,75,527/-. It is noted, with the assistance of the parties that in the original assessment proceedings made u/s 143(3) vide assessment order dated 05.11.2008 a disallowance was made for an amount to Rs.84,01,938/- on account of bad debts. The assessee filed an appeal before Ld. CIT(A), wherein this disallowance was deleted by Ld. CIT(A) vide its order dated 16.12.2008 by relying upon order of the Tribunal for A.Y.2002-03 in assessee’s own case. It has been shown to us that impugned amount of provision of Rs.64,75,527/- is included in the total amount of the profit debited in the profit and loss account for Rs.86,75,207/-. It is further noted that amount debited in the profit and loss account was added back in the computation sheet of income filed along with return, and claim of Rs.84,01,938/- was made in the computation sheet. This claim was disallowed by the AO in the original assessment order passed u/s 143(3), which was subsequently allowed by the Ld. CIT(A) in the appellate order. In view of these facts, we noted that “Reasons” recorded by the AO are factually incorrect in as much as impugned claim has already been allowed by the Ld. CIT(A). Thus, no belief of escapement of income could have been formed on the basis of incorrect facts and any such belief would be erroneous under the law. No reopening can be done u/s 147 in absence of belief about escapement of income based upon correct facts and law. It is further noted by us that this issue has already been examined

4 SBI Global Factors P. Ltd. in detail by the AO in the original assessment proceedings u/s 143(3) as discussed above also. Thus, it is a clear case of change of opinion by the AO at the time of the recording of the impugned reasons for reopening of the impugned assessment of the assessee. We find that Ld. CIT(A) has recorded correct findings while quashing the impugned reassessment. These are reproduced below for the sake of ready reference:

“4.3 I have considered the AO’s order as well as appellant AR’s submissions. Having considered both, and also after taking noted of the reason by the AO, I find that the reopening was not done on any new information or based on any income or particulars which were not disclosed by the appellant company at the time of filing the original return of income but it was done merely on the basis of audit objection as stated by the appellant company in para 2 of its submission as depicted above. Taking not of the decisions of the Apex Court in the case of India and Eastern Newspaper Society v. CIT, New Delhi reported in 119 ITR page 996 and also the Delhi High Court decision in the case of Transworld International Inc. v. JCIT reported in 273 ITR page 242 and also the jurisdictional High Court decision the case of IL & FS Investment Managers Ltd. vs. ITO & Ors reported in 298 ITR page 32, I consider it proper and appropriate to hold that the AO’s action of reopening of assessment based on audit objection was not justified. Accordingly, the reopening of the assessment is cancelled. 4.4. Even, I have taken note of the appellant’s other grounds of appeal without prejudice wherein the aforesaid addition of Rs.64,75,522/- has been made by the AO through reopening of assessment. After taking noted of the appellant’s submission made through appellant proceedings, I find that the said sum was already forming part of the disallowance already made by the appellant company through its computation of income filed through original return of income. The appellant’s AR has also filed a detailed written submission to this effect in the appellate

5 SBI Global Factors P. Ltd. proceedings which clearly suggests that the said sum of Rs.64,75,522/- was already added back by the appellant company itself. Even on this basis also, the reopening of assessment was completely misconceived by AO. Accordingly, even on factual basis also the reassessment made by the AO is cancelled.” Thus, in view of the detailed discussion made by us and aforesaid finding of Ld. CIT(A), we find no force in the grounds raised by the Revenue and therefore, we uphold the action of Ld. CIT(A) in quashing the reassessment order.

Order pronounced in the open court on 24th February, 2016.

Sd/- Sd/- (C.N. Prasad ) (Ashwani Taneja) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated : 24/02/2016 ctàxÄ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai

6 SBI Global Factors P. Ltd.

Date Initial Original order dictated directly on computer 1. Draft dictated on 15.1.16 Sr.PS 15.1.16 2. Draft placed before author Sr.PS 3. Draft proposed & placed before JM/AM the second member 4. Draft discussed/approved by JM/AM Second Member 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Date of pronouncement Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the Head Clerk 9. Date of dispatch of Order