prpri Reassessment on change of opinion on provision for bad & doubtful debts is invalid Reassessment on change of opinion on provision for bad & doubtful debts is invalid

Case Law Details

Case Name : CIT Vs. M/s. Indian Potash Ltd. (Madras High Court)
Appeal Number : Tax Case Appeal No.1363 of 2008
Date of Judgement/Order : 11/09/2018
Related Assessment Year : 1998-99

CIT Vs. M/s. Indian Potash Ltd. (Madras High Court)

The Tribunal has recorded a factual finding that the Assessee has disclosed the figure of provision for bad debts and doubtful debts and interest income also in the Profit and Loss Account submitted along with the return of income. Therefore, the Tribunal held that there is no failure on the part of the Assessee to disclose fully and truly all material facts.  Furthermore, it was pointed out that the figures and reasons for reopening were picked up from the assessee’s accounts submitted along with return.  In the said factual position, the Tribunal placed reliance on the decision in the case of CIT V Elgi Finance Ltd., (2006) 286 ITR 674 (Mad) and held that the assumption of jurisdiction in the instant case is barred by limitation.

We are fully in agreement with the view expressed by the Tribunal.  From the facts of the case, it is evidently clear that the reopening was a change of opinion.  When there is no allegation that the Assessee is not fully and truly disclosed all the materials, the question of reopening the assessment does not arise.  The duty of the Assessee rests only to fully and truly disclose all facts in the return, which has been done by the respondent/Assessee.  It is not for the respondent/Assessee to tell the Assessing Officer has to how he has to frame the assessment and in the instant case, it is evidently clear that the reopening was because of change of opinion.

FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT

This appeal filed by the Revenue is directed against the order passed by the Income Tax Appellate Tribunal Bench A, Chennai, in I.T.A.No.2025/Mds/2006, dated 14.03.2008 for the Assessment Year 1998-1999.

2. The appeal has been admitted vide order dated 01.09.2008 on the following substantial question of law:

Whether in the facts and circumstances of the case, the Tribunal was right in holding that the Tribunal erred in holding that the reassessment under Section 143(3) r/w 147 is bad in law ?

3. We have heard Mr.Karthik Ranganathan, learned counsel for the appellant/Revenue and Mr.R.Vijayaraghavan, learned counsel for the respondent/Assessee.

4. The only issue, which falls for consideration, is whether the Tribunal was right in holding that reassessment under Section 147 of the Income Tax Act, 1961 was bad in law ?

5. We have gone through the facts of the case as well as the findings rendered by the Tribunal. The Tribunal has recorded a factual finding that the Assessee has disclosed the figure of provision for bad debts and doubtful debts and interest income also in the Profit and Loss Account submitted along with the return of income. Therefore, the Tribunal held that there is no failure on the part of the Assessee to disclose fully and truly all material facts.  Furthermore, it was pointed out that the figures and reasons for reopening were picked up from the assessee’s accounts submitted along with return.  In the said factual position, the Tribunal placed reliance on the decision in the case of CIT V Elgi Finance Ltd., (2006) 286 ITR 674 (Mad) and held that the assumption of jurisdiction in the instant case is barred by limitation.

6. We are fully in agreement with the view expressed by the Tribunal.  From the facts of the case, it is evidently clear that the reopening was a change of opinion.  When there is no allegation that the Assessee is not fully and truly disclosed all the materials, the question of reopening the assessment does not arise.  The duty of the Assessee rests only to fully and truly disclose all facts in the return, which has been done by the respondent/Assessee.  It is not for the respondent/Assessee to tell the Assessing Officer has to how he has to frame the assessment and in the instant case, it is evidently clear that the reopening was because of change of opinion.

T.S.SIVAGNANAM, J.

and

V.BHAVANI SUBBAROYAN, J.

7. Thus, for the aforesaid reasons, we are of the considered view that there is no error in the order passed by the Tribunal. Accordingly, the appeal filed by the Revenue is dismissed and the substantial question of law is answered in favour of the Assessee and against the Revenue. No costs.

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