Icici Bank Ltd, Mumbai vs Department Of Income Tax

सव ौी नरे ि कुमार ब लै या, लेखा सदःय एवं अिमत शु'ला, याियक सदःय के सम(

BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER &

SHRI AMIT SHUKLA, JUDICIAL MEMBER

आयकर अपील सं./I.T.A. No. 4282/Mum/2013 िनधा रण वष / Assessment Year : 2002-03 (िनधा

The DCIT 10(1), बनाम M/s. ICICI Bank Ltd. बनाम/ Room No.607, 6 t h Floor, ICICI Bank Towers, Bandra Vs. Aaykar Bhavan, MK Road, Kurla Complex, Mumbai 400020 Mumbai 400051 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACI 1195H (अपीलाथ- /Appellant) .. (ू/यथ- / Respondent)

Revenue by Shri Kishan Vyas Assessee by Ms. Aarti Vissanji

सुनवाई क0 तार1ख / Date of Hearing :12.02.2015 घोषणा क0 तार1ख /Date of Pronouncement:18.02.2015

आदे श / O R D E R

PER N.K.BILLAIYA, JM:

This appeal by the Revenue is directed against the order of the Ld. CIT(A)-7, Mumbai dated 4/12/2012 pertaining to assessment year 2002-

03. The sum and substance of the grievance of the Revenue is that the Ld. CIT(A) erred in law in holding that the reopening of assessment done by the AO is not correct in view of section 147 r.w. Explanation-1 and Explanation 2(c)(i) , (iii) and (iv) of the Income Tax Act, 1961 (the Act).

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2. Briefly stated, the facts of the case are that the original return was filed on 31/10/2002 declaring total income at Rs.351.21 crores. The assessment was completed on 25/2/2005 determining the total income at Rs.899.06 crores. Thereafter assessment was reopened under section 147 of the Act by issuing notice under section 148 of the Act dated 26/03/2007. The reasons for reopening of the assessment read as under:

"The assessee company had claimed deduction of Rs.3,39,96,92,465/- as Misc. Expenditure. This amount was not passed to the P&L A/c. The AO disallowed only Rs.2,42,22,50,540/- on account of issue expenses on rupee loan/debenture/fixed deposits and foreign currency loan and balance amount of Rs.97,74,41,925/- remained to be disallowed. As this expenditure was not routed through the P&L A/c. the same was not subjected to scrutiny of the statutory auditors of the assessee company nor the relevant evidences for allowability of the same were submitted before the assessing officer for proper verification."

2.1 Thereafter, the assessee attended the proceedings and replied to the queries of the AO. After considering replies filed by the assessee, the AO finally completed the assessment by making addition on account of miscellaneous expenses at Rs.97.74 crores.

2.2 Aggrieved, the assessee carried the matter before Ld. CIT(A). Before Ld. CIT(A) it was strongly contended that the reopening was erroneous and bad in law and not in accordance with the settled principles of the law. It was explained to Ld. CIT(A) that the complete disclosure was made by the assessee under the head "notes forming part of accounts where the claim of such expenses has been detailed.". It was contended that the assessee had proper disclosure on the relevant issue. After 3 आयकर अपील सं./I. T . A . N o . 4 2 8 2 / M u m / 2 0 1 3 ( िनधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 2 -0 3

considering the facts and the submissions the Ld. CIT(A) observed as under:

I also find that the details related to the claim made by the appellant bank were annexed with the return of income in the form of statement 11 & 14 filed by the appellant bank. Hence, I am of the considered view that issue involved in this appeal, which resulted reopening of assessment was very well deliberated by the A.O. at the time of original assessment passed u/s 143(3) of the Act as per para-7 of the assessment order and also duly disclosed by the appellant bank. In view of the same and also after taking note of Apex Court decision in the case of CIT vs. Kelvinator India Ltd. reported in 325 ITR page 56 & the decision of jurisdictional High Court decision, which has been taken note by the Hon'ble Bombay High Court in the appellant's own case itself by ITA No.1237 of 2011 dated 09/107/2012, I have no hesitation to hold that reopening of assessment is merely based on change of opinion in the appellant's case, which is not based on any tangible material in the possession of the A.O. Hence, in this background of the appellant's case, I consider it proper and appropriate to hold that reopening of original assessment, which was passed by the A.O. is not justified. Hence the reassessment order passed by the A.O. u/s 143(3) r.w.s 147 is annulled. Thus, appellant's this ground of appeal is allowed.

3. Aggrieved by this the Revenue is before us. Ld. DR strongly supported the assessment order.

4. Ld. Counsel for the assessee reiterated what has been submitted before lower authorities.

5. In the notes forming part of accounts it is provided as under:

"1. The board of ICICI Limited at its meeting on October 25, 2001 decided to merge ICICI Limited with ICICI Bank Limited, subject to several approvals including those of the Reserve Bank of India, shareholders and the High Courts, which have since been received. The Appointed Date of the merger is March 30, 2002 and ICICI Limited has ceased to exist with effect from the appointed date.

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Accordingly the accounts of erstwhile ICICI Limited have been prepared for the period ended March 29, 2002 for compliance with requirements of 1ncone Tax Act, 1961 by the merged ICICI Bank Limited.

In view of the merger the balance of deferred revenue expenditure as on March 29, 2002 aggregating to Rs.3 799 million, which would have been amortised to the profit and loss account in the future, has been written off by direct debit to the General Reserve. Further a provision of Rs.7074.9 million has been made against investments in equity shares to ensure that the investments of ICICI Ltd. are valued in accordance with valuation norms applicable to banks by direct debit to capital reserve/general reserve.

Figures the previous year are not comparable with the current period figures for 363 days."

5.1 It is apparent that a detailed disclosure was made by the assessee in relation to the claim of expenditure. Reopening the assessment on the very same set of facts which were very much available at the time of the original assessment proceedings is nothing but a change of opinion. In our considered opinion one needs to give a schematic interpretation of the words " reason to believe" failing which, section 147 would give arbitrary powers to the AO to reopen the assessment on the basis of "mere change of opinion", which cannot be per se reason to reopen. There is conceptual difference between power to review and power to reassess. The AO has no power to review, he has the power to re-assess. But assessment has to be based on fulfillment of certain conditions and if the concept of "change of opinion" is removed, then, in the garb of reopening of assessment, review would take place. Hon'ble Supreme Court in the case of CIT vs.Kelvinator of India India, 320 ITR 561 has held that the AO must have some tangible material for reopening the 5 आयकर अपील सं./I. T . A . N o . 4 2 8 2 / M u m / 2 0 1 3 ( िनधा रण वष / A s s e s s m e n t Y e a r : 2 0 0 2 -0 3

assessment. In the case in hand, we do not find any new tangible material evidence on the basis of which the AO has reopened the assessment. Ld. CIT(A) has rightly followed the decision of the Hon'ble Supreme Court (supra). Ld. CIT(A) has also observed on similar facts the Hon'ble Bombay High Court in assessee's own case in ITA 1237 of 2011 dated 9/10/2012 following the decision of the Hon'ble Supreme Court has quashed the reopening proceedings. We, therefore, do not find any reason to interfere with the findings of Ld. CIT(A).

6. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court at the time of hearing on 18th day of Feb. 2015.

Sd/- Sd/- (AMIT SHUKLA ) (N.K. BILLAIYA) याियक सदःय/JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER मुंबई Mumbai; 4दनांक Dated : 18. 02.2015 व.िन.स./ VM , Sr. PS आदे श क0 ूितिल प अमे षत/Copy षत of the Order forwarded to : 1. अपीलाथ- / The Appellant 2. ू/यथ- / The Respondent. 3. आयकर आयु6(अपील) / The CIT(A)- 4. आयकर आयु6 / CIT 5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुब ं ई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदे शानुसार/ ार BY ORDER, स/या पत ूित //True Copy// उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai