Icici Bank Ltd vs Deputy Commissioner Of Income ...
2023 Latest Caselaw 11139 Bom

2023:BHC-OS:12971-DB
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                              IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                                 ORDINARY ORIGINAL CIVIL JURISDICTION

                                    WRIT PETITION NO.3108 OF 2022

                  ICICI Bank Ltd.
                  ICICI Bank Towers,
                  Bandra Kurla Complex,
                  Bandra (East),
                                                                     ...Petitioner
                  Mumbai - 400 051.
                                          Versus
                  1. Deputy Commissioner of Income Tax-2(3)
                       (1), having his office at Room No.552,
                       Aayakar Bhavan, M.Karve Road, Mumbai -
                       400 020.
                  2.    National Faceless Assessment Centre,
                        Mayur Vhavan, Barakhamba Road, Delhi -
                        110 001.
                  3.    Union of India
                        through Ministry of Law Aayakar Bhavan,
                        Maharshi Karve Road, Mumbai - 400 020.       ...Respondents

                  Ms. A. Vissanji, for Petitioner.
                  Mr. Suresh Kumar, for Respondents-Revenue.


                                                    CORAM: K. R. SHRIRAM &
                                                           NEELA GOKHALE, JJ.

DATED: 31st October 2023

ORAL JUDGMENT (Per K.R. Shriram, J.):

1. Rule. Rule made returnable forthwith by consent of parties.

2. Petitioner had filed its return of income for Assessment Year

2013-14 on 29th November 2013 declaring total income of

Rs.85,82,23,14,680/-. The said return was revised on 31st March

2015 declaring total income of Rs.85,70,52,53,270/-. Petitioner filed

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the said return along with audited accounts, Form 3CD and other

prescribed documents. Petitioner's case was selected for scrutiny and

various queries were raised particularly in respect of deductions

under Section 36(1)(vii), 36(1)(viia) and 36(1)(viii) of the Income

Tax Act, 1961 ("the Act"). Petitioner responded and explained that

the amount of bad debts claimed have been revised in the revised

return on account of a change in the credit balance which was taken

as per the revised claim in the return for the preceding Assessment

Year 2012-13.

3. In its reply dated 12th August 2016, Petitioner submitted

detailed explanation with respect of the deductions for bad debts

claimed under Section 36(1)(vii) of the Act with reference to relevant

circulars of Central Board of Direct Taxes ("CBDT") as well as

deduction claimed under Section 36(1)(viia) of the Act. Petitioner

also submitted a working of the deductions and later revised working

of deductions and revised statement were also submitted along with

other documents.

4. After considering the submissions made by Petitioner together

with the documents submitted, Respondent No.1 passed an

assessment order dated 23rd January 2017 under Section 143(3) read

with Section 144C(3) of the Act.

5. The claim for deduction under Section 36(1)(viii) has been

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discussed in paragraph 15 of the said assessment order. Respondent

No.1 has noted that "since the claim is linked to the business income,

computed under the head 'Profits and Gains of Business and

Profession' the same would be subject to change depending on the

final figure of business income determined after considering various

disallowances/additions but not exceeding Rs.760,00,00,000/- being

the amount appropriated during the year by the assessee to the

Special Reserve Account".

6. Petitioner preferred an appeal against the assessment order

pertaining to issues unreleated to deductions under Section 36(1)

(vii), Section 36(1)(viia) and Section 36(1)(viii) of the Act. The

Commissioner of Income Tax (Appeals) ("CIT(A)") passed an order

dated 24th January 2009. Respondent No.1 gave effect to CIT(A)'s

order on 29th March 2019. Respondent No.1 added back the net bad

debts of Rs.167,69,24,260/- after adjusting earlier years provision of

Rs.564,81,45,059/- and allowed deduction of Rs.166,86,41,107/-

under Section 36(1)(vii) of the Act after adjusting the provision of

Rs.565,64,28,212/- for bad and doubtful debts allowed as per order

giving effect passed for assessment year 2012-13. The amount of

Rs.760,00,00,000/- was allowed under Section 36(1)(viii) of the Act

whereas the deduction of Rs.950,71,42,265/- was allowed under

Section 36(1)(viia) of the Act in the said order giving effect to the

CIT(A)'s order for the relevant assessment year.

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7. Subsequently, based on audit objections, Petitioner was served

with a notice under Section 148 of the Act stating that Petitioner's

income has escaped assessment. Petitioner was also supplied with

reasons for issue of the notice under Section 148 of the Act. The

reasons recorded state that on verification of record, it was observed

that in the order dated 29 th March 2019 giving effect to the order of

the CIT(A): (a) provision for bad debts was allowed in excess at

Rs.564,81,45,059/- instead of Rs.499,98,11,924/-; (b) deduction

under Section 36(1)(viii) was allowed in excess at

Rs.760,00,00,000/- instead of Rs.657,83,50,134/-; Respondent No.1

relied upon the judgment of the Apex Court in the case of Goetze

(India) Ltd. v. CIT,1 that deduction had to be restricted to the amount

claimed in the return; (c) excess deduction had been allowed under

Section 36(1)(viia) of the Act to the extent of Rs.130,89,42,096/-.

Respondent No.1 concluded, relying upon the judgment of the Apex

Court in Goetze (India) Ltd. (supra), by stating that bad debts and

the provision for bad debts had been allowed in excess, that the

deduction had to be restricted to the claims made in the return of

income and hence income was underassessed.

8. Petitioner filed its objections vide letter dated 14 th December

2021. Petitioner was called upon to submit further details which

Petitioner did and then order dated 17th February 2022 rejecting

1 284 ITR 323.

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Petitioner's objections came to be passed.           This order is also

impugned in the Petition.

9. It is Petitioner's case that since the notice under Section 148 of

the Act was issued after the expiry of four years from the end of

relevant assessment, the onus is on Respondents to prove that there

was failure on the part of Petitioner to truly and fully disclose

material facts required for the assessment. Ms. Vissanji submitted

that the reasons do not indicate that there was failure to disclose and,

therefore, on this ground alone the notice is not sustainable.

10. Though repeatedly time was taken to file affidavit in reply, no

reply has been filed.

11. We have considered the reasons recorded for reopening of the

assessment under Section 147 of the Act. In our view, the reopening

cannot be sustained.

12. The first proviso to Section 147 prescribes a limit of four years

for reopening an assessment in a case where an assessment has been

made under Section 143(3) of the Act and there is no failure on part

of the assessee to disclose fully and truly all material facts necessary

for assessment. Petitioner has been assessed under Section 143(3) of

the Act.

13. We have considered the reasons and the entire basis for

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forming a reason to believe that there has been escapement of

income is the effect that the assessing officer gave while giving effect

to CIT(A)'s order dated 29th March 2019 under Section 250 of the

Act. In paragraph 2.1 of the reasons, it states that " On verification of

records it is observed that the while giving effect to CIT(A)'s order

u/s. 250 IT Act dated 29/03/2019 revealed that while computing the

assessed income.....". In paragraph 2.2, it states that "Further, on

verification of records it is observed that the while giving effect to

CIT(A)'s order u/s. 250 IT Act dated 29/03/2019 revealed that while

computing the assessed income....". And in paragraph 2.3, it states

that "Further, on verification of records it is also observed that the

while computing the assessed income had allowed deduction of

Rs.950,71,42,265/- u/s. 36(1)(viia) of IT Act. Further, it is observed

from details of Computation of Income for AY 2013-14 submitted by

assessee that assessee had claimed following deduction u/s. 36(1)

(viia) of IT Act [Statement 18 of Computation of Income]..... ". All

these only refer to the Assessment Order giving effect to CIT(A)'s

order. These do not indicate that there was no failure on the part of

Petitioner to truly and fully disclose material facts.

14. During the assessment proceedings, the Assessing Officer had

issued notices under Section 142(1) and also issued questionnaires

from time to time with respect to Petitioner's claim under Section

36(1)(vii), Section 36(1)(viia) and Section 36(1)(viii) of the Act and Gaikwad RD 7/7 502-oswp-3108-2022-J.doc

Petitioner has answered all those queries. In the assessment order,

Petitioner's claim under Section 36(1)(vii) read with Section 36(1)

(viia) and Section 36(1)(viii) of the Act has been discussed in detail

and certain amount of bad debts had been disallowed. In fact,

Petitioner had carried that in appeal to CIT(A) and an order giving

effect to the order passed by the CIT(A) came to be passed.

Therefore, the reasons as recorded for reopening indicate only

change of opinion which again is not permissible in law. This change

of opinion does not constitute justification and/or reasons to believe

that income chargable to tax has escaped assessment.

15. In the circumstances, Rule made absolute. Petition is allowed

in terms of prayer clause (a) which reads as under:

"(a) This Hon'ble Court may be pleased to issue under Article 226 of the Constitution of India an appropriate direction, order or writ including a writ in the nature of Certiorari calling for the records of the case and after satisfying itself as to the legality thereof, quash and set aside the notice dated 24.03.2021 (Exhibit 'M') and the order dated 17.02.2022 (Ex.R) issued by the Respondent No.1 for the relevant assessment year."

                               (NEELA GOKHALE, J.)                                       (K. R. SHRIRAM, J.)




Signed by: Raju D. Gaikwad
Designation: PS To Honourable Judge
                                Gaikwad RD
Date: 02/11/2023 15:53:31