The Gujarat High Court has held that the revision under section 263 of the Income Tax Act, 1961 without any tangible material is not valid and set aside the proceedings against Axis Bank.
The petitioner is a private sector Bank and limited company and some of the shareholders are citizens of India. The petitioner Bank filed its original return of income for Assessment Year 2015-16 on 24.11.2015 and later a revised return of income was also submitted on 30.03.2017 inter alia declaring the total income of Rs.112,53,09,30,950/-.
The assessing officer informed the petitioner Bank that the case of the petitioner has been converted from limited scrutiny into complete scrutiny whereby the assessing officer has assumed unrestricted power to verify or deal with any issue for Assessment Year 2015-16.
The notice came to be issued under Section 142 (1) of the Income Tax Act on 22.09.2017 calling upon the petitioner to tender specific details relating to the issue of bad debt and NPA in view of Section 36(1) (vii) and Section 36(1) (viia) of the Income Tax Act.
The petitioner was selected for revision under Section 263 of the Income Tax Act by the higher authority of then assessing officer i.e.Principal Commissioner of Income Tax and under Section 143(3) read with Section 263 of the Income Tax Act, the total income of the petitioner was revised and determined as Rs.122,00,22,24,051/-.
In CIT v. Kelvinator of India Ltd., the apex Court held that “one needs to give a schematic interpretation to the words reason to believe failing which, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments based on mere change of opinion which cannot be per se reason to reopen.”
Apex Court also held that the Assessing Officer has no power to review and he has the power to reopen provided there is tangible material to come to the conclusions that there is escapement of income from assessment and there was a failure on the part of the assessee to disclose material facts truly and fully.
It was evident that the petitioner had truly and fully disclosed all material facts necessary for assessment. Not only material facts were disclosed by the petitioner truly and fully but they were scrutinized and figures of income, as well as deductions, were reworked carefully by the Assessing Officer.
A two-judge bench comprising Justice Ashutosh J. Shastri and Justice J C Doshi observed that there was no tangible material and the re-opening is sought based on the assessment record itself. While allowing the appeal, the Court quashed and set aside the impugned notice as well as the impugned order.
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