IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 803 OF 2017 Pr. Commissioner of Income Tax 7 .. Appellant. v/s. M/s. Glaxo Smithkline Pharmaceuticals Pvt. Ltd., .. Respondent. Mr. Suresh Kumar, for Appellant. CORAM: M.S.SANKLECHA & NITIN JAMDAR, JJ. DATE : 20th AUGUST, 2019. P.C: This Appeal under Section 260 of Income Tax Act, 1961 (the Act), challenges order dated 7th April, 2016 passed by Income Tax Appellate Tribunal (the Tribunal). impugned order dated 7 th April, 2016 is in respect of Assessment Year 2005 06. 2 Revenue urges following questions of law, for our consideration: (a) Whether on facts and in circumstance of case and in law, Tribunal was justified in quashing reassessment proceeding, initiated by AO u/s. 147 r.w.s. 148 of IT Act, 1961? (b) Whether on facts and in circumstance of case and in law, Tribunal was justified in quashing reopening u/s. 147 of Act holding that reasons had not mentioned that failure of assesssee to disclose fully and truly material facts has led to escapement of income without appreciating that mere submission of details during original proceeding do not tantamount to submission of all material facts truly and fully? S.R.JOSHI 1 of 4 ::: Uploaded on - 27/08/2019 ::: Downloaded on - 29/08/2019 09:50:45 ::: itxa-803-2017 (c) Whether on facts and in circumstance of case and in law, Tribunal was justified in quashing reopening u/s. 147 of Act without considering matter on merits of case? 3 From above, it is evident that only issue which arises is jurisdiction of Assessing Officer to re open assessment under Section 147/148 of Act by notice dated 27 th March, 2012 beyond period of four years from end of relevant Assessment Year. This in context of fact that regular assessment was completed under Section 143(3) of Act and recorded reasons not mentioning any failure on part of Respondent to truly and fully disclose all material facts necessary for Assessment. 4 reasons recorded in support of re opening notice dated 27th March, 2012 reads as under: On perusal of case record, it is noticed that assessee company had made provision for doubtful debts of Rs. 1258.61 lacs in Balance Sheet as on 31/03/2005and amount of Rs.11,46,19,000/ had been reduced as amount written off in books as bad debts from income in computation of income filed along with return of income. said debts had not been debited in profits and loss account. As bad debts of Rs.11,46,19,000/ which is not debited in profit and loss account was required to be disallowed and omission to do so as has resulted in under assessment of income by Rs.11,46,19,000/ . This view was held in case of CIT v/s. Hotel Ambassador (2002) 121 Taxman 437, writing off of bad debts without charging in same profit and loss account is not writing off at all. So, bad debt of Rs.11,46,19,000/ which is not debited in profit and loss account is required to be disallowed. 2. In response, Shri Saurabh Kuwadia, Sr. Manager Taxation, from assessee company attended and submitted details called for from time to time. assessee vide its reply submitted on 31.10.2012 stated as under: S.R.JOSHI 2 of 4 ::: Uploaded on - 27/08/2019 ::: Downloaded on - 29/08/2019 09:50:45 ::: itxa-803-2017 (a) Total provision made for doubtful debs/ loans and advances is Rs.2,87,77,700/ (page 16 of signed accounts). In revised computation of income, whole amount of Rs.2,87,77,000/ has been disallowed. (b) Amount claimed in revised computation of income is Rs.11,46,19,000/ as bad debts written off in books is Rs.12,83,33,000/ . However, we have not claimed bad debts of Rs.11,37,14,000/ pertaining to Horus Pharma. (c) Also enclosed herewith, is schedule of provision for doubtful debts and advances which demonstrates opening provision + provision for current year bad debts written off = closing provision which matches with signed accounts. (Annexure 1). (d) Also enclosed is revised computation of total income ascertaining above mentioned facts as per Annexure 2. Relevant extracts of signed accounts are enclosed as per Annexure 3. Considering above facts and explanation given by us, we state that there has no understatement of any income/ under assessment of any income. Consequently, we request you to drop re assessment proceedings for assessment year 2005 06. 5 It is undisputed position that for Assessment Year 2005 06, assessment was completed under Section 143(3) of Act on 29th December, 2008. Thereafter, on 27th March, 2012, notice under Section 148 of Act was issued to Respondent, seeking to re open assessment for Assessment Year 2005 06. Thus, re opening notice was admittedly beyond period of four years. 6 It is also undisputed position that reasons recorded for re opening of assessment does not mention any failure on part of Respondent to disclose fully and truly all material facts necessary for assessment. impugned order of Tribunal while allowing appeal of Respondent places reliance upon decision of this Court S.R.JOSHI 3 of 4 ::: Uploaded on - 27/08/2019 ::: Downloaded on - 29/08/2019 09:50:45 ::: itxa-803-2017 in Titanor Components Ltd., v/s. CIT 343 ITR 183. This Court in above case has observed as under Moreover, it is necessary for AO to first observe that there is failure to discloser fully and truly all material facts necessary for assessment and having observed that there is such failure to proceed under Section 147. It must follow that where A.O. does not record such failure he would not be entitled to proceed under Section 147...... (emphasis supplied) 7 Therefore, view taken by Tribunal is in accord with decision of this Court in Titanor Components Ltd., (supra). Thus, no substantial question of law arises for our consideration. Hence, not entertained. 8 Accordingly, Appeal dismissed. (NITIN JAMDAR,J.) (M.S.SANKLECHA,J.) S.R.JOSHI 4 of 4 Pr. Commissioner of Income-tax-7 v. Glaxo Smithkline Pharmaceuticals Pvt. Ltd