1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. INCOME TAX APPEAL NO.2456 OF 2009 The Commissioner of Income Tax-6 ..Appellant. Vs. M/s. Mahindra & Mahindra Financial Services Ltd. ..Respondent. .... Ms. Suchitra Kamble for the Appellant. Mr. Nishant Thakkar with Mr. Rajesh Poojari i/b Mint and Conferes for the Respondent. ..... CORAM : DR.D.Y.CHANDRACHUD & J.P.DEVADHAR, JJ. 5th February, 2010. P.C. : 1. In the Appeal by the revenue under Section 260-A of the Income Tax Act, 1961 the following questions of law have been formulated : a) “ Whether on the facts and circumstances of the case and in law, the Hon ble ITAT is right in holding that notice u/s. 148 of ’ the Income Tax Act, 1961, being beyond the period of 4 years from the end of the relevant Assessment Year, was based on a mere change of opinion of the Assessing Officer? b) Whether on the facts and circumstances of the case and in law, the Hon ble ITAT is right in quashing the notice u/s. 148 ’ and the assessment pursuant to the said notice by holding there being no failure on the part of the assessee to disclose the material facts necessary for completion of assessment relevant to A.Y. 1997-98? c) Whether on the facts and circumstances of the case and in law, the Hon ble ITAT is right in deleting the addition of interest ’ on non performing assets to the tune of Rs.37,37,329/-?” 2 2. In the present case, the reopening of the assessment has admittedly taken place beyond the period of four years. Three reasons were furnished for reopening the assessment: (i) The leasing transactions were not genuine and were loan transactions consequent upon which depreciation was disallowed on assets acquired in assessment year 1996-97. The adjustment of depreciation was improper resulting in an under assessment of income; (ii) The transaction entered into by the assessee was a loan transaction and the lease rent was debited as expenditure which was required to be disallowed and to be added to income; (iii) Non consideration of interest due on Non Performing Assets (NPAs) which had escaped assessment. 3. The Tribunal held that the first and second issues related to the leasing transaction entered into by the assessee. Though the assessing officer held that these were loan transactions, the CIT(A) by his order dated 28th March, 2001 had come to the conclusion that the transactions were in fact genuine. Since the order of the CIT(A) was dated 28th March, 2001, the assessing officer, while issuing his notice under Section 148 on 31st March, 2004 was not entitled to reagitate the very same issue which was concluded by the order of the CIT(A). 3 4. Insofar as this aspect of the matter is concerned, the approach of the Tribunal does not suffer from any error. Admittedly, on the date when the notice under Section 148 was issued, a view had been taken by the CIT (A) to the effect that the transactions were genuine. In these circumstances, the attempt of the assessing officer to reopen the assessment under Section 148 was legitimately regarded by the Tribunal as a mere change of opinion. 5. Insofar as the third ground for reopening is concerned, the plea of the assessee was that all the material facts necessary for the completion of the assessment had been provided during the course of the original assessment. Hence, there was no failure on the part of the assessee to disclose all material facts so as to justify a recourse to the provisions of Section 148 after the expiry of a period of four years from the end of the relevant assessment year. Insofar as this aspect is concerned, the Tribunal held that the assessee had declared that the income though accrued had not been recognized by the assessee in its books of accounts, as part of the notes furnished in the computation of income during the course of the assessment. The assessing officer called upon the assessee to explain the regular method of accounting followed and the guidelines of the RBI regarding accrual of income. This information was furnished by the assessee to the assessing officer. On considering the information supplied by the assessee, no addition was made on account of 4 interest accruing on NPAs in the original assessment. In other words, there is a finding to the effect that there was no failure on the part of the assessee to disclose all material facts relevant to the assessment. Having regard to this finding, the order of the Tribunal cannot be faulted. 6. The Appeal therefore does not raise any substantial question of law and is accordingly dismissed. (Dr. D.Y.Chandrachud, J.) (J.P. Devadhar, J.)