COMMISSIONER OF INCOME TAX Vs. INDBANK HOUSING LTD

JUDGEMENT

(1.) THIS appeal is filed by the Revenue against the order of the Income Tax Appellate Tribunal Madras 'A' Bench dated 27.10.2006 in I.T.A.No.581/Mds/2005 for the assessment year 1996-1997 raising the following substantial questions of law.

(2.) THE brief facts are as follows:- THE assessee is engaged in the business of housing finance. THE relevant assessment year is 1996-1997 and the corresponding accounting year ended on 31.03.1996. THE assessee has filed the return of income on 28.11.1996 admitting the total income of Rs.1,96,31,710/-. THE assessment was made on 27.10.1998 under Section 143(3) of the Income Tax Act. Subsequently the assessment was completed under Section 143(3) read with Section 147 of the Income Tax Act on 29.01.2002 determining the income at Rs.2,13,18,659/-. Once again, the assessment was re-opened under Section 147 of the Act by issuing notice on 25.03.2003 on the ground that there was escapement of income and the re-assessment was completed on 26.03.2004 determining the total income at Rs.4,80,64,413/-. It is noticed that the assessee has not recognized interest to the extent of Rs.1,91,37,015/- in respect of non-performing assets under the head 'provision for contingencies' provided for housing loan and investments to the extent of Rs.1,92,78,560/- and the assessee has also written-off the amount payable by M/s Flesta Properties. THErefore the Assessing Officer was of the view that there was a failure to admit the correct income and, hence, the income escaped assessment. Aggrieved by the second order of re-assessment, the assessee has filed an appeal before the Commissioner of Income Tax(Appeals). THE Commissioner of Income Tax(Appeals) has allowed the appeal and held that the re-opening was bad in law. Aggrieved by that order, the assessee has filed an appeal to the Income Tax Appellate Tribunal and the Tribunal dismissed the appeal filed by the Revenue confirming the order of the Commissioner of Income Tax (Appeals). Hence, the present appeal.