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2015 (6) TMI 1019 - AT - Income TaxReopening of assessment - assessee had claimed depreciation in respect of tenancy rights, whereas according to the provisions of section 32 depreciation is allowable only on tangible assets and the amended provisions for depreciation pertaining to intangible assets also does not include within its fold, tenancy rights and that so, due to the wrong claim of depreciation made by the assessee, income had escaped assessment - Held that:- There was no tangible material available with the A.O. at the time of recording of reasons for initiating reassessment proceeding so as to enable such reassessment proceedings to be initiated, the return of income filed by the assessee was processed u/s 143(1) of the Act on 26-10- 2005. At that time, the tax audit report filed by the assessee was before the A.O. and it was this very tax audit report, and nothing else, or further, which had come to the notice of the A.O., on the basis of which, the reasons for reopening the completed assessment of the assessee were recorded. The reasons recorded, as reproduced above, do not talk of any independent tangible material having come to the notice of the A.O. In “CIT vs. Orient Craft Ltd.” (2013 (1) TMI 177 - DELHI HIGH COURT ), it has been held, inter alia, that the expression “reason to believe” cannot have two different standards and sets of meaning one applicable where the assessment order earlier made u/s 143(3) of the Act, and another applicable where the intimation was issued u/s 143(1);that as such, where the reasons disclosed that the A.O. reached the belief of escapement of income “on going through the return of income” filed by the assessee after he accepted the return u/s 143(1) without scrutiny and nothing more, this was nothing but a review of the earlier proceedings and an abuse of power by the A.O. This is exactly what has happened in the present case, as discussed. The reasons recorded by the A.O. do not show that any tangible material come in the possession of the A.O. subsequent to the issue of the intimation u/s 143(1) of the Act, as such, and therefore, the notice reflected an arbitrary exercise of the power conferred u/s 147 of the Act. It is held that in the absence of any tangible material before the A.O., the A.O. was not entitled to invoke the reassessment jurisdiction and to proceed to reopen the completed assessment of the assessee. Accordingly, the reassessment proceedings are found to be void ab initio, and as such, they were cancelled. - Decided in favour of assessee
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