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2014 (12) TMI 53 - AT - Income TaxValidity of reassessment proceedings u/s 148 – Any new tangible material came to the notice of the AO or not - Held that:- Existence of new tangible material with the AO is a condition precedent to formulate a belief that certain income chargeable to tax has escaped assessment within the meaning of section 147 of the Act - it is to be appreciated that absence of fresh tangible material would not enable the AO to entertain a belief that certain income chargeable to tax has escaped assessment within the meaning of section 147 of the Act - If the AO forms a belief that certain income chargeable to tax has escaped assessment on the basis of the material already available at the time of original assessment proceedings, it would not be a valid reopening of assessment u/s 147/148 of the Act - the AO was made aware of the intention and purpose for which the assessee was making investment in shares and securities - the existence of the transactions of long term and short term capital gain and dividend earnings was noted by the AO - the reasons recorded thereof to invoke section 147 of the Act do not show any fresh material which came to the notice of the AO so as to enable him to formulate a belief that income chargeable to tax has escaped assessment on the ground that income from short term capital gain was to be assessed as ‘business income’. On the issue of treating the short term capital gain as business income, the initiation of proceedings by the AO u/s 147 of the Act is based on material already available at the time of original assessment proceedings and no new tangible material come to his notice – following the decision in COMMISSIONER OF INCOME TAX. CENTRAL –I Versus SHRI AMITABH BACHCHAN [2012 (7) TMI 374 - BOMBAY HIGH COURT], such an initiation of re-assessment proceedings u/s 147 of the Act is invalid. The assessee is a company engaged in the business of manufacturing of engineering goods and fabrication as well as generation of electricity by windmill - As far as the application of section 32(1)(iia) of the Act relating to additional depreciation is concerned, what is required to be satisfied is acquisition and installation of a new machinery or plant after the 31st day of March, 2005 by an assessee who is already engaged in the business of manufacture or production of any article or thing - as per the AO, income has escaped assessment on account of allowance of additional depreciation on windmill because windmill is not “related to business of manufacture or production of any article or thing” - it does not state that setting up of a new machinery or plant should have any operational connectivity to the article or thing that was already being manufactured by the assessee - the normal depreciation on windmill in terms of section 32(1) of the Act was also allowed in the original assessment, and that has not been disturbed by the AO at the time of initiating the reassessment proceedings – there was no justification for the AO to baldly formulate a belief which is not even in consonance with the phraseology of the relevant provision or any other judicial pronouncement to say that additional depreciation u/s 32(1)(iia) of the Act on windmill is not allowable – thus, the initiation of proceedings by the AO by issuance of notice u/s 147/148 of the Act suffer from legal infirmities and is to be set aside – Decided in favour of assessee.
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