2009 (9) TMI 1055 - AT - Income Tax

Summary

Issues Involved:
1. Legality of the assessment cancellation u/s 153A of the I.T. Act, 1961.
2. Deletion of disallowance of depreciation by the CIT(A).

Summary:

Issue 1: Legality of the assessment cancellation u/s 153A of the I.T. Act, 1961

The Revenue challenged the CIT(A)'s decision to cancel the assessment on the grounds that all additions were subject to original assessment proceedings and appellate proceedings before the CIT(A) and ITAT, and thus could not be re-agitated by the Assessing Officer in an action u/s 153A of the I.T. Act, 1961. The Tribunal upheld the CIT(A)'s decision, stating that the assessment u/s 153A cannot disturb issues that have attained finality in original assessment proceedings unless fresh material is found during the search or subsequent investigation. The Tribunal referenced its previous decision in the case of Meghmani Organics Ltd., which held that only pending assessments abate and not completed assessments. Therefore, the Tribunal confirmed the CIT(A)'s order to cancel the assessment u/s 153A.

Issue 2: Deletion of disallowance of depreciation by the CIT(A)

The Revenue also contested the deletion of the disallowance of depreciation amounting to Rs. 19,61,690/- by the CIT(A). The Tribunal noted that the issue of depreciation had already been decided in favor of the assessee in the original assessment proceedings, where it was held that for working out the Written Down Value (WDV), only the actual depreciation allowed should be reduced. The Tribunal reiterated that the WDV should be calculated by reducing the actual depreciation allowed and not any notional depreciation. Since no fresh material was found during the search to justify a different view, the Tribunal upheld the CIT(A)'s decision to delete the disallowance of depreciation.

Conclusion:

The Tribunal dismissed all seven appeals filed by the Revenue, confirming the CIT(A)'s orders for all assessment years from 2001-02 to 2007-08. The Tribunal emphasized that issues which have attained finality in original assessment proceedings cannot be re-agitated in proceedings u/s 153A unless fresh material is found during the search or subsequent investigation.