TMI Blog2011 (10) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... being invalid - Since there was no such tangible material before the AO from which he could entertain the belief that income of the assessee chargeable to tax had escaped assessment, the Third Member held that reassessment proceedings initiated by the AO were liable to be quashed on the ground that there was no tangible material before the AO even though the assessment was completed originally u/s 143(1) - Decided in favor of the assessee - I.T.A. No. 2230/Mum/2010, I.T.A. No.2476/Mum/2010. - - - Dated:- 7-10-2011 - Shri R.V. Easwar, Shri P.M. Jagtap, JJ. Assessee by : Shri Dinesh Vyas. Department by : Shri Goli Sriniwas Rao. O R D E R. Per P.M. Jagtap, A.M. : These two appeals, one filed by the assessee bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27-03-2003 may be treated as return filed in response to notice u/s 148. Thereafter assessment u/s 143(3) read with section 147 was made by the AO by an order dated 27-12-2006 assessing the total income of the assessee at a loss of Rs.50,17,47,153/- after making addition inter alia, on account of disallowance of expenses incurred on ERP Software treating the same as of capital nature. In the said assessment, he also disallowed assessee s claim for depreciation at 100% in respect of Pollution Control and Energy Saving Devices valued at Rs.29.27 crores holding that the same had been earlier used by the sister concern of the assessee company. 3. Against the order passed by the AO u/s 143(3) read with section 147, an appeal was preferred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to reopen the assessment. Relying on the Third Member decision of Mumbai Bench of ITAT in the case of Telco Dadaji Dhackjee Ltd. vs. DCIT (ITA No. 4613/Mum/2005 dated 12th May, 2010), he contended that in the absence of any such new material, the reopening of assessment itself was bad in law and the assessment made in pursuance thereof is liable to be cancelled being invalid. 6. The learned DR, on the other hand, submitted that the return filed by the assessee in this case was originally processed u/s 143(1) and even in the absence of any new material coming to the possession of the AO, it was permissible to reopen the assessment. He invited our attention to the reasons recorded by the AO and submitted that there was a valid reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alent to a Special Bench decision as held by Hon ble Delhi High Court in the case of P.C. Puri vs. CIT 151 ITR 584. 8. We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessment completed in this case originally u/s 143(1) was reopened by the AO for the following reasons recorded u/s 148(2) : From the Balance Sheet, Annexure 11, it is seen that assessee has incurred expenses towards Enterprise Resource Planning Software amounting to Rs.95,14,000/-. In the accounts, the assessee has debited 25% of this amount i.e. 23,78,500/- whereas in the computation of income, the assessee has claimed entire amount of Rs.95,14,000/- as a deduction. The expense incurred by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors. The assessee had also claimed depreciation of Rs.1,41,858/- on lease premises. The AO issued notice u/s 148 on the ground that these were not allowable expenses and income chargeable to tax had escaped assessment. He accordingly disallowed both the items in the reassessment order. When the matter reached to the Tribunal, the learned Judicial Member took the view that there was no fresh material to support the formation of the belief of the AO that income chargeable to tax had escaped assessment and in the absence of any fresh tangible material, he came to the conclusion that it was not permissible for the AO to reopen the assessment. The learned Accountant Member, however, took a different view relying on the decision of Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a mere change of opinion. The Third Member then referred to the decision of Hon ble Supreme Court in the case of CIT vs. Kelvinator of India (supra) wherein it was held that there should be tangible material to come to the conclusion that income had escaped assessment. Relying on the said decision, it was held by the Third Member that while resorting to section 147 even in a case where only an intimation had been issued u/s 143(1)(a), it is essential that the AO should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible material before the AO from which he could entertain the belief that income of the assessee chargeable to tax had escaped assessment, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
