TMI Blog2015 (4) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution as well as the approval of the board’s decision in the general body meeting in support of its claim that the change of method of depreciation as well as rate of depreciation is in conformity with the requirement of provisions of Companies Act as well as Accounting Standard. - Decided partly in favour of assessee for statistical purposes. - ITA NO.6644/Mum/2012 - - - Dated:- 21-1-2015 - SHRI R.C. SHARMA AND SHRI VIJAY PAL RAO, JJ. For The Assessee : Shri K.K. Ved and Shri N.A. Patade For The Pronouncement : Shri Sachidanand Dubey ORDER Per Vijay Pal Rao, JM This appeal by the assessee is directed against the order dated 8.8.2012 of CIT(A) for A.Y. 2005-06. The assessee has raised following grounds:- 1. The learned (Id) CIT(A) erred in confirming the action of the Assessing Officer (AO) under section 143(3) r.w.s. 147 of the Income-Tax Act, 1961 (the Act), for the year under consideration. 2. The Id. CIT(A) erred in not appreciating the fact that the reassessment having been made on the basis of same records as was available at the time of original assessment, the reassessment proceedings was based merely on change of opinion which is not pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. 5. Before us, the Ld. Authorized Representative of the assessee has submitted that the reopening is based on the same material which is available on record with the Assessing Officer. He has referred to the reasons of reopening and submitted that the Assessing Officer has reopened the assessment only on the basis of notes on accounts wherein the assessee has declared change in the accounting policy regarding the rate of depreciation for the year under consideration. The Ld. Authorized Representative has submitted that even, otherwise, the Assessing Officer has no jurisdiction to tinker with the accounts of the assessee which are duly audited by the auditors and found to be in conformity with schedule VI of the Companies Act. The Ld. Authorized Representative has further contended that there is no provision under section 115JB to make any adjustment on account of depreciation rate applied by the assessee when the accounts are prepared as per the provisions of Companies Act. He has referred the audit report and submitted that the auditor has not raised any query or objection regarding the accounting policy and information required under the Companies Act to give a true and fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no change of opinion at the time of reopening of the assessment because there was no enquiry conducted by the Assessing Officer during the course of assessment proceedings so far as the higher rate of depreciation rate applied by the assessee for the year under consideration which is in a complete departure of the accounting policy of the assessee regarding the depreciation of the earlier years. He has further contended that the assessee has not explained the reason for change in the accounting policy and, therefore, when the Assessing Officer has overlooked a material fact at the time of the original assessment, the reopening is justified. He has relied upon the judgment of Hon'ble Jurisdictional High Court in the case Export Credit Guarantee Corporation of India Ltd Vs, Additional CIT (350 ITR 651). 7. We have considered the rival submissions as well as relevant material on record. There is no dispute on the point that at the time of reopening of the assessment framed u/s 143(3), the Assessing Officer is not permitted to review or revise its own assessment order even if there is no proper enquiry conducted during the original assessment. This legal proposition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne method of providing depreciation to another should be made only if the adoption of the new method is required by statute or for compliance with an accounting standard or if it is considered that the change would result in a more appropriate preparation or presentation of the financial statements of the enterprise. When such a change in the method of depreciation is made, depreciation should be recalculated in accordance with the new method from the date of the asset coming into use. The deficiency or surplus arising from retrospective recomputation of depreciation in accordance with the new method should be adjusted in the accounts in the year in which the method of depreciation is changed. In case the change in the method results in deficiency in depreciation in respect of past years, the deficiency should be charged in the statement of profit and loss. In case the change in the method results in surplus, the surplus should be credited to the statement of profit and loss. Such a change should be treated as a change in accounting policy and its effect should be quantified and disclosed. 8. As per para 21 of the AS 6, it is contemplated that depreciation method selected should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther this is a very relevant and crucial fact to be taken into account while computing the book profit u/s 115JB which has been ignored by the Assessing Officer. The Hon ble High Court in the case of Export Credit Guarantee Corporation of India Ltd Vs, Additional CIT (supra) has held in para 9 10 as under:- 9. We have considered it appropriate to emphasise this aspect because much of the submission on behalf of the petitioner in these proceedings has focused on the merits of the assessment. At this stage, the test to be applied is whether there was reason to believe that income had escaped assessment and whether the Assessing Officer has tangible material before him for the formation of that belief. A reason to believe is what is relevant not an established fact of the escapement of income. 10. The salient aspect of the case that merits emphasis is that the order of assessment that was passed by the Assessing Officer under section 143(3) is completely silent in respect of each one of the five points on the basis of which the assessment is sought to be reopened. There is merit in the contention which has been urged on behalf of the Revenue that no query had been raised duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystallized before the balance-sheet date. Here again, it is apparent that there has been no application of mind to the relevant facts by the Assessing Officer during the course of the assessment proceedings. As regards the first ground, on the basis of which the assessment is sought to be reopened, it has been sought to be urged that under section 44 read with rule 5(a), it would not be open to the Assessing Officer to make an income addition. Moreover, it has been urged that in the past, the same practice had been accepted by the Revenue. These are matters which on the merits will be considered by the Assessing Officer and it would be inappropriate for this court to express any opinion on the merits of issue. Moreover, once the court has come to the conclusion that even a single ground on the basis of which the assessment is sought to be reopened is valid and within jurisdiction, the notice for reopening of the assessment would have to be upheld. Consequently, we clarify that though the submissions have been urged on the merits of each of the grounds, we keep all rights and contentions of the parties open to be urged before the Assessing Officer, once the assessment is reopened in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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