TMI Blog2015 (6) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer's action of disallowance of depreciation on tenancy rights of ₹ 36,23,587. 2. The learned Commissioner (Appeals) was wrong in concluding that tenancy rights did not fall within the block of Intangible Assets. 3. The learned Commissioner (Appeals) failed to appreciate that tenancy rights were a form of licence. As regards addition of Payment to Retired Partner 4. The learned Commissioner (Appeals) erred in confirming addition of payment made to a retired partner of ₹ 25,85,617 in terms of the partnership deed. 5. The learned Commissioner (Appeals) failed to appreciate that such payment was diverted by overriding title. 6. The learned Commissioner (Appeals) was wrong in holding that that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible material before the A.O. at the time of recording of the reasons for re-opening the completed assessment of the assessee, so as to enable the A.O. to form a belief of escapement of income. Thus, according to the ld. Counsel for the assessee, the completed assessment of the assessee has wrongly been reopened. 5. On the other hand, the ld. D.R. has contended that in the return of income, the assessee had claimed depreciation @ 25% on WDV of an intangible asset; that whereas, a perusal of the records of the assessee showed that this asset represented the tenancy rights in a building which was used by the assessee as its office premises; that therefore, a wrong claim of depreciation had been made by the assessee, which was not allowabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve reasons to believe that the assessee has made a wrong claim of depreciation at ₹ 36,23,587/- which has escaped assessment and therefore if is a fit case for 'reopening the assessment for considering the assessing the sum of ₹ 36,23,5871- by issue of notice u/s 148 . 7. A perusal of the reasons recorded by the A.O. for invoking reassessment proceeding against the assessee shows that the A.O. entertained a belief of escapement of income, since according to him, the assessee had claimed depreciation in respect of tenancy rights, whereas according to the provisions of section 32 of the I.T. Act, depreciation is allowable only on tangible assets and the amended provisions for depreciation pertaining to intangible assets al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings 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. 9. In view of the above, the grievance sought to be raised by the assessee by way of the additional ground taken is justified and is accepted as such. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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