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2016 (5) TMI 583 - ITAT MUMBAI

2016 (5) TMI 583 - ITAT MUMBAI - TMI - Reopening of assessment - excess claim of depreciation which had resulted from the wrong claim of the brought forward depreciation as against the correct claim - whether it is an apparent arithmetic error or computational error? - Held that:- In the present case to correct a simple apparent mistake which could have been rectified by the AO by exercising his power u/s 154 of the Act, the AO choose to re-open the entire assessment and thus assumed the unlimit .....

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AO to amend any order passed by them with a view to rectify any mistake apparent from the record. In the case of Hindustan Unilever Ltd. vs. Deputy Commissioner of Income-Tax (2010 (4) TMI 206 - BOMBAY HIGH COURT ) the Hon’ble Bombay High court has clearly held that the revenue had an efficacious remedy open to it in the form of a rectification under section 154 for correcting a computational error and consequently recourse to the provisions of section 147 was not warranted. Also excessive clai .....

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T.A. No 3627/Mum/2013 - Dated:- 26-2-2016 - Shri C. N. Prasad, JM And Shri Rajesh Kumar, AM For the Appellant : Shri Nitesh Joshi For the Respondent : Shri R.A. Dhyani ORDER Per Rajesh Kumar, A. M This appeal by the revenue is directed against the order dated 28.02.2013 of Commissioner of Income Tax (Appeals)-40, Mumbai (Hereinafter called as the CIT(A)) for assessment year 2006-07. The assessee has raised the following grounds of appeal: 1. The learned Commissioner of Income-tax (Appeals) erred .....

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pholding the action of the Assessing Officer in not allowing the set off of brought forward unabsorbed depreciation amounting to ₹ 16,828,559/- ( in respect of assessment year 2001-02) against the business income for assessment year 2006-07 on the ground that such loss has been set off in assessment year 2005-2006. 3. The learned Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in disallowing a sum of ₹ 64,18,653/- comprising of ₹ 37,0 .....

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0,000 being wealth tax and ₹ 22,68,656/- being prior period expenses)while computing Book Profit as per provisions of section 115JB. and to modify the assessment in accordance with the provisions of the Act and also to give all consequent. ial relief. 2. The issue raised in the ground no.1 is against the upholding the action of the AO in re-opening assessment u/s 148. The brief facts of the case are that the assessee filed its return of income on 29/11/2006 declaring its income at Rs. Nil .....

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AY 20001-02 of ₹ 4,23,73,057/- was accepted. Thereafter the assessment order was appealed before the CIT(A) and Tribunal and ultimately Tribunal set aside the issue to the file of the AO to make reasonable disallowance u/s 14A after relying on the case passed by the jurisdictional High Court. 3. The case of the assessee was re-opened u/s 147 r.w.s. 148 of the Act and notices u/s 148 was issued by the assessee after recording the reasons u/s 148(2) which were incorporated by the AO in para .....

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the assessment was completed by the AO under the normal provisions of the Act at nil and at ₹ 31,89,94,374/- u/s 115JB of the Act vide order dated 30.12.2011 u/s 143(3) r.w.s. 147 of the IT Act by making various disallowance inter alia including depreciation of A.Y. 2001-2002 of ₹ 1,68,28,559/-. 5. The assessee being aggrieved by the order of the AO preferred an appeal before the CIT(A) who also dismissed the appeal of the assessee by upholding the re-opening u/s 147 of the Act and u .....

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xcess claim of unabsorbed depreciation to the tune of ₹ 16,828,559/-. The ld. Counsel submitted before us that the AO had wrongly re-opened the assessment u/s 147 of the Act when an alternative effective remedy was available before the AO to rectify the assessee s excess claim of brought forward depreciation u/s 154 of the Act. The reopening of the case u/s 147 of the Act to re-open the entire assessment which was already concluded was totally illogical, illegal and against the provision o .....

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remedy that left the assessee with the least detriment. However the AO could have exercised the rectification powers conferred upon him by the provisions of section 154 to rectify the excess claim on brought forward depreciation. The AO instead chose the course of reopening of assessment in order to rectify the simple computational error was a matter of serious prejudice to the assessee as the entire assessment was reopened u/s 147 of the Act. The ld. Counsel submitted before us the ld. AO thus .....

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e rectify the mistake which are apparent from records without disturbing the entire concluded assessment. The ld. AO also made various other additions which could not have otherwise made at the AO not reopening the case u/s 147. Ultimately the counsel for the assessee finally prayed that the entire addition of reassessment proceeding be declared as null and void ab initio and the consequent assessment order passed by the lower authorities be quashed as more efficacies alternative remedy was avai .....

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rival submissions and perused the material on record. We find from the orders of the authorities below and records before us that the case of the assessee was re-opened u/s 147 r.w.s.148 of the Act in order to withdraw the excessive claim of brought forward depreciation amounting to ₹ 1,68,28,559/- as is clear from the reasons recorded u/s 148 (2) of the Act. The reasons recorded u/s 148 are reproduced as under:- The assessee company is engaged in the business of manufacturing and sale of .....

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ing to ₹ 6,77,706/- was made in the assessment order under both normal and provisions of s. 115JB. From the perusal of details of AY 2005-06, the unabsorbed depreciation of AY 2001-02 that is carried forward for set-off with current year s income remains at ₹ 2,55,44,498/-, while the assessee company has claimed the same at ₹ 4,23,73,057/- in its return of income for AY 2006-07 and the same has been allowed in the order u/s 143(3). Thus, an excess claim of unabsorbed depreciati .....

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amely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, de .....

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cial year under consideration. Therefore, I have reasons to believe that due to omission or failure on the part of the assessee with regard to incorrect claim, income chargeable to tax amounting to ₹ 1,68,28,559/- has escaped assessment for A.Y. 2006-07 within the meaning of section 147. Thus the AO re-opened the assessment u/s 147 of the Act already completed u/s 143(3) in order to rectify the excess claim of depreciation of ₹ 1,68,28,559 which had resulted from the wrong claim of t .....

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essee to huge detriment and inconvenience. The Act has provided for various provisions remedying the various types errors for apparent computation error and also for those involving complex and complicated issue which are otherwise than apparent error. The various possible remedies available under the Act are namely (i) a rectification under section 154 of the Act; (ii) a revision under section 263 of the Act; and (iii) a reassessment under section 147 of the Act. Thus the AO is duty bound to ta .....

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