TMI Blog2016 (6) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether or not its relevant explanation formed part of discussion in assessment order. Suffice to say, the Assessing Officer did not specific reject the corresponding explanation in the scrutiny assessment. We observe in this factual backdrop that he formed an opinion in assessee’s favour and reopened the said assessment subsequently without any fresh tangible material. We are of the view that the same amounts to mere change of opinion not permissible Whether Assessing Officer in the course of scrutiny assessment had examined the issue of section 36(1)(iii) interest disallowance and not that of interest income arising from GSIL loan? - Held that:- Once the assessee could not have booked the income in absence of any interest stipulation in loan agreement even by following accrual principle, Assessing Officer’s corresponding reason of reopening does not satisfy the cause-effect relationship reiterated hereinabove. We conclude that the issue as to whether or not the Assessing Officer had examined this issue in scrutiny has been rendered academic. The Revenue’s further contention that the tribunal had already examined the very issue (supra) is not borne out from the records com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Appeals) has erred in upholding the additions of Interest of ₹ 5,67,76,733 calculated @ 17% when arbitrator has awarded interest @ 11.5%. The Revenue raises following substantive grounds in its appeal ITA 2027/Ahd/2010. 1(i). On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of additional depreciation of ₹ 4,57,62,711/- u/s. 32(1)(iia) of the Act on account of new machinery acquired and installed. 1(ii). The CIT(A) failed to appreciate that on perusal of Annexure-B forming part of Form BAA of the Audit Report filed with the return of income, it was found that certain expenditure in regard to purchase of plant and machinery was incurred prior to 01.04.2002. Further, during the course of assessment proceedings, the assessee failed to substantiate its claim with supporting evidence that the expenses were indeed for the machinery purchased in the A.Y. 2003-04. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred, in deleting the disallowance of inventory write off amounting to ₹ 2,47,85,301/-, without appreciating that the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total amount of ₹ 61,01,69,488/- to be disallowed. The assessee has claimed depreciation at 50% of 15% i.e. 7.5% which comes to ₹ 4,57,62,711/- requires to be disallowed as it is escaped income. 3. It was revealed from the audited accounts and notes of the auditors forming part of the return of income that during the year relevant of A.Y. 2003-2004, the assessee company had written off inventory of costing ₹ 2,47,85,301/- treating them as non moving and absolute in nature. (Refer 17.0.06 Note). As per income tax Act, the loss of inventory by way of theft, fire etc. is allowed as expenses/revenue loss. But, when the assessee receives the insurance claim against such loss will be offered as income of the year in which it is received. Here the assessee themselves treated certain inventory as absolute and cost of it has been debited in the profit and loss account. This loss is due to the mistake on the part of the assessee of plan out properly the requirement of inventory and its timely use to production. 4. So, the action of the assessee to write off the inventory treating it as absolute is not justified. Omission to disallow the claim resulted into escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 5,67,76,733/-; respectively. 5. The assessee preferred appeal. Its first substantive argument challenged validity of reopening followed by corresponding grounds challenging above additions on merits. We repeat that our instant adjudication is confined to reopening issue only. The CIT(A) upholds the same as follows:- 5.3 In appeal it was argued that the appellant had contended before the Assessing Officer that it had disclosed fully and truly all material facts in the return of income and attachment thereto including audited annual accounts and details were furnished during assessment proceedings which were necessary for assessment. There is nothing on record to show what fresh facts have come to the notice of assessing officer, which were not disclosed by the appellant in the original assessment proceedings. The assessing officer during course of Original assessment proceedings had called for details and justification for claim of additional depreciation and inventory written off. Appellant had filed detailed justification vide submission dated 23-09-2005 for its claim for additional depreciation and inventory written off. It was also contended that Assessing officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to section 147 is attracted where the assessment has been completed u/s. 143(3) and the proceedings u/s. 147 are initiated after 4 years from the end of relevant assessment year. This case therefore is not covered under proviso to section 147 and it is not necessary for the Assessing Officer to show that the income had escaped assessment for reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In the case of Praful Chunilal Patel vs. MJ.Makwana, Assistant (Commissioner of Income Tax (1999) 236 ITR 832 (Guj), Hon'ble Gujarat Court has held as under:- Since the Assessing Officer at the first assessment in the year and that the amounts credited to the accounts of the partners who had contributed the lands to the firm, were meant to be the price of the land in question to the firm and that the amounts credited to the accounts of the partners who had contributed the lands to the firm, were meant to be the price of the land which was to be actually paid from the collections received by the firm from membership fees as soon as received, as was envisaged admittedly in paragraph 11 of the partnership deed, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued in the course of scrutiny inter alia raising specific queries on the issues of depreciation/additional depreciation, inventory justification including store items and spare parts written off as well as details of interest free advances to subsidiary and associate concerns. It is pleaded that the assessee filed reply thereto on 25-08-2005 and 23-09-2005 explaining each and every query at length. Leanred authorized representative draws our attention to assessment order dated 31-03-2006 that the Assessing Officer did not make any disallowance on either of the three issues. He accordingly argues that the impugned reassessment is not based on any fresh tangible material and the same is only a change of opinion not sustainable in the eyes of law as held in CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) as well as hon ble Delhi high court in CIT vs. Orient Carft ltd. (2013) 354 ITR 536 (Del). He prays for quashing of the impugned reassessment even if the same is taken recourse to within four years from the ends of the impugned assessment year. 7. Next come Revenue s arguments. Shri Sanjay Agrawal (CITDepartmental Representative) vehemently contends that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional depreciation and inventory written off amounting ₹ 2.48 crores respectively. This followed assessee s explanation tendered on 25-08-2005 and 23-09-2005 on the very issues. The Assessing Officer thereafter framed regular assessment on 31-03-2006 not rejecting the same. We are of the opinion in this factual backdrop that it can be safely inferred that the Assessing Officer duly agreed with the assessee s explanation. The Revenue s contention is that he had not mentioned anything in the assessment order on these issues. This fails to impress us. We are of the opinion that it was beyond assessee s control as to whether or not its relevant explanation formed part of discussion in assessment order. Suffice to say, the Assessing Officer did not specific reject the corresponding explanation in the scrutiny assessment. We observe in this factual backdrop that he formed an opinion in assessee s favour and reopened the said assessment subsequently without any fresh tangible material. We are of the view that the same amounts to mere change of opinion not permissible as held by hon ble apex in Kelvinator s case as well as hon ble jurisdictional high court in Gujarat Power Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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