TMI Blog2019 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment is not provided to him? Apart from this the AO has reopened the assessment completed u/s 143(3) on the basis of objection raised by audit party. AO has not applied his mind independently to arrive at the conclusion as to whether he had reasons to believe that income of the assessee was escaped from tax in the assessment for the relevant year. Therefore the material on record, we are unable to uphold the stand of the AO for reopening the assessment U/s 147/148, therefore, we cancel the reassessment order passed by the assessing officer under section 147 of the Act. - Decided in favour of assessee. - ITA No.1736/Kol/2017 - - - Dated:- 16-1-2019 - Shri S. S. Godara, JM And Dr. A.L. Saini, AM For the Assessee : Shri SripatiCharanGiri, AR For the Respondent : Shri Ajoy Kr. Singh, CIT-DR ORDER PER DR. A. L. SAINI: The captioned appeal filed by theassessee,pertaining to Assessment Year 2007-08, is directed against an order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Kolkata, in appeal No.41/CIT(A)-2/14-15 dated 02.05.2017, which in turn arises out of an assessment order passed by the Assessing Officer u/s 147/143(3) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. CIT(Appeals) in assessee's own case for the immediately two succeeding assessment years and the Revenue has accepted the same by not filing appeal before the Hon'ble ITAT against the said orders of the Ld. CIT(Appeals). 4. That the assessee craves leave to add to and/or amend, alter, modify or rescind the grounds hereinabove before or at the time of hearing of the appeal. 3. The brief facts qua the issue are that the assessment of the assessee company, for the A.Y. 07-08, was completed u/s 143(3) on 31.12.2009 at a total income of ₹ 14,61,09,525/- against returned income of ₹ 3,56,22,546/- (as per revised return filed on 30.09.2009). It was noticed from the records that assessee company had incomes from business and house property. From depreciation schedule as annexed with the Tax Audit Report it was noticed by the AO that the allowable depreciation on building as per Income Tax Act was ₹ 4,92,729. The assessee in its computation had deducted ₹ 1.73 lakhs from total depreciation as proportionate depreciation on building in respect of let out portion of such building which was calculated in the following manner: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of Income, the depreciation of let-out portion of building calculated on proportionate basis was disallowed u/s 38 of the Act by the assessee. The assessee further submitted before the AO that section 30 of the Act stipulates the same restriction for expenditure incurred on account of repairs to building i.e. repairing expenditure on building will be allowable as a business expense provided the building used for business or profession. In the F.Y. 2007-08, relevant to the A.Y. 2008-09, the assessee has incurred expenditure of ₹ 15.02 Lakh, which was debited to Profit Loss Account and claimed as business expense. In the instant case, the expenditure on account of building is clearly identifiable or relatable. The question of disallowing of expenditure u/s 38 arises only if the expenditure is incurred for both business profession and for other purpose. Since the expenditure has been incurred by the assessee for the purpose of business or profession i.e. for the building/premises used by assessee for business or profession, there is no question of disallowance of expenditure u/s 38 of the Act. However, the assessing officer rejected the contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the eyes of law. In instant case of the assessee, the AO had initiated reassessment proceedings under section 147 of the Act without serving notice under section 148 of the Act on the assessee. Further, reasons for reopening of assessment had also not been provided to the assessee. In such a situation, reassessment proceedings should be held to be illegal. Further, in the order under section 147/143(3) of the Act dated 30-12-2011, the AO has contended that a notice under section 148 of the Act was issued on 05-09-2011 for the relevant year and that the assessee had filed its submission vide letter dated 25- 11-2011. The AO has passed the reassessment order based on the said notice dated 05-09-2011 and submission filed by the assessee vide letter dated 25-11-2011. In this regard it is submitted that the assessee had neither received the aforesaid notice under section 148 of the Act dated 05-09-2011 nor filed any reply dated 25- 11-2011, on the issue of reassessment for the relevant year. Thus, the above contention of the AO is factually incorrect. In this regard it is pertinent to note that after completion of assessment under section 143(3) of the Act dated 31.12.2009 the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reassessment proceedings, the notice under section 148 of the Act should be issued to the assessee. It is well settled law that initiation of reassessment proceedings under section 147 of the Act without issuing notice under section 148 of the Act is void ab initio. For this, we rely on the judgment of Hon`ble Supreme Court in the case of Y. Narayana Chetty -vs.- ITO (1959) 35 ITR 388 (SC) wherein the Hon'ble Supreme held as follows: The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under section 34; and if a valid notice is not issued as required, proceedings taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well-founded. The notice prescribed by section 34 (Corresponding to section 148 of the Income Tax Act, 1961) cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g under the provisions of the Act for the relevant year. Since a part of the building located at Salt Lake was used for let out purposes, the assessee had reduced the claim of depreciation on building allowable under the Act by ₹ 1,73,000/- on proportionate basis in computing business income and accordingly, the same was offered to tax in the return of income for the relevant year. In the computation of Total Income ( page no.10 of Paper Book) the assessee had separately disclosed the details of the workings of the aforesaid sum of ₹ 1,73,000- which are given below for ready reference: Depreciation (Rs.) Total Area (Sq.mt) Area of Let out portion (sq.mt) No. of days Proportionate disallowance of depreciation (Rs. (1) (2) (3) (4) (5)=(1)x(3)x(4)/[(2)x365] 4,91,880/- 18588.82 9044.63 191 1,30,000 4,91,880/- 18588.82 3548 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already filed before the AO during the original assessment. For that we rely on thelandmark judgment delivered by the Hon'ble Supreme Court in the case of CIT -vs.- Kelvinator of India (2010) 320 ITR 561 (SC), wherein by affirming the decision of the Full Bench of the Delhi High Court, it was held as follows: 6. .... Therefore, post 1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid section 147 would give arbitrary powers to the AO to reopen assessments on the basis of mere change of opinion , which cannot be per se reason to reopen. We must also keep in, mind the conceptual difference between power to review and power to reassess. The AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the AO. Hence, after 1st April, 1989, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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