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TMI Blog2020 (7) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... t - assessee filed their return of income for the assessment year in question on 20.9.2008 declaring an income of Rs. 14,26,99,69,690/-. The return was processed under Section 143(1) of the Act. Thereafter, the case was selected for scrutiny and a notice under Section 143(2) of the Act was issued, which culminated in an order under Section 143(3) of the Act dated 28.12.2010 returning a total income of Rs. 16,02,04,51,970/-. 5. By notice dated 28.3.2013 issued under Section 148 of the Act, the Assessing Officer reopened the assessment under Section 147 of the Act stating that the income escaped assessment since the assessee claimed depreciation on block of assets - water supply and drainage at 15% and the said asset was shown separately and not in the plant and machinery. The decision of the Hon'ble Supreme Court in the case of CIT Vs. Gwalior Rayon Silk Manufacturing Company Limited [reported in 196 ITR 149] and the decision of the Delhi High Court in the case of CIT Vs. Modi Industries Limited [reported in 197 ITR 517] were referred to and it has been stated that in those decisions, the depreciation on water supply and drainage should be restricted to 10% only and that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2016) 75 Taxmann.com 172]. 10. It is further submitted by the learned Senior Standing Counsel appearing for the Revenue that the CIT(A) as well as the Tribunal erred in referring to the decision of the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. [reported in 320 ITR 561], which would have no application, as the assessee's case was a case of reopening within four years and that the question of change of opinion will not arise. 11. The learned counsel appearing for the respondent - assessee submits that the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Ltd., will squarely apply to the facts of the present case and that the said decision does not make any distinction with regard to escaped assessment or under assessment. According to the learned counsel, the common thread is that the Assessing Officer should have reasons to believe and that such reasons cannot be merely based on change of opinion. It is further submitted that the decision relied upon by the Assessing Officer in the order rejecting the objections for reopening namely Bawa Abhai Singh Vs. DCIT [reported in (2001) 117 Taxman 12 (Delhi)] was considered and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight be permitted. 15. The Assessing Officer considered the reply given by the respondent - assessee and the claim of excess rate of depreciation on the non productive assets to the tune of Rs. 32.20 lakhs was restricted to 10% instead of 15%. Accordingly, the excess depreciation claimed by the respondent - assessee to the tune of Rs. 1,61,000/- was disallowed and added to the total income of the current year. Subsequently, the Commissioner of Income Tax, LTU issued the notice dated 31.10.2012 under Section 263 of the Act. There were two issues and here, we are concerned with the second issue wherein the Commissioner stated that the assessee claimed income tax depreciation on the block of assets - water supply and drainage at 15% instead of eligible depreciation at the rate of 10%. However, the depreciation was restricted to 10% only on a small portion of the asset i.e on the value of non productive asset instead of applying such rate of depreciation on the entire block. 16. The assessee submitted their reply dated 30.11.2012 stating that during the assessment under Section 143(3) of the Act, the Assessing Officer classified the asset value at Rs. 34,19,617/- as non productive as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act and that he had reasons to believe that income eligible to tax escaped assessment and accordingly, the assessment needed to be reopened under Section 147 of the Act. 20. The assessee submitted their reply dated 31.7.2013 objecting to the reopening firstly contending that it was a clear case of change of opinion, that there was no new material and that in the assessment order under Section 143(3) of the Act, specific disallowance was made after scrutinizing the list of assets. The assessee relied upon the decision of the Hon'ble Supreme Court in the case of Kelvinator of India Limited and another decision of the Hon'ble Supreme Court in the case of ACIT Vs. ICICI Securities Primary Dealership Limited [reported in 24 Taxman 310]. Without prejudice to the jurisdiction point, which was canvassed and on merits also, the assessee submitted a reply. 21. The Assessing Officer rejected the contention of the respondent - assessee and pointed out that it was not a case of change of opinion and that the decisions of the Hon'ble Supreme Court in the case of Kelvinator of India Limited and ICICI Securities Primary Dealership Limited would not have any application. 22. For a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome had escaped assessment on account of omission or failure on the part of the assessed to file a return of income for an assessment year or to disclose fully and truly all material facts necessary for assessment for that year. (ii) Clause (b) empowered the Income-tax Officer to reopen an assessment, notwithstanding the fact that there had been no omission or failure, as mentioned in Clause (a), on the part of the assessed if the Income-tax Officer, on the basis of information in his possession, had reason to believe that income had escaped assessment for the relevant assessment year. Since under the new scheme of assessment (refer to para 5.1 of these Explanatory Notes), introduced by the Amending Act, 1987, returns filed will now be accepted as such and passing of assessment orders will not be necessary, it follows that in the majority of cases there would not be any application of mind by the Assessing Officer after the returns are filed, unless the case is picked up for scrutiny and a regular assessment order is passed under Section 143(3). The Amending Act, 1987, has, therefore, rationalized the provisions of Section 147 and other connected sections to simplify the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 147, however, remain the same. 7.3 Deemed cases of income escaping assessment (Explanation 2 to Section 147)- Under the old provisions of Explanation 1 to Section 147, income chargeable to tax was deemed to have escaped assessment if it had been under-assessed or assessed at too low a rate or if any, excessive relief or loss or depreciation allowance had been allowed. The new provisions in this respect, as contained in Explanation 2 to new Section 147, are more elaborate and cover those cases where assessments have been completed (called as scrutiny cases) as well as those cases where no assessments have been completed (called as non-scrutiny cases). Thus, the new Explanation 2 to the section clarifies that the following shall be deemed to be cases of income escaping assessment:- (i) Where no return of income has been furnished by the assessed, although the total income is above the taxable limit. (ii) Where a return of income has been furnished, but no assessment has been made (i.e. in a non-scrutiny case)- if the assessed is found to have understated his income or claimed excessive loss, deduction, allowance or relief in the return. (iii) Where an assessment has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out about the scrutiny assessment under Section 143(3) of the Act, the query raised by the Assessing Officer, the reply given and the decision taken thereon. In fact, the reasons for issuing the notice under Section 147 are identical to the query raised by the Assessing Officer in the proceedings under Section 143(3) of the Act, for which, the assessee gave an explanation, which was accepted by the Assessing Officer and the claim of excess rate of depreciation was restricted to non productive assets alone. For the very same reasons, the Commissioner issued the notice dated 31.10.2012 under Section 263 of the Act. The respondent - assessee submitted their reply dated 30.11.2012, after which, the proceedings were dropped by order dated 21.2.2013. 25. The learned Senior Standing Counsel appearing for the appellant - Revenue may be right in stating that there cannot be estoppel on the part of the authorities to invoke their power under Section 263 of the Act. 26. We wish to clarify that we do not say that it is a case of estoppel as there can be no estoppel against a statute. But, what we wish to point out is that the issue cannot be permitted to be raised more than once. Not stop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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