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TMI Blog2021 (8) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... facts that were necessary at the time of assessment u/s. 143(3) of the Act and reassessment based on new views/opinions on same facts is not permissible in law. 3. That on the facts and in the circumstance of the case the learned CIT(A) erred in confirming the action of the assessing officer in disallowing depreciation amounting to Rs. 2,51,43,548/- on the lease transactions with twelve different parties listed at Annexure B, by treating the same as finance transactions. S. No. 1 Name of Supplier Sri Balaji Textiles Traders Coimbatore Lessee name Jai Renga Mills Description assets Spindles Amount 25,00,848 2 Kumar Textiles Coimbatore Vijay Spinners Spindles 10,03,200 3. a) Laxmi Textiles Co. Bright Spinners Spindles 15,00,000 15,03,380 3.b) Laxmi Textiles Co. Bright Spinners Spindles 10,00,000 3.c) Laxmi Textiles Co. Bright Spinners Spindles 20,50,272 3.d) Laxmi Textiles Co. Ganga Text Spindles 4 Sri Srinivas Text. Co. Coimbatore Ltd Spindles 25,00,000 5 Prashanth Textiles Pvt. Ltd. Coimbatore L.S. Mills Ltd Prashanth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AO recorded the reasons on 30/3/1999 that he has reason to believe that income is chargeable to tax has escaped assessment for Assessment Year 1994-95. xi. Subsequently, assessment order u/s. 143(3) read with section 147 of the Act was passed by the ld. AO on 09.03.2001 disallowing the depreciation of Rs. 4,19,78,276/-. 4. The Assessee aggrieved with the order of the ld. AO preferred an appeal before the ld. CIT(A). The Assessee challenged the reopening of the assessment. The ld. CIT(A) held that the ld. AO had sufficient evidence in the form of enquiry report from Investigation Wing, Coimbatore which cannot be ignored and therefore, he confirmed the action of the ld. AO u/s. 147 of the Act. 5. On the merits of the addition he analyzed facts of 13 suppliers and out of that the transaction with APSEB which is Govt Corporation he held that Govt Corporation cannot be a party to a sham transaction and therefore, to that extent he decided the issue in favour of the Assessee and directed the ld. AO to allow deprecation on asset leased to APSEB. 6. With respect to the other parties he confirmed the disallowances for the following reasons:- i. Mere filing of a suit is no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64. He submitted that in Assessee's own case for Assessment Year 1992-93 the claim of the Assessee was allowed. He submitted that original proposal u/s. 263 was sent on the ground that depreciation should have allowed at normal rate and not @100%. 11. He also submitted a paper book containing 19 pages to support his contentions. He therefore, submitted that the reopening is bad in law. With respect to the merits of the claim he submitted that the issue is squarely cover in favour of the Assessee by the decision of the coordinate bench in Assessee's own case in 1993-94 and 1995-96. 12. The ld. DR vehemently supported the order of the ld. AO. 13. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that i. on 04.08.1997 there were an audit objection which shows that assessment on the Assessee was completed for Assessment Year 1994-95 on scrutiny by passing an order u/s. 143 (3) dated 26.03.1997. The Assessee was allowed a deduction of Rs. 4,64,55,842/- as deprecation on various assets. The Assessee claimed 100% deprecation on some assets as cost of each plant and machinery was less than Rs. 5000/-. Audit scrutiny rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings for Assessment Year 1994-95 have already been completed and no proceedings are pending before him against the Assessee and therefore, he requested necessary permission from the CIT to make an enquiry u/s. 133(6) of the Act. vi. Then on 23.09.1998, the ld. CIT granted permission to the ld. AO to make enquiries u/s. 133(6) of the Act. vii. On 03.02.1999 the ld. AO wrote to the Assessee that in some of the cases where the address are given by the Assessee of the parties are either incomplete or parties are not found therefore, to furnish the complete address of the suppliers. viii. On 11.02.1999, the ld. CIT wrote a letter to the ld. AO referring to the proposal u/s. 263 of the Act stating that the order has to be passed by the ld. CIT by 31.03.1999 after giving Assessee an opportunity of hearing. Therefore, it was stated that report called from the office of the ld. AO of CIT on 23.09.1998 has not been received by CIT so far and therefore, it was directed to AO to expedite the same. ix. On 23.02.1999, the ld. AO submitted a report to the CIT. It was stated that on enquiry by him with respect to all the parties, letters came back unserved in cases of four parties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot certain enquiries conducted but when the enquiry is concluded, no time was left with them for carrying out proceedings u/s. 263 of the Act. It required issuance of show cause notice, opportunity of hearing to the assessee and then passing of the orders. Thus, time for passing order u/s. 263 of the Act i.e. 31.03.1999 was not available. This fact is also mentioned in one of the correspondence of CIT with ld. AO when he requested ld. AO to expedite the inquiries. Therefore, the ld. CIT directed the ld. AO to initiate action u/s. 147 of the Act. The ld. AO recorded the reasons on 30.03.1999 stating that specifically that the ld. CIT has directed him to invoke provisions of section 147 of the Act and therefore, the reopening was made. From the above fact it is clear that it is not the 'reason to believe' of the AO about escapement of income which is basic mandatory requirement of law for reopening u/s. 147 of the Act. Opinion of ld. AO is clearly manifest that he thought it is case of erroneous order, which is prejudicial to interest of revenue. Hence, Reopening is made at the direction of the ld. CIT. The ld. CIT when he did not find time to invoke provision of section 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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