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TMI Blog2021 (12) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Commissioner of Income Tax (Appeals) - 13 (hereinafter referred to as 'CIT(A)') under section 250 of the Income-tax Act,1961 (hereinafter referred to as 'the Act') on the following grounds which are separate and without prejudice to each other. On the facts and in the circumstances of the case and in law, the learned CIT(A)/AO have: 1. Erred in re-opening and validating the assessment under section 147 of the Act an passing the impugned order. 2. Without prejudice to the above, erred in disallowing the depreciation of Rs. 28,00,768/- by classifying certain items of electrical installation without which machinery would be unable to function as electrical installation instead of plant and machinery thereby applying depreciation rate of 10% instead of 15%. 3. Failed to appreciate that the electrical installation which forms the integral part of plant and machinery is entitled to depreciation by applying the rate of 15%. 4. Erred in rejecting consequential additional depreciation of Rs. 1,12,03,075/- on the electrical installation forming part of plant and machinery. 5. Without prejudice to the above, the disallowed depreciation and additional depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the assessee's claim for depreciation on electrical installation. Insofar the assessee'e challenge to the jurisdiction assumed by the A.O for reopening its case u/s 147 of the Act was concerned, the CIT(A) not finding favour with the same upheld the reassessment order passed by the A.O. Also, the CIT(A) holding a conviction that the assessee's entitlement for claim of depreciation on electrical fittings, as per the mandate of law, was restricted to 10%, thus, finding no infirmity in the view taken by the AO upheld, the same. 6. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. A.R to drive home his aforesaid claim. As the assessee has assailed the validity of the jurisdiction assumed by the A.O for reopening its concluded assessment, therefore, we shall first deal with the same. As observed by us hereinabove, the case of the assessee was reopened, for the reason, that as against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to disclose fully and truly all material facts necessary for the assessment Notice u/s 148 of the Income-tax Act, 1961 is therefore, issued to the assessee." On a bare perusal of the aforesaid reasons, we find, that the original assessment framed in the case of the assessee u/s 143(3), dated 30.12.2010 had been dislodged by the A.O, for the reason that a perusal of the assessment records revealed that the assessee was allowed an excessive depreciation of 5% on its electric installations i.e @ 15%, as claimed by it, instead of its entitlement for the same @ 10%. As is discernible from the 'reasons to believe', the A.O, admittedly, had taken recourse to the reassessment proceedings not on the basis of any fresh tangible material coming to his notice after the culmination of the regular assessment that was framed by him u/s 143(3), dated 30.12.2010, but on account of a discrepancy which as per him was discernible from a perusal of the assessment record. In our considered view, the A.O had clearly assumed jurisdiction for reopening the case of the assessee u/s 147 of the Act on the basis of a 'change of opinion' as against that as was held by his predecessor while fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in s. 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the AO. We quote hereinbelow the relevant portion of Circular No. 549, dt. 31st Oct., 1989 [(1990) 82 CTR (St) 1], which reads as follows : "7.2 Amendment made by the Amending Act, 1989, to re-introduce the expression 'reason to believe' in s. 147.-A number of representations were received against the omission of the words 'reason to believe' from s. 147 and their substitution by the 'opinion' of the AO. It was pointed out that the meaning of the expression, 'reason to believe' had been explained in a number of Court rulings in the past and was well settled and its omission from s. 147 would give arbitrary powers to the AO to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of framing of the assessment but had inadvertently remained omitted to be considered would tantamount to review of order, which is not permissible as per law. The Hon'ble High Court while concluding as hereinabove had held as under:- "10. It is further to be seen that the legislature has not conferred power on the AO to review its own order. Therefore, the power under s. 147 cannot be used to review the order. In the present case, though the AO has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the AO, nothing new has happened, therefore, no new material has come on record, no new information has been received; it is merely a fresh application of mind by the same AO to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator (supra) referred to above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from assessment. Reasons must have a link with the formation of the belief." 24. In the present case, for all the assessment years in question, and a fortiorari for asst. yr. 2004-05, what the AO has purported to do is to reopen the assessment on the basis of a mere change of opinion. That the AO had no tangible material is evident from the circumstance that the reasons which have been disclosed contain a reference to the same basis, namely the existence of a nil surplus/deficit in Form 1 which was drawn to the attention of and was present to the mind of the AO during the assessment proceedings under s. 143(3). Consequently, it is evident that there is an absence of tangible material before the AO". Also, the Hon'ble High Court of jurisdiction in the case of Aventis Pharma Ltd. Vs. Asst. CIT (2010) 323 ITR 570 (Bom), reiterating its aforesaid view that reassessment proceedings cannot be permitted on the basis of a 'Change of opinion' had held as under:- "There is merit in the submission which has been urged on behalf of the assessee that there was no tangible material before the AO on the basis of which the assessment could have been reopened and what is sought to be don ..... X X X X Extracts X X X X X X X X Extracts X X X X
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