Tribunal upholds CIT(A)'s decision on depreciation allowance, deems reassessment invalid.

The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal. It affirmed the allowance of 80% depreciation on wind mills and deemed the reassessment under section 147 as invalid. The AO's lack of valid reasons to believe income escapement led to the conclusion that the reassessment was unfounded, as the depreciation was consistent with previous years and did not require a specific form for the claimed percentage.

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Issues:
1. Allowing depreciation of Wind Mills at 80% on WDV method without exercising the option for claiming higher depreciation under Rule 5(1A).
2. Validity of reopening of assessment under section 147.

Analysis:

Issue 1: Allowing depreciation of Wind Mills at 80% on WDV method
The assessee, engaged in milk products and power generation through wind mills, filed revised returns post-merger. Initially, the depreciation was allowed in the scrutiny assessment. However, due to an audit objection, the AO reopened the assessment under section 147 and disallowed the claimed 80% depreciation. The CIT(A) found the reopening invalid, citing that the AO had no reason to believe income escaped assessment as he previously allowed the depreciation. Judicial precedents were referenced to support the claim that the depreciation was allowable at 80% without the need for a prescribed form to exercise the option under Rule 5(1A). The CIT(A) concluded in favor of the assessee, emphasizing the lack of merit in the Revenue's grounds.

Issue 2: Validity of reopening of assessment under section 147
The CIT(A) highlighted that the AO's action of reopening the assessment was based on an audit objection, not a genuine belief of income escapement. Citing legal precedents, the CIT(A) emphasized that the AO's action lacked the necessary foundation required for a valid reassessment under section 147. The absence of a valid reason to believe income escapement led to the conclusion that the reassessment proceedings were invalid. The Tribunal concurred with the CIT(A)'s findings, dismissing the Revenue's appeal as they failed to establish a basis for reopening the assessment or disallowing the depreciation claimed, which was consistent with previous years.

In conclusion, the Tribunal upheld the CIT(A)'s detailed order, finding no grounds to interfere with the decision on both issues. The Revenue's appeal was dismissed, affirming the allowance of depreciation at 80% on the wind mills and declaring the reopening of assessment under section 147 as invalid.

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