2017 (7) TMI 140 - HC - Income Tax

High Court affirms Tribunal's decision on tax appeal, no errors found, dismissal upheld

Pr. Commissioner of Income Tax-4, Ahmedabad Versus West Inn Ltd.

Pr. Commissioner of Income Tax-4, Ahmedabad Versus West Inn Ltd. - TMI Issues:1. Validity of reopening proceedings u/s 147 of the Income Tax Act.2. Adjustment of surplus in book profit u/s 115JB due to change in depreciation method.Issue 1: Validity of Reopening Proceedings:The High Court dealt with the first issue regarding the validity of the reopening proceedings under section 147 of the Income Tax Act. The Tribunal held that the Assessing Officer had reopened the assessment beyond the permissible period of four years from the end of the relevant assessment year. The Tribunal emphasized that there was no failure on the part of the assessee to disclose all material facts necessary for assessment. The Tribunal referred to legal precedents and highlighted that the Assessing Officer's reasons for reopening did not indicate any non-disclosure by the assessee. Consequently, the Tribunal quashed the reopening of the assessment. The High Court concurred with the Tribunal's findings, stating that there was no error in the Tribunal's judgment. Therefore, the High Court dismissed the tax appeal on this issue.Issue 2: Adjustment of Surplus in Book Profit:The second issue involved the adjustment of a surplus amount in the book profit under Section 115JB of the Income Tax Act due to a change in the method of calculating depreciation. The Tribunal had not confirmed the adjustment of Rs. 4.20 crores made by the Assessing Officer in the book profit. The Tribunal's decision was based on the fact that the Assessing Officer did not attribute any failure on the part of the assessee to disclose all relevant facts. The Tribunal emphasized that the Assessing Officer formed his opinion based on existing records without any evidence of non-disclosure by the assessee. As a result, the Tribunal considered the assessee's legal challenge to the validity of the reopening and quashed the same, rendering the subsequent grounds on merit academic. The High Court did not find any error in the Tribunal's judgment on this issue as well and concluded that no question of law arose. Consequently, the tax appeal was dismissed concerning the adjustment of surplus in the book profit under Section 115JB.In conclusion, the High Court upheld the Tribunal's decision regarding both issues, emphasizing the absence of any failure on the part of the assessee to disclose material facts and the consequent quashing of the reopening proceedings under section 147 of the Income Tax Act.