2019 (6) TMI 1222 - HC - Income Tax

High Court affirms Tribunal's decision on assessment reopening under Income Tax Act

The High Court of Gujarat upheld the Tribunal's decision regarding the reopening of assessment under section 148 of the Income Tax Act, 1961. The court ... Reopening of assessment u/s 147 - Disallowance of claim of depreciation of wind power generation unit - notice issued beyond a period of four years from the end of the relevant assessment year - HELD THAT:- As during the course of scrutiny assessment, the Assessing Officer had examined this issue threadbare and had accepted the assessee’s submission and allowed the depreciation on wind mill. Therefore, the Commissioner (Appeals) was wholly justified in holding that the reopening was invalid as it was based upon a mere change of opinion. The notice u/s 148 had been issued beyond a period of four years from the end of the relevant assessment year and the Commissioner (Appeals) has recorded a finding of fact to the effect that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the year under consideration. On behalf of the appellant nothing has been pointed out to dislodge the concurrent findings of fact recorded by the Commissioner (Appeals) and the Tribunal nor has it been pointed out that the Tribunal has placed reliance upon any irrelevant material or that any relevant material has been ignored. Conclusion arrived at by the Tribunal being based on concurrent findings of fact upon appreciation of the material on record, no infirmity can be found in the finding recorded by the Tribunal that the reopening of assessment was invalid. Claim for depreciation - power generation unit having started its production in March, 2006 - HELD THAT:- The Tribunal as well as the Commissioner (Appeals), have found that the relevant evidence was produced by the assessee on record to establish that the operation of the wind mill had commenced prior to 31.3.2006 and consequently, the assessee was entitled to depreciation on windmill. - Decided in favour of assessee. Issues:1. Validity of reopening assessment under section 148 of the Income Tax Act, 1961.2. Disallowance of depreciation on Wind Mill.Issue 1: Validity of reopening assessment under section 148 of the Income Tax Act, 1961:The appellant revenue challenged the order passed by the Income Tax Appellate Tribunal, Ahmedabad, regarding the reopening of assessment for the assessment year 2006-07. The Assessing Officer had reopened the assessment based on the claim of depreciation on a wind power generating unit. The Tribunal observed that the reopening was invalid as it was against the documentary evidence examined during the original proceedings. The Commissioner (Appeals) also found the notice issued for reopening beyond the prescribed period and without any failure on the part of the assessee to disclose material facts. The Tribunal upheld the Commissioner's order, emphasizing that the reopening was based on a mere change of opinion and lacked valid grounds. The Tribunal's decision was supported by the fact that the Assessing Officer had already allowed the depreciation during the original assessment, making the reopening unnecessary.Issue 2: Disallowance of depreciation on Wind Mill:The appellant contended that the assessee was not entitled to claim depreciation on the wind mill as it did not start generating electricity before a specific date. The Assessing Officer disallowed the depreciation, leading to an appeal by the assessee. The Commissioner (Appeals) found that the wind mill had indeed started production before the specified date based on evidence provided by the assessee. The Tribunal agreed with the Commissioner's findings, stating that the assessee was entitled to claim depreciation as the power generation unit had started production in March 2006. Both the Commissioner (Appeals) and the Tribunal concluded that the reopening of the assessment was invalid and that the evidence supported the assessee's entitlement to depreciation on the wind mill. The Tribunal's decision was based on the concurrent findings of fact and the evidence presented during the proceedings.In conclusion, the High Court of Gujarat upheld the Tribunal's decision, dismissing the appeal and affirming the validity of the depreciation claim on the wind mill. The judgment highlighted the importance of evidence and the Assessing Officer's previous acceptance of the depreciation claim during the original assessment, emphasizing the lack of grounds for reopening the assessment and the entitlement of the assessee to claim depreciation based on the evidence provided.