Tribunal decision: EPF, ESI deductions allowed; higher depreciation rate disallowed.

The Tribunal upheld the validity of the notice under Section 148 for reopening assessments, allowed deductions for EPF and ESI contributions made before the return filing due date, and confirmed the disallowance of the higher depreciation rate claimed by the assessee. The appeals were partly allowed, providing relief on the EPF and ESI contributions issue while dismissing the other grounds.

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Issues Involved:
1. Validity of the issue of notice under Section 148 of the Income Tax Act, 1961.
2. Delay in remittance of Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) contributions.
3. Disallowance of depreciation claimed by the assessee.

Detailed Analysis:

1. Validity of the Issue of Notice under Section 148:
The primary issue in these appeals is the validity of the notice issued under Section 148 for reopening assessments under Section 147 of the Income Tax Act, 1961. The assessee argued that the reopening was due to a change of opinion and lacked fresh information, thus making it invalid. The CIT(A) rejected this contention, noting that the assessments were completed under Section 143(1), which is merely an intimation and not an assessment. Therefore, there was no question of change of opinion. The CIT(A) upheld the reopening, citing sufficient material indicating income escapement due to an incorrect claim of higher depreciation rates. The CIT(A) relied on multiple case laws, including Skylight Hospitality LLP Vs. ACIT (2018) and the Supreme Court decision in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt Ltd. [2007] 291 ITR 500 (SC), to support the validity of the notice under Section 148.

The Tribunal concurred with the CIT(A), stating that since the assessments were completed under Section 143(1), there was no case for change of opinion. The AO had a valid reason to believe that income had escaped assessment due to the incorrect depreciation claim, fulfilling the requirements for issuing a notice under Section 148. The Tribunal dismissed the assessee's argument that the AO should have taken action under Section 154 or 263 instead of reopening the assessment.

For the assessment year 2013-14, where the original assessment was completed under Section 143(3), the Tribunal noted that the reopening was within four years, making the failure to disclose full information irrelevant. The Tribunal upheld the reopening, rejecting the argument that it was based on audit objections, citing the Supreme Court's decision in Commissioner of Income-tax v. P.V.S. Beedies (P.) Ltd., which allows reopening based on factual errors pointed out by the audit party.

2. Delay in Remittance of EPF and ESI Contributions:
The second issue involved the disallowance of deductions for EPF and ESI contributions made beyond the due date under the relevant Acts but before the due date for filing the return of income. The AO disallowed these deductions, which was upheld by the CIT(A). However, the Tribunal noted that it has consistently held that contributions made before the due date for filing the return should be allowed as deductions. The Tribunal cited its own decision in ACIT Vs. Brandix India Apparel City Private Ltd. and the Karnataka High Court's decision in ESSAE TERAOKA PVT Ltd. Vs. DCIT [366 ITR 408], allowing the deduction for contributions made before the return filing due date. Consequently, the Tribunal set aside the CIT(A)'s order and deleted the additions made by the AO, allowing the assessee's appeals on this issue for the assessment years 2011-12 to 2015-16.

3. Disallowance of Depreciation Claimed by the Assessee:
The third issue was the disallowance of depreciation claimed at 30% instead of 15% for certain machinery and vehicles. The AO found that the assessee, engaged in civil contracts, was not using the vehicles for running them on hire, thus not eligible for the higher depreciation rate. The CIT(A) upheld this disallowance, noting that the service tax returns also indicated that the assessee was not in the business of running vehicles on hire.

The Tribunal agreed with the lower authorities, stating that the dominant purpose of the assessee was to use the vehicles for its own business, not for running them on hire. The Tribunal cited the Kerala High Court's decision in N.D.Joseph Vs.CIT (2010) 325 ITR 200 and the Supreme Court's decision in CIT Vs. Gupta Global Exim (P.)Ltd, 171 taxman 474 (SC), to support its conclusion. The Tribunal dismissed the assessee's appeal on this ground, affirming the lower rate of depreciation.

Conclusion:
The Tribunal upheld the validity of the notice under Section 148 for reopening assessments, allowed deductions for EPF and ESI contributions made before the return filing due date, and confirmed the disallowance of the higher depreciation rate claimed by the assessee. The appeals were partly allowed, providing relief on the EPF and ESI contributions issue while dismissing the other grounds.

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