Invalid reassessment quashed, additional depreciation upheld. Revenue appeal dismissed.

The Tribunal held that the reassessment proceedings were invalid as the Assessing Officer lacked fresh tangible material and failed to dispose of the assessee's objections, citing precedents. Consequently, the reassessment order was quashed, and the appeal allowed. The claim of additional depreciation was upheld due to lack of contrary evidence. The revenue's appeal was dismissed, with the order pronounced on 07/01/2020.

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Issues Involved:
1. Validity of reassessment proceedings under Section 147 of the Income Tax Act.
2. Compliance with statutory notices under Sections 143(2) and 142(1).
3. Claim of additional depreciation on plant and machinery.
4. Disposal of objections raised by the assessee against reopening of assessment.

Detailed Analysis:

1. Validity of Reassessment Proceedings:
The primary issue was whether the reassessment proceedings initiated under Section 147 were valid. The Tribunal found that the Assessing Officer (AO) lacked fresh tangible material to justify the reassessment. The AO's belief that the income had escaped assessment was based on existing records rather than new information. The Tribunal noted that the reopening was aimed at making roving inquiries, which is impermissible under the law. The Tribunal cited several cases, including the Supreme Court's decision in CIT vs. Kelvinator of India Ltd., to support the conclusion that reassessment based on a mere change of opinion is not allowed.

2. Compliance with Statutory Notices:
The AO issued notices under Sections 143(2) and 142(1) on 04/10/2016, which the assessee did not comply with by the stipulated date. Instead, the assessee filed an objection on 02/11/2016. The Tribunal noted that the AO failed to dispose of these objections through a speaking order, as required by the Supreme Court's decision in GKN Driveshafts India Ltd. vs. DCIT. This procedural lapse rendered the reassessment proceedings invalid.

3. Claim of Additional Depreciation:
The assessee claimed additional depreciation of Rs. 338.34 Lacs on new plant and machinery acquired from its holding company. The AO disallowed this claim, suspecting that the machinery was previously used. The assessee provided purchase invoices and argued that the machinery was new, supported by the fact that excise duty was charged on the invoices. The Tribunal found that the AO did not conduct any further verification or bring any contrary material on record to substantiate the claim that the machinery was old. The Tribunal upheld the assessee's claim, noting that the AO's disallowance was based on mere conjecture.

4. Disposal of Objections:
The Tribunal emphasized the importance of disposing of objections raised by the assessee against the reopening of assessment. The AO's failure to pass a speaking order on the objections violated the procedural requirements established by the Supreme Court. The Tribunal cited multiple cases, including the Bombay High Court's decision in Asian Paints Ltd. vs. DCIT, to highlight that the AO must dispose of objections before proceeding with reassessment.

Conclusion:
The Tribunal concluded that the reassessment proceedings were invalid due to the lack of fresh tangible material and the AO's failure to dispose of the assessee's objections. Consequently, the Tribunal quashed the reassessment order and allowed the assessee's appeal. The Tribunal also noted that the claim of additional depreciation was valid, as the AO did not provide sufficient evidence to the contrary. The appeal by the revenue was dismissed, and the order pronounced in the open court on 07th January 2020.

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