Tribunal directs separate assessment orders, upholds reopening beyond 4 years, dismisses audit-based reassessment.

The Tribunal allowed the assessee's appeal, directing the AO to pass distinct and separate assessment orders instead of a combined one. The reassessment proceedings initiated beyond the 4-year period were upheld, citing jurisdiction to reopen due to the belief of escaped income. Additional grounds were admitted for adjudication without the need for fresh facts. The reassessment based on an audit objection was deemed invalid as a change of opinion, and the non-grant of depreciation on goodwill was addressed by ordering separate assessment orders for clarity and proper adjudication.

---

---

Issues Involved:
1. Initiation of reassessment proceedings under section 147 of the Income Tax Act.
2. Admission of additional grounds by the assessee.
3. Validity of reassessment based on audit objection.
4. Non-grant of depreciation on goodwill.
5. Requirement for separate assessment orders.

Detailed Analysis:

1. Initiation of Reassessment Proceedings under Section 147:
The assessee challenged the initiation of reassessment proceedings under section 147, arguing that it was without authority of law and jurisdiction. The reassessment was initiated beyond the period of 4 years despite the assessee having disclosed all requisite facts during the original assessment proceedings under section 143(3). The assessee contended that the reassessment was based on an audit objection, amounting to a change of opinion, which is not permissible under the law. The CIT(A) upheld the action of the AO, applying principles from the case of Kalyanji Mavji & Co vs CIT (102 ITR 287), stating that the AO had jurisdiction to reopen the assessment due to the belief that income had escaped assessment.

2. Admission of Additional Grounds:
The assessee filed a petition for the admission of additional grounds, which included the non-allowance of short-term capital loss and the arbitrary addition of the apportioned cost of goodwill to the income. The Tribunal admitted these additional grounds for adjudication, following the Supreme Court decision in National Thermal Power Corporation v. CIT (229 ITR 383), as there was no necessity for investigating fresh facts.

3. Validity of Reassessment Based on Audit Objection:
The assessee argued that the reassessment was invalid as it was based on an audit objection, which is considered a change of opinion. The reassessment was initiated on the grounds that the assessee made a wrong claim of goodwill deduction in the computation of capital gains on slump sale. The Tribunal noted that reassessment based on audit objection is void ab initio, referencing multiple judicial decisions, including Indian and Eastern Newspaper Society vs CIT (119 ITR 996) and CIT vs Kelvinator of India Ltd (320 ITR 561).

4. Non-Grant of Depreciation on Goodwill:
The assessee's appeal included the non-grant of depreciation on goodwill acquired during the slump sale. The Tribunal noted that the AO passed a combined order, which included adjustments related to the Tribunal’s previous orders and the reassessment order. The Tribunal directed the AO to pass distinct and separate orders for the original assessment and the reassessment.

5. Requirement for Separate Assessment Orders:
The Tribunal found that the AO erred by issuing a combined assessment order for both the original assessment and the reassessment. It directed the AO to pass separate orders: one for giving effect to the Tribunal’s previous orders related to the original assessment and another for the reassessment. This separation ensures clarity and proper adjudication of each issue.

Conclusion:
The Tribunal vacated the combined assessment order dated 29.12.2016 and remitted the issue to the AO to pass distinct and separate assessment orders, providing the assessee an opportunity to be heard. Consequently, the appeal by the assessee was allowed for statistical purposes.

---