Reassessment based on depreciation error failed where MAT liability was unchanged and the issue was already examined in scrutiny.

Reassessment under section 147 was stated to be invalid where the alleged depreciation error did not affect tax liability under section 115JB and the original scrutiny assessment had already examined the depreciation claim. The text notes that the reassessment was sought only on the same material already on record, with the impact limited to business-income computation and the section 80-IA deduction, while tax remained governed by MAT on audited book profit. It further records that no escapement of income chargeable to tax was shown and the reopening amounted to a mere change of opinion. On that basis, the reopening conditions were not satisfied and the reassessment under section 148A(3) could not be sustained.

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Issues: Whether reassessment under section 147 of the Income-tax Act, 1961 was valid when the alleged depreciation error did not affect the assessee's tax liability under section 115JB and the original scrutiny assessment had already examined the depreciation claim.

Analysis: The assessee had returned nil income but paid tax on book profit under section 115JB. The alleged escapement arose only from the claim of depreciation at lower rates instead of 40%, which, on the facts found, would only alter the computation of business income and the quantum of deduction under section 80-IA(4)(i), without increasing the assessee's tax liability because the assessment remained governed by MAT on the audited book profit. The depreciation details were already on record in the original scrutiny assessment under section 143(3) read with section 144B, and the reopening was founded on the same material without any demonstrated escapement of income chargeable to tax. The Court also held that the reassessment was based on a mere change of opinion.

Conclusion: The reopening conditions under section 147 were not satisfied, and the reassessment order under section 148A(3) could not be sustained. The challenge succeeded.

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