TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 482
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....s Ltd., was amalgamated with M/s. Bannari Amman Sugars Limited, Coimbatore, as scheme of amalgamation was approved by Hon'ble Madras High Court in Company Petition Nos. 187 and 188 of 2007, vide order dated 06.11.2007 w.e.f. 01.01.2007. 3. At the outset, the ld. counsel for the assessee stated that the AO reopened the assessment by issuing notice u/s. 148 of the Act and reassessment order was passed u/s. 143(3) r.w.s. 147 of the Act vide order dated 31.03.2014 and the same was challenged before CIT(A). The CIT(A) adjudicated the issue of reopening against the assessee but the CIT(A) allowed the appeal of assessee on merits. Now, the ld. counsel for the assessee stated that assessee want to raise the issue of reopening under Rule 27 of Income Tax Appellate Tribunal Rules, 1963. The assessee moved a petition claiming that the assessee has not preferred an appeal against the order of CIT(A) rejecting the assessee's ground for reopening of assessment. The assessee has raised following two grounds:- 1. The CIT(A) erred in confirming the reopening, without considering that reopening was beyond 4 years from the end of the assessment year and all the details regarding unabsorbed....
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....2005-06, it appears that the company was not operative during these years, except for sale of sugars by Tahsildar in terms of the Government order. As per Sec 32(1) of the income tax Act, depreciation on plant and machinery etc to be allowed where owned wholly or partially by the assessee & used for the purpose of business. But in this case as the factory was not in operation for 5 years and there was no activity of production or use of plant and machinery. Therefore the depreciation allowed for the A.Y. 2003-04 to 2005-06 is not allowable as the plant and machinery was not in use and thus the excess depreciation claimed has to be disallowed. In view of the above, 1 have reason to believe that income chargeable to tax, has escaped assessment within the meaning of Sec 147." The ld. counsel for the assessee then took us through the assessment order i.e., original assessment order which is enclosed at assessee's paper-book, page 5 and stated that as reasons recorded by the AO that the assessee's factory was not in operation for more than 5 years, this information was available with the AO during the original assessment proceedings and AO has noted this fact in the very ....
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....lure on the part of the assessee to disclose all necessary material facts fully and truly for completion of assessment and reopening of assessment is after a period of 4 years from the end of assessment year. Even the original assessment was completed u/s. 143(3), reopening is not at all permissible. The ld. counsel for the assessee relied on the decisions of Hon'ble Supreme Court in the case of CIT vs. Foramer France, (2003) 264 ITR 566 and Hon'ble Madras High Court in the case of CIT vs. RPG Transmissions Ltd., [2014] 48 taxmann.com 57. In view of the above, the ld. counsel stated that even on merits, assessee's case is fully covered and CIT(A) has rightly allowed the claim of assessee. 6. On the other hand, the ld. Senior DR could not point out either from the reasons recorded or in the reassessment order, there is mention of any failure on the part of the assessee to disclose any material fact not disclosed by the assessee. He admitted that reopening is beyond 4 years and original assessment was completed u/s. 143(3) of the Act. The ld. CIT-DR only relied on the decision on the Hon'ble Supreme Court in the case of CIT vs. PVS Beedies Pvt. Ltd., 237 ITR 13 (SC).....
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.... referred to as the relevant assessment year): Provided that where an assessment under Sub-section (3) of Section 143 or this Section has been made for the relevant assessment year, no action shall be taken under this Section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year." 16. This new Section has made a radical departure from the original Section 147 inasmuch as clauses (a) and (b) of the original Section 147 have been deleted and a new proviso added to Section 147. 17. In Rakesh Aggarwal v. Asst. CIT (1997] 225 ITR 496, the Delhi High Court held that in view of the proviso to Section 147 notice for reassessment under Section 147/148 should only be issued in accordance with the new Section 147, and where the original assessment had been made under Section 143 then in view of the proviso to....
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....he invocation of extended period of time under the proviso to section 147 is answered in the affirmative and in favour of the assessee." 8. In view of the above, we quash the reassessment on reopening and hence, this issue of assessee's petition under Rule 27 is allowed. 9. Coming to Revenue's appeal, even on merits the CIT(A) has categorically held that the assessee is eligible for carry forward of depreciation for the assessment years 2002-03 to 2004-05. The observation of CIT(A) in para 11 reads as under: 11. In the case of the appellant company, the asset could not be put to use during the Asst. Year 2002-03 to 2004-05 for reasons beyond the control of the company. In the case of CIT vs. Travancore Chemicals & Mfg. Co. Ltd., reported in 142 Taxman 316 (Ker), the Hon'ble High Court stated that "the test of actual user is to be applied only in the year of purchase i.e., when the new asset is first put to use. Subsequently, on its merger into the Block of Assets, depreciation is allowable irrespective of the fact whether individual items in the Block has been put to use or not". In this case the assessee raised a contention though the factory was under lockout so l....