TaxTMI 
TaxTMI 
2023 (8) TMI 447
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.... its Return of Income declaring total income of Rs. 2,36,69,459/-. Regular assessment u/s. 143(3) was completed assessing the total income as Rs. 2,39,71,533/-. Thereafter the case was reopened u/s. 148 on account of excess claim of additional depreciation for Fluidized Bed Furnace which was utilized to generate hot air by heat treatment and not for manufacture of article or things, thus not eligible for additional depreciation. 2.1. During the re-assessment proceedings, the assessee asked to furnish of user manual of the machine to substantiate its claim of additional depreciation and technical details of the machinery. However the assessee sought time to produce the User Manual, however failed to produce the same. Therefore the Assessing Officer passed an ex-parte assessment order disallowing the claim of additional depreciation of Rs. 20,78,780/-. 3. Aggrieved against the same, the assessee filed an appeal before the Ld. Commissioner of Income Tax (Appeals)-2. During the appellate proceedings, the Authorized Representative field a written submission. The Ld. CIT(A) dismissed the assessee appeal on the ground that the assessee failed to prove that the generation of hot air ....
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....d and there is no failure on the part of the assessee in disclosing claim of additional depreciation by the assessee. The Ld. Counsel filed a compilation of Paper Book wherein notice dated 16-08-2012 issued u/s. 142 by the Assessing Officer asking for various details in the questionnaire issued wherein Serial No. 26 reads as under: "26. Explain whether any claim u/s. 32(1)(iia) has been made by you. If yes, then complete details and justification for the same." 6. In reply thereto the assessee furnished the details as follows: "1. In the course of the hearing reply to your query as to claim of depreciation of 100%, we have to state that we have claimed such depreciation on fluidized bed furnace for hot air generation by heat treatment for use in our manufacturing process. We refer to Income Tax Rules Appendix, III (8), (ix) (A) (c) in which Fluidized bed type heat treatment furnace are entitled to 80% depreciation. We have purchased machinery and put to use on 5/9/2009 as per statement A in 3Cd report submitted earlier and therefore u/s 32 0) (ia). We are entitled to additional depreciation @ 20% on such new plant & machinery installed during the year in our ma....
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....d the income to extent of Rs. 20,78,780/- within the meaning of the provision of section 147 of the I.T Act, 1961. Hence it is a fit case for issuing notice u/s. 148 of the IT Act, 1961 to M/s Indo Colchem Ltd. for A.Y. 2010-11." 8. Ld. Counsel further submitted that there is no omission on the part of the assessee in disclosing the income before the authority. Therefore there is no escapement of income in reopening the assessment beyond four years period and relied upon Hon'ble Supreme Court judgment in the case of Parashuram Pottery Works Co. Ltd. Vs. ITO reported in (1977) 1 SCC 408 held as follows: "....14. It may also be mentioned that so far as the assessment for the assessment year 1957-58 is concerned, the assessment order was once rectified and at another time revised. Despite such rectification and revision, the above mistake in the calculation of the depreciation remained undetected. It was only in October 1965 that the Income-tax Officer realized that higher amount of depreciation had been allowed to the appellant than was actually due. A letter to that effect was consequently sent to the assessee on October 5, 1965. It was, however, nowhere mentioned in tha....
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....et aside and the impugned notices are quashed. The parties in the circumstances shall bear their own costs throughout." 9. Even on merits of the case, the assessee relied upon Jurisdictional High Court judgment in the case of CIT Vs. Diamines & Chemicals Ltd. on claim of additional depreciation as follows: "6......At the outset, it is required to be noted that the assessee claimed the deduction under s. 32(1)(a) of the IT Act with respect to the cost incurred by it for installation of the wind electric generator. The AO disallowed the same and made the addition of Rs. 1,17,99.030 by observing that as the assessee is not in the business of generation and distribution of power, hence the assessee shall not be entitled to deduction under s. 32(1)(a) of the IT Act of Rs. 1,17,98,030. The said addition has been deleted by the CIT(A) relying upon the decisions of the Madras High Court in the case of VTM Ltd. (supra) and in the case of CIT v. Hi Tech Arai Ltd. (supra). In both the aforesaid decisions, the Madras High Court had an occasion to consider the similar issue and it is held that while claiming the deduction under s. 32(1)(a) of the IT Act setting up will mill has noth....
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....ssessment year under consideration. 8. From the submissions advanced by the learned counsel for the respondent, primarily the case of the respondent is that the assessee had wrongly claimed additional depreciation in respect of the wind-mill because wind mill was utilized to generate electricity and not for manufacture of any article or thing and that generation of electricity does not result in to production or manufacture of article or thing. As the facts depict, the claim for depreciation had been allowed during the course of scrutiny assessment after verification of all the details. As noted hereinabove, in the facts of the present case, the Assessing Officer could not have entertained the belief as to escapement of income chargeable to tax from assessment for failure to disclose fully and truly all material facts relevant for assessment for the year under consideration. In absence of any such failure on the part of the petitioner, the Assessing Officer could not have assumed valid jurisdiction to reopen the assessment under section 147 of the Act. Evidently, therefore, the reopening of assessment under section 147 of the Act is without any authority of law." 11. Pe....
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....nceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987. Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on th....