2014 (3) TMI 1057 - AT - Income Tax

Reopening of assessment - deductions of additional depreciation on CPPs and grant of deduction u/s 80IA in respect of income from CPPs - Held that - Each such ground of addition was subject matter of verification and specific consideration during the course of original assessment proceedings, appellate proceedings, and in the revisional proceedings undertaken in this assessee s case. The reopening of the assessment order, especially made u/s 143(3), merely on the basis of change of opinion of the AO, by reappraisal of evidence already existing on records or on the basis of mere change of opinion of the related provisions of the law and its interpretation is patently invalid, wholly without jurisdiction and is grossly erroneous. It will be imperative to repeat that all such claim and deductions were accepted after a careful consideration of the entire relevant material, the relevant provisions of law and the relevant judgments relating to all those points. Hence reopening the said completed assessment without any fresh material or without any contrary direct binding judicial precedent, is patently illegal. Thus we strike down the very reassessment proceedings which are based on the charge of opinion of the A.O. On merits also the case of the assessee is strong but since we have already allowed the legal ground raised in the CO, we need not to decide the appeal of the revenue on its merit and in the circumstances all the grounds raised become infructuous. Resultantly, the appeal of the Revenue is liable to be dismissed having become infructuous. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of the assumption of jurisdiction under Section 147 read with Section 148 of the Income Tax Act, 1961.
2. Deletion of disallowance of additional depreciation on new plant and machinery in the Captive Power Plant (CPP) at Chanderia Lead Zinc Smelter.

Issue-Wise Detailed Analysis:

1. Validity of the Assumption of Jurisdiction under Section 147 read with Section 148 of the Income Tax Act, 1961:

The assessee challenged the validity of the assumption of jurisdiction under Section 147 r.w.s. 148 of the Income Tax Act, 1961, arguing that the reassessment was based on a change of opinion. The original assessment for AY 2005-06 was completed under Section 143(3) after thorough scrutiny. The AO later issued a notice under Section 148, claiming that additional depreciation on CPP and Wind Mills was wrongly allowed. The assessee contended that all facts were disclosed during the original assessment, and no new material facts had emerged to justify reopening the case. The Tribunal found that the AO had initiated reassessment proceedings based on the same facts already on record, which constituted a change of opinion. The Tribunal cited several judgments, including *CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC)*, to support the view that reassessment based on a change of opinion is not justified. Consequently, the reassessment proceedings were deemed invalid and ab-initio void, leading to the quashing of the reassessment order.

2. Deletion of Disallowance of Additional Depreciation on New Plant and Machinery in the Captive Power Plant at Chanderia Lead Zinc Smelter:

The revenue appealed against the CIT(A)'s order, which deleted the disallowance of Rs. 30,09,36,209/- being the amount of additional depreciation on new plant and machinery in the Captive Power Plant at Chanderia Lead Zinc Smelter. The AO had disallowed the additional depreciation on the grounds that the production capacity of the plant was not increased, no substantial expansion was achieved, and no power was generated from the newly commissioned plant. The Tribunal, however, did not delve into the merits of this issue, as it had already allowed the legal ground raised by the assessee regarding the invalid assumption of jurisdiction. As the reassessment proceedings were quashed, the revenue's appeal on the merits of the disallowance became infructuous and was dismissed.

Conclusion:

The Tribunal allowed the assessee's cross-objection, quashing the reassessment proceedings based on the invalid assumption of jurisdiction under Section 147 r.w.s. 148. Consequently, the revenue's appeal regarding the deletion of disallowance of additional depreciation was dismissed as infructuous. The order was pronounced in the open court on 04th March 2014.