2013 (12) TMI 1043 - AT - Income Tax

Proceedings u/s 147 Held that - The notice was issued beyond the period of four years from the relevant assessment year - The notice does not state that the escapement of income chargeable to tax was by result of the failure on the part of the assessee to make a return u/s 139 or in response to a notice issued under sub-section (1) of section 142 or 148 or to disclose fully and truly all material facts necessary for its assessment for that assessment year - The proceedings u/s 147 read with reference to notice u/s 148 dated 31.12.2011 was clearly invalid Decided against Revenue. Depreciation on windmills at higher rate Held that - Following M/s. K.K.S.K. Leather Processors (P) Ltd 2009 (11) TMI 556 - ITAT MADRAS-D - Even if option is not exercised within the stipulated time as per second proviso to rule 5(1A), the same cannot have a serious consequence of total denial of the claim of the assessee - When there is no prescribed procedure or mode of exercising option prescribed in the Rules, then the option exercised by the assessee by way of making a claim in the return of income along with the audit report is definitely more than the requirement of the second proviso - The requirement of second proviso to rule 5(1A) is satisfied if the option is exercised before the expiry of due date of filing of return of income under section 139(1) Decided against Revenue.

Summary

Issues involved:
1. Validity of notice u/s 148 for reassessment.
2. Claim of higher rate of depreciation on windmills without exercising the option within due dates specified u/s 139(1) of the Act.

Issue 1: Validity of notice u/s 148 for reassessment
The Revenue appealed against the order of the CIT(A) quashing the proceedings u/s 147 based on the invalidity of notice u/s 148 dated 31.12.2011. The notice was issued beyond four years from the relevant assessment year 2004-05 without stating the grounds for escapement of income chargeable to tax as required under the proviso to section 147 of the Act. The CIT(A) ruled the notice as invalid, and the DR conceded that the Revenue had no case on these grounds. Consequently, the Tribunal dismissed these grounds of appeal.

Issue 2: Claim of higher rate of depreciation on windmills
The CIT(A) directed the Assessing Officer to allow a higher rate of depreciation on windmills under Rule 5(1A) of the Income Tax Rules, even though the assessee had not exercised the option within the due dates specified u/s 139(1) of the Act. The Assessing Officer disallowed the claim since the option was not exercised on time. The CIT(A) allowed the claim based on the decision of the Chennai Bench of the Tribunal in a similar case. The Tribunal upheld the CIT(A)'s decision, citing that the second proviso to rule 5(1A) is only to facilitate the Assessing Officer and not mandatory. The Tribunal found no specific mistake in the CIT(A)'s order and dismissed the Revenue's appeal, confirming the allowance of higher depreciation on windmills to the assessee.

In conclusion, the Tribunal upheld the CIT(A)'s decision regarding the validity of the notice u/s 148 and the allowance of higher depreciation on windmills, dismissing the Revenue's appeal on both issues.