2015 (9) TMI 649 - AT - Income Tax

Reopening of assessment - CIT(A) restricting depreciation rate @15% instead of 20% on dumper vehicle thereby resulting in the impugned disallowance on merits - Held that - Revenue strongly supports the impugned reopening action. However, it fails to rebut the factual position that the Assessing Officer has not decided assessee s stated objection. We are of the view in this backdrop of facts that such a course of action is mandatory on an Assessing Officer s part before framing reassessment. See G K & Drysofts India Ltd. vs. ITO 2002 (11) TMI 7 - SUPREME Court and GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX. 2012 (8) TMI 714 - GUJARAT HIGH COURT Thus once the Assessing Officer in the instance case has not decided/disposed of assessee s objections to the reopening, the same is liable to be quashed - Decided in favour of assessee.

Summary

Issues:
1. Validity of the impugned re-opening taken by the Assessing Officer.
2. Correctness of the Assessing Officer's action in restricting depreciation rate on dumper vehicle.

Issue 1: Validity of the impugned re-opening:
The assessee challenged the CIT(A)'s action in upholding the validity of the re-opening by the Assessing Officer. The Assessing Officer issued a reopening notice under section 148, citing reasons related to the depreciation claimed on dumpers at 20% instead of the allowable rate of 15%. The assessee objected to the reopening, stating that the dumper fell under a specific category entitling it to claim depreciation at 30%. The Assessing Officer proceeded with reassessment without deciding the objections raised by the assessee. The Tribunal held that the failure to address the objections before finalizing reassessment was a mandatory requirement. Citing legal precedents, the Tribunal concluded that the Assessing Officer's failure to address the objections rendered the reassessment liable to be quashed. The assessee's legal plea on the validity of the re-opening succeeded, making the second ground on merits irrelevant.

Issue 2: Correctness of depreciation rate on dumper vehicle:
The second ground raised by the assessee challenged the correctness of the Assessing Officer's decision to restrict the depreciation rate on the dumper vehicle from 20% to 15%. The Assessing Officer's action resulted in a disallowance of Rs. 14,81,512. The CIT(A) rejected the assessee's contentions on both the validity of the re-opening and the correctness of the disallowance. However, since the Tribunal allowed the appeal based on the first issue, the second ground on merits became inconsequential. The Tribunal held that the assessee's objections to the re-opening not being addressed by the Assessing Officer led to the quashing of the reassessment, making the discussion on the correctness of the depreciation rate unnecessary.

In conclusion, the Tribunal allowed the assessee's appeal, primarily on the grounds of the Assessing Officer's failure to address the objections raised regarding the validity of the re-opening. The decision highlighted the importance of the Assessing Officer's obligation to consider and dispose of objections before finalizing reassessment, as failure to do so could render the reassessment invalid.