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Issues Involved: Reopening of the case under section 148, disallowance of depreciation, charging of interest under section 234B, initiation of penalty proceedings under section 271(1)(c).
Issue-wise Detailed Analysis: 1. Reopening of the Case under Section 148: The assessee challenged the reopening of the case under section 148 on the grounds that the only contention was the wrongful claim of depreciation. It was argued that all facts and figures were disclosed, and the assessment was completed under section 143(1). The assessee relied on various judicial pronouncements, including Vipan Khanna v. CIT, which held that reassessment proceedings could only be initiated for items of under-assessment and not for matters unrelated to depreciation. The revenue, however, defended the reopening, citing the case of Palbro Auto Parts (P.) Ltd., where reassessment was upheld due to the discovery of excessive claims under section 80HHC. The Tribunal concluded that since the original assessment was processed under section 143(1) and not under section 143(3), there was no expression of opinion by the Assessing Officer, and thus, no change of opinion could be claimed. The reopening was deemed valid as the assessee was not the owner of the building and had claimed lease rent, which contradicted the claim for depreciation. 2. Disallowance of Depreciation: The assessee claimed depreciation on an advance given as security for a leasehold building, which was disallowed by the Assessing Officer on the grounds that the assessee was not the owner of the property and the advance was refundable. The Tribunal upheld the disallowance, emphasizing that depreciation under section 32 requires ownership and use of the asset for business purposes. Since the building was not owned by the assessee, the claim for depreciation was not permissible. The Tribunal also noted that similar disallowance was made for the assessment year 1996-97. 3. Charging of Interest under Section 234B: The assessee contended that the charging of interest under section 234B was consequential. The Tribunal, however, held that charging interest under section 234B is mandatory, citing the decision of the Hon'ble Apex Court in CIT v. Anjum M.H. Ghaswala, which affirmed the mandatory nature of such interest. 4. Initiation of Penalty Proceedings under Section 271(1)(c): The Tribunal noted that the issue of penalty proceedings under section 271(1)(c) did not arise out of the order of the learned CIT (Appeals) and thus required no deliberation. Conclusion: The appeal of the assessee was dismissed, and the stand of the learned CIT (Appeals) was upheld. The reopening of the case under section 148 was deemed valid, the disallowance of depreciation was upheld, the charging of interest under section 234B was confirmed as mandatory, and the issue of penalty proceedings under section 271(1)(c) was not addressed.
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