2019 (7) TMI 1391 - HC - Income Tax

Reopening of assessment u/s 147 - Incorrect claim of depreciation - use less than 180 days - HELD THAT - The original assessment proceedings were under Section 143(3) of the Act. As held by the ITAT that in the original assessment proceedings itself the issue concerning claim of depreciation had been thoroughly examined by the AO and therefore there was no failure on the part of the Assessee to disclose fully and truly all the material facts relevant for the assessment. ITAT noted that in the order re-opening the assessment, the AO referred to the documents already produced in the course of the original assessment proceedings and inferred that the proportionate amount of depreciation should have been disallowed because of de-leasing of certain assets and claim of depreciation on new assets that were used for less than 180 days. Accordingly, the ITAT concurred with the CIT (A) that this was a mere change of opinion on the part of the AO. The Court is not persuaded that any legal error has been committed by the ITAT in the impugned order. No substantial question of law - Decided against revenue.

Summary

Issues:
1. Condonation of delay in re-filing the appeal.
2. Alleged incorrect claim of depreciation by the Assessee.
3. Reassessment based on change of opinion.
4. Disallowance of depreciation by the AO.
5. Appeal dismissal by ITAT and Revenue's appeal before the High Court.

Condonation of Delay:
The High Court condoned the delay of 172 days in re-filing the appeal, citing reasons provided in the application, and disposed of the delay application.

Incorrect Claim of Depreciation:
The Revenue appealed against an ITAT order regarding the Assessee's alleged incorrect claim of depreciation for the AY 2005-2006. The Assessee, engaged in trading and export of personal care products, faced a reduction in rental income due to de-leasing of assets. The AO disallowed depreciation on the full value of assets without proportionate reduction and on newly acquired assets used for less than 180 days. The ITAT upheld the Commissioner's decision that the reassessment was a mere change of opinion and not valid.

Reassessment Based on Change of Opinion:
The AO issued a notice under Section 147 read with 148 of the Act, alleging that income had escaped assessment due to incorrect depreciation claims. The ITAT concluded that the AO's reassessment was a mere change of opinion, as the issue had been thoroughly examined during the original assessment proceedings.

Disallowance of Depreciation:
The ITAT found no failure on the Assessee's part to disclose material facts during the original assessment. It concurred with the CIT (A) that the AO's disallowance of depreciation was based on a mere change of opinion, as the documents produced during the original assessment were already considered.

Appeal Dismissal and High Court Decision:
The High Court dismissed the Revenue's appeal, stating that no legal error was committed by the ITAT. It found no substantial question of law for determination and upheld the ITAT's decision, ultimately dismissing the appeal.