2021 (6) TMI 283 - AT - Income Tax

Reopening of assessment u/s 148 - assessee claimed depreciation of 100% on windmill having capacity of 1.25 mw which was so eligible only if the windmill was put to use for more than 180 days during the relevant previous year - HELD THAT - As evident that the original return of income stood scrutinized u/s 143(3) wherein assessee' claim of depreciation was duly examined by Ld. AO. The claim was allowed after due application of mind. The requisite documents and details were already furnished by the assessee during original assessment proceedings. Subsequently, on the basis of existing material as available on record, Ld. AO formed an opinion of escapement of income which was nothing but mere change of opinion. There was no new tangible material which would demonstrate any escapement of income in the hands of the assessee. This being so, the ratio of cited decision was squarely applicable to the facts of the case and Ld. CIT(A) was quite justified in declaring the reassessment proceedings as invalid. Finding no infirmity in the same, we dismiss the appeal.

Summary

Issues:
Appeal against the order invalidating reassessment proceedings for Assessment Year 2012-13 due to depreciation claim on windmill.

Analysis:
1. Reassessment Proceedings Initiated: The appellant, a resident corporate assessee engaged in various sectors, was subjected to reassessment proceedings for claiming 100% depreciation on a windmill. The original assessment under section 143(3) was done, but a notice under section 148 was issued based on the claim. The reassessment was triggered due to the windmill being utilized for less than 180 days, resulting in an excess depreciation claim of ?125.69 Lacs.

2. Assessee's Defense: The assessee contended that the windmill was used for over 180 days, and the claim was valid, as verified during the original assessment. The Assessing Officer (AO) disagreed, allowing only 50% depreciation. The assessee argued that all necessary details were submitted during the original assessment, and there was no new evidence for reassessment. Citing the Kelvinator of India Ltd. case, the assessee emphasized that reassessment cannot be based on a mere change of opinion.

3. CIT(A) Decision: The Commissioner of Income Tax (Appeals) upheld the assessee's contentions, noting that all details regarding the depreciation claim were verified during the original assessment. The AO lacked new material to suggest income escapement, relying solely on existing records. The CIT(A) found the reassessment invalid, as reopening based on a change of opinion was unjustified. The issue was held to be infructuous, and the revenue appealed.

4. ITAT Decision: The ITAT observed that the original assessment scrutinized the depreciation claim, which was accepted after due diligence. The AO's opinion on income escapement was deemed a mere change of opinion without new tangible material. Consequently, the ITAT upheld the CIT(A)'s decision, dismissing the appeal as the reassessment was declared invalid based on existing records and lack of new evidence.

5. Conclusion: The ITAT affirmed the CIT(A)'s decision, emphasizing that the reassessment was unfounded due to a lack of new material and being a mere change of opinion. The appeal against the order invalidating the reassessment proceedings for Assessment Year 2012-13 was dismissed on 1st June 2021.