1983 (3) TMI 99 - AT - Income Tax

Summary

Issues:
1. Validity of reopening assessments based on excess depreciation.
2. Consideration of new facts for reopening assessments.
3. Interpretation of the law regarding reopening assessments due to error.

Analysis:
1. The Assessing Officer (AO) initiated proceedings under section 147(b) of the IT Act to disallow excess depreciation in the form of extra shift allowance on electrical machinery in the original assessments completed on specific dates. The AO disallowed the claimed extra shift allowances after reconsidering the facts and issued notices accordingly. The Commissioner of Income Tax (Appeals) accepted the assessee's argument that the AO's reopening of assessments due to a mere change of opinion was not justified. The revenue appealed this decision.

2. The AO's reason for reopening assessments was based on the interpretation that extra shift allowance could be allowed for specific machinery or plant items exempted from it with the inscription 'NESA' and those subject to a general depreciation rate of 10%. However, no new facts emerged between the original assessment and the reopening, leading to the conclusion that it was a change of opinion by the AO. The case of Indian and Eastern Newspapers Society vs. CIT was cited to emphasize that an error discovered upon reconsideration did not grant the AO the power to reopen assessments.

3. The Tribunal acknowledged the differing views in previous judgments such as R.K. Malhotra, ITO vs. Kasturbhai Lalbhai but followed the later decision that errors discovered through reconsideration did not empower the AO to reopen assessments. Citing the limitations on the AO's authority to reopen assessments, the Tribunal dismissed the appeals, stating that there was no legal basis for interference based on the current interpretation of the law.