2013 (5) TMI 358 - HC - Income Tax

Reopening of assessment Claimed deprecation On verification of records, the Department found that the depreciation claimed is excessive and therefore issued a notice u/s 148 and then proceeded to reassess the same and finally passed an order. The same is questioned as there was an interim order of status quo and without considering the same, the respondent has proceeded to conclude the proceedings. Held that - The above aspects are concerned with the material information and only on the apprehension of the petitioner, the court intended to hear the learned counsel on either side and therefore, passed an order of status quo. That could not be a factor to interfere with the order passed by the AO, when there is an effective appeal remedy available before the Commissioner (Appeals) within a period of thirty days. Therefore, without availing such remedy, the petitioner has approached the Court. In the absence of any infringement of fundamental rights, violation of principles of natural justice or anything contrary to law, there is no possibility of any scope of interference of this nature, when such a matter can be adjudicated before the appellate authority. Thus, this Writ Petition is disposed of with a direction to the petitioner move the appellate authority within a period of four (4) weeks from the date of receipt of a copy of this order and take all other course available and on such appeal being made.

Summary

Issues:
Challenge to Assessment Order for Assessment Year 2007-08.

Analysis:
The Writ Petition was filed to quash the Assessment Order dated 22.03.2013 for the Assessment Year 2007-08. The petitioner, a company engaged in various businesses, claimed depreciation at 80% for its Power Generating Unit. The Department issued a notice under Section 148 of the Income Tax Act alleging escapement of income, leading to the reopening of assessment proceedings. The petitioner contended that the claimed depreciation was in accordance with the law and had been duly disclosed to the Department in previous years. The petitioner raised objections to the proposed assessment, which were rejected by the respondent, resulting in the filing of the Writ Petition to challenge the assessment order.

The respondent argued that the petitioner's claim of depreciation at 80% without exercising the option as per Rule 5(1) of the Income Tax Rules within the due date of filing the return was noticed after the completion of the initial assessment under Section 143(3) of the Act. The respondent maintained that the petitioner had to exercise the option as per Rule 5(1) to claim a higher rate of depreciation, which was not done in this case.

The petitioner contended that the order of assessment passed by the respondent was vitiated in law as it did not consider the order of status quo granted by the Court, which was to be in effect until a specified date. However, the respondent argued that due to the closing of the financial year, the Assessing Officer had to scrutinize the assessment and pass final orders, providing the petitioner with an appeal remedy before the Commissioner.

The Court noted that the petitioner had filed its return for the Assessment Year 2007-08 declaring 'nil' income after claiming deductions under Section 80IB of the Act. The Department found the claimed depreciation to be excessive, leading to the reassessment and the impugned order. The Court emphasized that the petitioner had an effective statutory remedy of appeal before the Commissioner, which should have been availed before approaching the Court. As there was no violation of fundamental rights or principles of natural justice, the Court directed the petitioner to move the appellate authority within four weeks and maintained status quo until then. The Original Assessment Order was to be returned to the petitioner's counsel for the appeal process.