2017 (4) TMI 1015 - HC - Income Tax

Reopening of assessment - depreciation at the higher rate claimed - Held that - The assessment for A.Y 2010-2011 is sought to be reopened on the ground that the petitioner had claimed depreciation at the higher rate ie., 30% instead of eligible normal rate of depreciation ie., 15%. However, it is required to be noted that the entire aspect with respect to the depreciation claimed by the assessee at the rate of 30% was gone into by the Assessing Officer at the time of scrutiny assessment. A specific query was raised by the Assessing Officer in the notice under Section 142 1 of the Act; more particularly, in Item No. 28 thereof. Item No. 28 was with respect to the claim of 30% depreciation, as against the regular depreciation claimed by the assessee. The assessee replied to the same and thereafter, the Assessing Officer dealt with the said issue and while passing the scrutiny assessment, accepted the claim of the petitioner. Under the circumstances, the subsequent reopening of the assessment on the aforesaid ground can be said to be a change of opinion by the subsequent Assessing Officer. As per the catena of decisions of Hon ble Supreme Court as well as of this Court, merely on the change of opinion of the subsequent officer, reopening of assessment is not permissible. Under the circumstances, on the aforesaid ground alone, the impugned Notice under Section 148 of the Act and the impugned reopening of the assessment for A.Y 2010- 2011 deserves to be quashed and set-aside. - Decided in favour of assessee

Summary

Issues:
Challenge to reopening of assessment for A.Y 2010-2011 based on change of opinion by subsequent officer.

Analysis:
The petitioner filed a petition under Article 226 of the Constitution of India to challenge the notice under Section 148 of the Income-tax Act, 1961, seeking to reopen the assessment for A.Y 2010-2011. The petitioner contested the reopening and claimed that the issue of depreciation at 30% had already been addressed during scrutiny assessment. The Assessing Officer had allowed the depreciation at 30% after specific queries were answered by the petitioner. However, the subsequent officer sought to reopen the assessment on the same ground, alleging that income had escaped assessment. The reasons recorded for reopening highlighted the discrepancy in depreciation claimed by the petitioner and the eligibility criteria for higher depreciation rates. The petitioner objected to the reopening, arguing it was solely based on a change of opinion by the subsequent officer, which is impermissible under established legal principles.

The court examined the facts and submissions made by both parties. It noted that the Assessing Officer had already considered and accepted the petitioner's claim for depreciation at 30% during the scrutiny assessment. The court emphasized that reopening an assessment solely on the basis of a change of opinion by a subsequent officer is not permissible under legal precedents. Citing decisions of the Hon'ble Supreme Court and the High Court, the court held that the impugned notice under Section 148 of the Act and the reopening of the assessment for A.Y 2010-2011 were unjustified and should be quashed and set aside. The court ruled in favor of the petitioner, stating that the reopening was indeed a change of opinion and not a valid ground for reassessment. Consequently, the impugned notice and the reopening of the assessment were declared null and void, with costs not imposed on the petitioner.