2018 (3) TMI 1354 - AT - Income Tax

Reassessment u/s 148 -reasons to believe - Held that - There was nothing concrete before the Revenue Authorities to reopen the case afresh the matter was contested till the level of Tribunal wherein the CIT(A) allowing assessee s appeal was upheld by the Tribunal. Thus the initiation of reassessment under 148 is bad in law. - Decided in favour of assessee

Summary

Issues:
1. Reassessment done under section 148 of the Income Tax Act based on audit objections
2. Disallowance of depreciation on plant and machinery
3. Condonation of delay in filing the appeal
4. Addition and disallowances made by the Assessing Officer
5. Reopening of the assessment under section 147 beyond the prescribed period

Reassessment under Section 148:
The appeal was filed against the reassessment done under section 148 of the Income Tax Act, initiated based on audit objections raised by the department. The appellant contended that the reassessment was illegal and whimsical. The CIT(A) confirmed the disallowances made under section 24(a) and disallowance of depreciation on plant and machinery. The appellant argued that the presumptions made by the CIT(A) were unfounded and not supported by facts. The tribunal considered the reasons recorded under section 148 and found no new material taken by the Assessing Officer. The tribunal noted that the assessment under section 143 was completed on similar lines to the assessment passed under section 153C. The tribunal held that the reassessment under section 148 was without any fresh tangible material and unsustainable in law, ultimately allowing the appeal.

Disallowance of Depreciation:
The CIT(A) confirmed the disallowance of depreciation on plant and machinery. The appellant argued that depreciation is not an expense but an allowance under section 32 of the Act, mandatory when the assets are put to use. The tribunal agreed with the appellant, noting that depreciation is not an expense but an allowance, and the CIT(A) erred in treating it as an expense. The tribunal held that the disallowance of depreciation was erroneous, ultimately allowing the appeal on this issue.

Condonation of Delay:
There was a delay of four days in filing the appeal, which the assessee explained through an affidavit. The Department objected to the condonation of the delay. After hearing both parties and examining the material on record, the tribunal found the delay to be genuine and condoned the delay of four days.

Addition and Disallowances:
The Assessing Officer made additions and disallowances, including addition under section 68, disallowance under section 14A, and disallowance under section 35D. The CIT(A) partly allowed the appeal, deleting some additions and disallowances. The tribunal upheld the order of the CIT(A) on these matters.

Reopening of Assessment under Section 147:
The reassessment under section 147 was challenged by the appellant, arguing that the initiation was without any fresh tangible material and unsustainable in law. The tribunal considered the proceedings under section 153C and found that the reassessment under section 148 was unjustified. The tribunal relied on case laws and held that there was no concrete basis for reopening the case, ultimately allowing the appeal.

In conclusion, the tribunal allowed the appeal of the assessee, finding the reassessment under section 148 and the disallowance of depreciation to be unsustainable in law. The tribunal also upheld the condonation of delay and decisions regarding additions and disallowances made by the Assessing Officer.