2023 (7) TMI 24 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - Change of opinion - issues already examined in original assessment proceedings - HELD THAT - In this case in the original assessment proceedings both the issues for which the reopening proceeding initiated were there and the assessee has furnished the necessary details and the order has been passed by the AO after making adjustment in the return of income u/s 143(3). Thereafter merely based on the audit objection, the assessment proceedings cannot be reopened merely on the same material which is already placed on record. We also noted that in the original assessment proceedings the issue related to the claim of the depreciation and interest paid on late payment of deposit of TCS is already forming part of the records. The issue raised by the Revenue is nothing but a change of opinion and the law does not permit the change of opinion on the same issue which has been examined by the ld. AO while passing the assessment order. As the issue on depreciation and interest payment has already been verified in the original assessment proceedings and the AO has already considered the claim of the assessee based on the submission placed before him. We also take note of the fact that in the reasons recorded in this case is that assessee has paid interest payment of TCS and claim on higher rate of depreciation is already decided based on the submission made by the assessee. Therefore, reopening is done merely based on the same material already on record. Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of additions made by the Assessing Officer (AO) on account of interest on late payment of TCS.
2. Legality of action initiated under section 147 of the Income Tax Act.
3. Sustaining of addition on account of depreciation of vehicles.

Summary:

Issue 1: Deletion of Additions on Account of Interest on Late Payment of TCS
The Revenue challenged the deletion of Rs. 3,81,033/- made by the AO on account of interest on late payment of TCS. The CIT(A) deleted the addition, agreeing with the assessee's submission that late deposition of TDS, TCS, and Service Tax is not penal in nature, relying on various judicial pronouncements. The Tribunal upheld this decision, noting that the interest paid on late payment of TCS is compensatory and not penal.

Issue 2: Legality of Action Initiated Under Section 147 of the Income Tax Act
The assessee argued that the reopening of the assessment under section 147 was not justified as it was based on the same material already examined during the original assessment. The Tribunal agreed, citing the Supreme Court's decision in Joint Commissioner of Income Tax and Another v. Cognizant Technology Solutions India Pvt. Ltd., which held that reassessment on the same set of facts amounts to a change of opinion and is not permissible. The Tribunal quashed the reopening of the case, declaring it illegal.

Issue 3: Sustaining Addition on Account of Depreciation of Vehicles
The CIT(A) sustained the addition of Rs. 56,680/- on account of excess depreciation claimed by the assessee. The assessee contended that the depreciation was allowed in the original assessment after due verification. The Tribunal noted that the issue of depreciation was already examined in the original assessment proceedings, and reopening on the same material amounts to a change of opinion, which is not permissible. Consequently, the Tribunal allowed the assessee's cross-objection and dismissed the Revenue's appeal.

Conclusion:
The Tribunal allowed the cross-objection of the assessee, quashing the reopening of the assessment and declaring it illegal. The appeal of the Revenue was dismissed, upholding the deletion of the addition on account of interest on late payment of TCS and rejecting the addition on account of depreciation of vehicles as a change of opinion.