9911796707
TMI Blog2008 (10) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... hich reads as under: "On the facts and circumstances of the case, the learned CIT(A)-II, Hyderabad, erred in holding that even on merits the claim of depreciation of Rs. 16,20,35,856 was admissible to the assessee company." After hearing both parties, we admit the additional ground. 3. The first effective ground is whether the notice under s. 148 was rightly issued as per Expln. 1 to the proviso to s. 147 of the IT Act, 1961 (for short 'the Act') or not and the second effective ground is whether on merit the claim of depreciation of Rs. 16,20,35,856 was admissible to the assessee company or not? 4. The facts of the case in brief are that the assessee, a public limited company is engaged in the business of power generation. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, submitted that the issue of notice under s. 147 r/w s. 143(3) is erroneous and contrary to law and facts of the case. He further submitted that the AO erred in making the reassessment under s. 143(3) r/w s. 147 of the Act determining the total income from business at Rs. 16,20,35,856 as against nil income. The notice for reopening the assessment issued to the assessee W?S beyond the time-limit prescribed under the provisions of the Act and therefore not valid. The AO failed to see that all the information regarding depreciation claimed on addition to fixed assets consequent to foreign exchange fluctuation was very much available before the AO while completing the reassessment and no new information has come to the possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, we find that during the course of assessment proceedings, the AO had called for all the details in respect of the claim of depreciation and asked the assessee to explain the discrepancy in the claim of depreciation. The assessee explained the discrepancy in the claim of depreciation and as per para 3.3 of the order of the CIT(A) the assessee has furnished all the original bills and vouchers in respect of additions made to the assets. The assessee appears to have mentioned that the plant and machinery and buildings for expansion were acquired on suppliers credit scheme and is payable in Japanese yen and foreign exchange fluctuation arising on such supplier's credit is added or reduced from the cost of plant and machinery and buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this context it is necessary to point that with regard to the second condition the requirement is not that omission or failure on the part of the assessee and concealment of income should be established before initiation of action but it is enough if the officer should have reason to believe that income has escaped assessment and that too on account of failure and omission. Non-existence of the above condition will make the notice invalid. In view of the above, our considered opinion is that there was no failure on the part of the assessee to disclose fully and truly all material facts relevant for assessment and the reopening of assessment in this case on the same set of facts to bring to tax the amount of alleged additional depreciatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any material on record to show that the assessee has not. fully and truly disclosed all the material facts necessary and relevant to the assessment. In this view of the matter, the reopening of assessment under s. 147 of the Act is not proper and the same has to be quashed. 8.2 On merit, the AO relied upon the second proviso to s. 43A of Act. Since s. 43A has been amended by the Finance Act, 2002 w.e.f. 1st April, 2003 wherein the proof of remittance is required to be submitted for claiming the depreciation on foreign exchange fluctuation. This provision was not there for earlier assessment years. The amendment brought in was also not with retrospective effect. Therefore, we do not find any justification on the part of the AO to have take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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