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TMI Blog2014 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... pen the assessment not on account of failure on the part of the assessee to disclose any material particulars, but on account of the change of opinion with regard to certain deductions claimed and allowed by the assessee - assessment cannot be reopened on mere change of opinion – relying upon CIT v. Kelvinator of India Limited [2010 (1) TMI 11 - SUPREME COURT OF INDIA] - a mere change of opinion cannot form the basis for reopening of assessment. Although the AO has recorded that he has reasons to believe that income chargeable to tax exceeding ₹ 1 lac. had escaped assessment, as the assessee had not disclosed, fully and truly, all material facts necessary for his assessment for the relevant assessment year, there is no allegation made in the reasons as furnished by the AO that there had been a failure on the part of the assessee to disclose, fully and truly, any particular fact that was necessary for the assessment - thus, the proceeding initiated by the AO for reopening the assessment for the AY 2006-2007 is without authority of law – Decided in favour of Assessee. - W. P. (C) 1349/2014 & CM APPL. 2821/2014 - - - Dated:- 30-7-2014 - S. Ravindra Bhat And Vibhu Bakhru, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner from Energy Ventures was claimed as capital receipt towards extinguishment of a right in business and the same was not offered to tax under the Act. The case of the petitioner was selected for scrutiny and a notice under section 143(2) of the Act was sent on 18.10.2007. After scrutiny, the Assessing Officer (AO) passed an assessment order dated 23.12.2008 under Section 143(3) of the Act, whereby expenditure of ₹ 1,61,09,642/- pertaining to period prior to 14.01.2006 was disallowed. The AO also disallowed depreciation to the extent of ₹ 5,85,078/- and assessed the total income at ₹ 59,05,595/-. Aggrieved by the assessment order, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals). By an order dated 02.05.2012, CIT(A) partly allowed the appeal and the disallowance of expenditure, to the extent of ₹ 1,51,11,880/- out of ₹ 1,61,09,642/-, and disallowance of depreciation was deleted. 3.3 Thereafter, a notice dated 28.03.2013 under Section 148 of the Act was issued to the petitioner for reopening the assessment for the AY 2006- 2007 under Section 147 of the Act. The said notice is hereinafter referred to as the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that assessment year: 5. The principal question, whether in the given facts, the condition that the assessee had failed to fully and truly disclose all material facts was met, can be best answered by referring to the reasons furnished by the AO for reopening the assessment. AO s letter dated 02.12.2013 discloses the following reasons for reopening the assessment:- Reasons for the belief that the income has escaped assessment in the case of M/s. Great Eastern Energy Corporation Ltd. The assessment of above company for the assessment year 2006-07 was completed after scrutiny in November 2008 at an income of ₹ 77,72,709/-. It is gathered that the assessee classified Software of ₹ 9,22,148 under Computer and claimed depreciation at the rate of 60%. These assets are classifiable as intangible assets, subject to depreciation at the rate of 25%. This mistake resulted in incorrect allowance of depreciation and consequent under assessment of income to the extent of ₹ 3,22,752/- having a tax effect of ₹ 1,44,489/-. It is also revealed that the assess received ₹ 87,13,000 as nonrefundable advance from another company LLC (EV) and the same amount wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O had disallowed depreciation to the extent of ₹ 5,85,078/-, which was claimed by the assessee in respect of the building and warehouse. The AO has now alleged that the depreciation on computer software was to be allowed only to the extent of 25% instead of 60% as admitted earlier. Apart from the fact that the depreciation as claimed by the assessee had been examined during the assessment proceedings. The contention that the rate of depreciation allowable on computer software is 25% is also apparently erroneous. The depreciation on computer software is either to be charged at 60% or in certain cases, expenditure on computer software is treated as revenue expenditure. Be that as it may, it is apparent that the dispute raised with regard to rate of depreciation by the AO merely indicates a change of opinion and there has been no failure on the part of the assessee to disclose any material fact in this regard. 7. The second reason furnished by the AO is with respect to the sum of ₹ 87,13,000/- received as non-refundable advance from Energy Ventures. It has been pointed out by the assessee that a specific reference was made to this advance in schedule 11 to the audited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year, there is no allegation made in the reasons as furnished by the AO that there had been a failure on the part of the assessee to disclose, fully and truly, any particular fact that was necessary for the assessment. In view of the express language of the proviso to Section 147, reopening of the assessment after expiry of four years from the end of the assessment year is impermissible unless this precondition is met. This Court in the case of in the case of Wel Intertrade P. Ltd. Anr. v. ITO: (2009) 308 ITR 22 (Del) and Haryana Acrylic Manufacturing Company v. CIT Anr.: (2009) 308 ITR 38 (Del) had held that unless the income has escaped assessment on account of failure, on the part of the assessee, to disclose all necessary material facts, the assessment cannot be reopened beyond the period of four years. The relevant extract from the decision in Wel Intertrade P. Ltd. (supra) reads as under:- A plain reading of the said proviso makes it more than clear that where the provisions of section 147 are being invoked after the period of four years from the end of the relevant assessment year, in addition to the Assessing Officer having reason to believe that any income charg ..... 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