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TMI Blog2015 (5) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the A.Y. 2007-2008 are hereby terminated on the aforesaid ground alone. - Decided in favour of assessee. - Special Civil Application No. 16680 of 2014 - - - Dated:- 8-4-2015 - M. R. Shah And S. H. Vora, JJ. For the Petitioner : Mr Hardik V Vora, Adv. For the Respondent : Mr Sudhir M Mehta, Adv. JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) 1.00. By way of this petition under Article 226 of the Constitution of India, the petitioner - assessee has prayed for appropriate writ, order and/or direction to quash and set aside the impugned notice dated 20/1/2014 issued under section 148 of the Income Tax Act, 1961 for the A.Y. 2007-2008, by which the reassessment proceedings have been initiated to reopen the assessment proceedings for the A.Y. 2007-2008 beyond the period of 4 years from the relevant year. 2.00. Facts leading to the present Special Civil Application in nutshell are as under :- 2.01. That the petitioner filed its return of income for A.Y. 2007-2008 declaring total income at ₹ 87,66,926/-. That the petitioner assessee Company stated source of income from business of cutting and polishing of diamond. The case was selected for scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available with him. 3.02. Mr.Hardik Vora, learned advocate appearing on behalf of the petitioner - assessee has further submitted that from the reasons recorded for reopening the assessment, it appears that the reassessment proceedings have been initiated on the ground that though additional depreciation was not available, additional depreciation was incorrectly claimed by the assessee and therefore, the claim of the additional depreciation, contrary to the provisions of the Act had resulted into escapement of income to the extent of ₹ 14,77,669/-. It is submitted that on the aforesaid ground, reassessment proceedings cannot be initiated beyond the period of 4 years. It is submitted that when the Assessing Officer passed the assessment order and allowed the claim of additional depreciation claimed by the assessee, it cannot be said that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment with respect to the additional depreciation claimed. It is submitted that, therefore, the reassessment proceedings, on the reasons recorded, is absolutely illegal and without jurisdiction and more particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner assessee is aggrieved by the reassessment order, alternative efficacious remedy is available by way of an appeal to the CIT(A) and thereafter to the learned tribunal as per the provisions of the Act. Therefore, it is requested not to entertain the present petition. 4.03. On merits, Mr.Sudhir Mehta, learned counsel appearing on behalf of the revenue has vehemently submitted that the impugned reassessment proceedings are absolutely just and proper and in accordance with the provisions of the Act, more particularly section 147 read with section 148 of the Income Tax Act. Submitting accordingly it is requested to dismiss the present Special Civil Application. 5.00. Heard the learned advocates appearing on behalf of the respective parties at length. 5.01. At the outset, it is required to be noted that what is challenged in the present Special Civil Application by the petitioner - assessee is the reopening of the assessment for the A.Y. 2007-2008 and initiation of the reassessment proceedings for the A.Y. 2007-2008, in exercise of the powers under section 147 read with section 148 of the Income Tax Act. It is required to be noted that in the present case initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the A.Y. 2007-08 on 24/9/2007 declaring total income of ₹ 87,66,926/-. Scrutiny of depreciation statement revealed that in respect of Laser machine, Lathe Ghanti A/c. and plant and machinery depreciation worked out includes depreciation at 15% / 7.5% and additional depreciation at 20% / 10%. The assessee was engaged in the manufacturing of diamond cutting and polishing. The cutting and polishing of diamond cannot be considered as a business of manufacturing of production as held by Hon ble Supreme Court in the case of CIT Vs. Gem India Mftg. Co. (2001) 249 ITR 307 (the Hon'ble Supreme Court). Accordingly additional depreciation was not allowable but the additional depreciation was incorrectly claimed by the assessee. Total depreciation claimed as ₹ 14,77,669/- as under:- Asset OB Additional 1st half Additional 2nd half Depreciation allowed Depreciation allowable Excess Depreciation claimed 1 2 3 4 5 6 Laser Machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case it cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment and therefore, the income chargeable to tax has been escaped due to the failure on the part of the assessee to disclose fully and truly all material facts with respect to the additional depreciation claimed. Under the circumstances, the condition precedent for invoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. 5.06. Identical question came to be considered by the Division Bench of this Court in the case of Niko Resources Ltd. (supra) and while considering the scope and ambit of powers to be exercised under section 147 of the Income Tax Act by the Assessing Officer, while reopening the assessment beyond the period of 4 years, the Division Bench of this Court while considering its decisions in the case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under:- 16. The Assessing Officer is authorized to make reassessment in the event of his having reasonable belief that any income chargeable to tax ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of such assessment. The onus is on the assessee to reveal the primary facts and to draw the inferential facts would be the responsibility of the Assessing Officer. Once having revealed from the record that the assessee disclosed full and complete facts and on scrutiny, at the time of original assessment all these details are examined, no change of opinion is permissible merely because there was some error earlier on the part of the Assessing Officer himself or because he choose not to opine on the issue or even when he changes his mind and interprets the material or law otherwise than what was done by him. 5.07. Applying the decision of the Division Bench of this Court in the case of Niko Resources Ltd. (supra) as well as Gujarat Lease Financing Limited (supra), to the facts of the case on hand and as observed hereinabove, there does not appear to be failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment with respect to the additional depreciation claimed, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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