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TMI Blog2020 (7) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... as posed to the respondent - assessee in the proceedings under Section 143(3) of the Act. Therefore, it is evidently clear that reopening was a case of change of opinion. A bare reading of Section 147 of the Act will clearly show that in all contingencies of reopening, the Assessing Officer should have reasons to believe that income chargeable to tax escaped assessment. If the very same reasons were the subject matter of the proceedings under Section 143(3) of the Act or the proceedings under Section 263 of the Act, once again, for the very same reasons, the power under Section 147 cannot be invoked and having done so, the CIT(A) as well as the Tribunal were right in coming to the conclusion that the reopening was bad in law. Thus, by applying the decision of Kelvinator of India Ltd. [ 2002 (4) TMI 37 - DELHI HIGH COURT] a s confirmed by the Hon ble Supreme Court [ 2010 (1) TMI 11 - SUPREME COURT] where the case pertains to an assessment before 01.4.1989 or thereafter, mere change of opinion cannot confer jurisdiction upon the Assessing Officer to initiate proceedings under Section 147 of the Act, we hold that the judgment under appeal does not call for interference. - Decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere all civil works and were, as such, eligible for depreciation only at the rate of 10% under the head buildings . 6. According to the Assessing Officer, the restriction of depreciation to 10% was for a small portion of the block of assets and 5% on ₹ 32.20 lakhs was to be disallowed and this had resulted in short computation of disallowance of depreciation. Therefore, in the assessment order passed under Section 143(3) of the Act, income had escaped assessment within the meaning of the provisions of Section 147 of the Act. 7. The assessee objected to the reopening stating that it was a change of opinion. However, the objection was rejected vide order dated 12.8.2013. Thereafter, the Assessing Officer proceeded to complete the assessment and disallowed the excess depreciation vide order dated 31.1.2014. Aggrieved by that, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals)-LTU, Chennai-1 by filing ITA.No.28/13-14. The appeal was allowed by order dated 14.11.2014. Challenging the same, the Revenue preferred an appeal before the Tribunal and it was dismissed by order dated 23.9.2015, which is impugned in this appeal. 8. Mrs.R.Hemalatha, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. [reported in 256 ITR 1], as confirmed by the Hon ble Supreme Court in the decision reported in 320 ITR 561. 12. It is further submitted by the learned counsel for the respondent assessee that on facts, the very same reasons were put against the assessee during the assessment under Section 143(3) of the Act and the assessee had given their reply. Thereafter, the assessment was completed and subsequently, the notice under Section 263 of the Act dated 31.10.2012 was issued wherein one of the issues related to depreciation claim, for which, the assessee submitted their reply and that the Commissioner of Income Tax, LTU passed the order dated 21.2.2013 dropping the proceedings. It is thereafter the notice under Section 148 of the Act came to be issued for the very same reasons and therefore, it is a clear case of change of opinion. It is also submitted by the learned counsel for the respondent assessee that even in cases where reopening is done within four years, it cannot be done based on change of opinion. 13. We have carefully considered the above contentions of the learned counsel on either side. 14. The original assessment was completed under Section 143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets blocked under the water supply and drainage blocks were related to productivity. 17. After receiving reply from the assessee, the Commissioner of Income Tax, LTU, by order dated 21.2.2013, ordered that the proceedings initiated under Section 263 of the Act for the assessment year 2008-09 on 31.10.2012 were dropped. After about a month, the Assessing Officer issued the notice dated 28.3.2013 under Section 147 of the Act stating that he had reasons to believe that the assessee s income chargeable to tax for the assessment year 2008-09 escaped assessment within the meaning of Section 147 of the Act. 18. The assessee, by letter dated 16.4.2013, requested to furnish reasons for reopening. 19. By reply dated 16.7.2013, the reasons were furnished stating that the assessee claimed income tax depreciation on block of assets water supply and drainage at 15% and that the asset was shown as a separate block of assets and was not included in the plant and machinery by the assessee in the income tax depreciation statement. It has been further stated that in the scrutiny assessment under Section 143(3) of the Act, it was held that based on the decision of the Delhi High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following paragraphs in the Full Bench decision of the Delhi High Court in the case of Kelvinator of India Limited (reported in 256 ITR 1) : 16. Section 147 of the Act as it stands w.e.f. 1st April 1989 reads as follows: 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under Sub- section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inging to tax the income which escapes assessment, especially in non-scrutiny cases. Thus, the Amending Act, 1987, has substituted a new Section 147 which contains simplified provisions as follows:- (i) Separate provisions contained in Clauses (a) and (b) of the old section have been merged into a single new section, which provides that if the Assessing Officer is of the opinion that income chargeable to tax for any assessment year has escaped assessment, he can assess or reassess the same after recording in writing the reasons for doing so. (ii) The requirements in the old provisions that the Income-tax Officer should have reason to believe or information in possession before taking action to assess or reassess the income escaping assessment, have been dispensed with. (iii) The existing legal interpretation that once an assessment has been reopened, any other income that has escaped assessment and comes to the notice of the Assessing Officer subsequently during the course of proceedings under this section can also be included in the assessment, has been incorporated in the new section itself. (iv) A proviso to the new section provides that an assessment, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment has been made (i.e. in a scrutiny case)- if income chargeable to tax has been under-assessed or assessed at too low a rate or if any excessive relief or loss or depreciation allowance or any other allowance under this Act has been allowed. 18. From a bare perusal of the provisions contained in Section 147 of the said Act, as it stood up to 31st March 1989, it is evident that to confer jurisdiction under Section 147 of the Act two conditions were required to be satisfied viz.; (i) the Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment; and (2) he must also have a reason to believe that such escapement occurred by reason of either; (a) omission or failure on the part of the assessed to make a return of his income under Section 139 or (b) omission or failure on the part of the assessed to disclose fully and truly all material facts necessary for his assessment for that year. The afore-mentioned requirements of law must be held to be conditions precedent for invoking jurisdiction of the Assessing Officer to re-open the assessment under Section 147 of the said Act. It is trite that both the conditions afore-mentioned are cum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed more than once. Not stopping with that, upon change of officer, the Department, once again, issued notice dated 28.3.2013 to reopen the assessment and in that notice, a finding was rendered that the relevant portion of the order under Section 143(3) of the Act was restricted and the Assessing Officer stated that the restriction of depreciation to 10% only to a small portion of the block of assets was incorrect. In fact, this was the very same reason, which was posed to the respondent - assessee in the proceedings under Section 143(3) of the Act. Therefore, it is evidently clear that reopening was a case of change of opinion. 27. The learned Senior Standing Counsel appearing for the appellant - Revenue has drawn our attention to Explanations 2(c) (iii) and (iv) to Section 147 of the Act. It is her submission that where an assessment has been made, but such income has been made the subject of excessive relief under the Act or excessive loss or depreciation allowance or any other allowance under the Act has been computed, the Authority is entitled to reopen an assessment under Section 147 of the Act and the question of change of opinion does not arise. 28. A bare reading of S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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