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TMI Blog2021 (12) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Dell India (P) Ltd. [ 2021 (2) TMI 37 - KARNATAKA HIGH COURT] an oversight, inadvertence or mistake of assessing officer or error discovered by him on reconsideration of the same material tantamounts to a mere change of opinion and, the same does not give him power to reopen a concluded assessment. As the A.O for the reasons discussed at length hereinabove had wrongly assumed jurisdiction and reopened the concluded assessment of the assessee company i.e without satisfying the mandate of law as required u/s 147 of the Act, therefore, the reassessment order passed by him u/s 143(3) r.w.s 147, dated 23.09.2013 cannot be sustained and is liable to be struck down. - Decided in favour of assessee. - ITA No. 1575/MUM/2020 (Assessment Year: 2008-09) - - - Dated:- 23-11-2021 - SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by : Shri H.P. Mahajani, A.R Revenue by : Shri Mahendra Ahuja, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-13, Mumbai, dated 21.01.2020, which in turn arises from the order passed by the A.O u/s 143(3) r.w.s 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income for A.Y 2008-09 on 27.09.2008, declaring a loss of ₹ 17,27,18,820/-. Original assessment was framed by the A.O vide his order passed u/s 143(3), dated 30.12.2010, determining the loss of the assessee company at ₹ 17,74,11,015/-. 3. Observing that the assessee had claimed depreciation on electrical fittings @ 15%, as against its entitlement for the same @10%, the A.O holding a conviction that excessive depreciation of ₹ 28,00,768/- was allowed to the assessee, reopened its case u/s 147 of the Act. 4. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed excessive depreciation of RS. 28,00,768/- on its electrical fittings, as under: (in Rs.) Depreciation allowable @ 10%/5% Depreciation allowed @ 15%/7.5% Excess Depreciation Cost of Installation put to use for more than 180 days 4974993 497499 746249 248749 Cost of installation put to use for less than 180 days 102080762 5104038 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment in this case was completed u/s 143(3) of the Income-tax Act, 1961 on 30/12/2010 at a loss of ₹ 17,74,11,015/-. Perusal of assessment records reveal that: Rule 5 of the Income-tax Rules provides allowance of depreciation on electrical fittings at the rate of 10%. The term electrical fittings include wiring, switches, sockets, other fittings and fans etc. as elaborated in Note 5 of Append I to rule 5. The electric installation, as defined in Indian Electricity Rules, 1956, is a composite electrical unit meant for transforming, transmitting, converting, distributing or utilizing energy. Thus, the term electric fittings also include electrical installation and attract depreciation allowance 10%. In this case, the income of the assesses was determined at a loss of ₹ 17.74 crore after scrutiny assessment completed in December, 2010. Verification of depreciation table indicates that the assesses had put into use electrical installation total valuing ₹ 107055755/- during the previous year. The depreciation was taken at the rate of 15% on such electric installation at par with plant and machinery instead of allowable depreciation at rate of 10%. This res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3), dated 30.12.2010. Backed by our aforesaid observations, we are of the considered view that de hors any tangible material and/or information which could have formed a basis for the A.O to form a bonafide belief that the income of the assessee chargeable to tax had escaped assessment, the concluded assessment of the assessee could not have been validly reopened by him u/s 147 of the Act. Our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in the case of CIT Vs. Kelvinator of India (2010) 320 ITR 561 (SC), wherein the Hon ble Apex Court had observed that merely on the basis of a change of opinion the case of an assessee cannot be reopened and had held as under:- On going through the changes, quoted above, made to s. 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, reopening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the AO to make a back assessment, but in s. 147 of the Act (w.e.f. 1st April, 1989), they are given a go by and only one condition has remained, viz., that where the AO has reason to believe that income has escaped assessment, confers j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe in place of the words for reasons to be recorded by him in writing, is of the opinion . Other provisions of the new s. 147, however, remain the same. Further, following the judgment of the Full bench of the Hon ble High Court of Delhi in the case of Kelvinator of India (supra), which had been upheld by the Hon ble Apex Court, the Hon ble High Court of Bombay in the case of Asteroids Trading Investment P. Ltd. Vs. DCIT (2009) 308 ITR 190 (Bom), had held, that an A.O is precluded from assuming jurisdiction to initiate reassessment proceedings on the basis of a Change of opinion , observing as under: 8. Perusal of the record shows that the petitioner had made full disclosure necessary for claiming deduction under s. 80M. The AO after applying his mind to the relevant records had made a specific order allowing the deduction. A perusal of the record shows that now respondent No. 1 proposes to reopen the assessment because according to him deduction under s. 80M was wrongly allowed, and, therefore, he was of the opinion that the income has escaped assessment. Though, in the notice respondent No. 1 has used the phrase reason to believe , admittedly bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that reopening of assessment under s. 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under s. 148 . Further, the Hon ble High Court of Bombay in the case of ICICI Prudential Life Insurance Co. Ltd. Vs. ACIT (2010) 325 ITR 471 (Bom), relying on the judgment of the Hon ble Supreme Court in the case of Kelvinator of India (supra), had held as under: 23. Though the power to reopen an assessment within a period of four years of the expiry of the relevant assessment year is wide, it is still structured by the existence of a reason to believe that income chargeable to tax has escaped assessment. The Supreme Court, in a recent judgment in Kelvinator of India Ltd. (supra) while drawing upon the legislative history of s. 147 held that the expression reason to believe needs to be given a schematic interpretation in order to ensure against an arbitrary exercise of power by the AO. The judgment of the Supreme Court emphasises that the power to reopen an assessment is not akin to a power to review the order of assessment and a mere change of opinion w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to propose a reassessment on the basis of a mere change of opinion. This, in view of the settled position of law is impermissible. No tangible material is shown on the basis of which the assessment is sought to be reopened. In the absence of tangible material, what the AO has done while reopening the assessment is only to change the opinion which was formed earlier on the allowability of the deduction. The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power. There is no tangible material in the present case. 7. At this stage, we may herein observe, that as per the mandate of law even where a concluded assessment is sought to be reopened by the A.O within a period of 4 years from the end of the relevant assessment year, it is must that the A.O has fresh material or information with him that had led to the formation of belief on his part that the income of the assessee chargeable to tax has escaped assessment. Our aforesaid view is fortified by the judgments of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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