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Income Tax Appellate Tribunal, DELHI BENCH “F”, DELHI
ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax, (Appeal)-9, New Delhi [in short ‘the CIT(A)’] dated 28.12.2018, for Assessment Year 2011-12.
2. Shri Ravi Sharma, appearing on behalf of the assessee submitted that the assessment in the case of assessee for AY 2011-12 was reopened after four years from the end of the relevant assessment year. He submitted that the assessee is (A.Y.2011-12) engaged in the business of generation of electricity, and has claimed deduction u/s.80IA of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’). In the past, the assessee’s claim of deduction u/s. 80IA of the Act has been consistently allowed. Even in the impugned assessment year, the assessee’s claim for deduction u/s.80IA of the Act was allowed by the Assessing Officer (AO) in assessment made u/s.143(3) of the Act. Thereafter, the assessment was reopened and notice u/s.148 of the Act was issued to the assessee on 23.12.2016. The reasons for reopening were provided to the assessee on 12.09.2017. The reasons for reopening are at pages 135 & 136 of the paper book. He submitted that a perusal of the reasons would show that the assessment has been reopened merely on re-appreciation of the documents already on record. Since, the assessment has been reopened after the period of four years, the first proviso to section 147 of the Act gets triggered. There is no whisper in the reasons alleging that the income chargeable to tax has escaped assessment for the impugned assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in the return of income. Thus, reopening of assessment beyond four years is invalid. He further submitted that in the reasons, there is no reference to any fresh material which has came into possession of Assessing Officer that led to reopening of assessment. The solitary reason for reopening of assessment is that the assessee has not claimed additional depreciation for plant and machinery. The ld. Counsel asserted that even on merits, the assessee has a strong case as the assessee claimed depreciation on plant and machinery related to units eligible for deduction u/s.80IA of the Act @15%. There was no provision for claiming additional depreciation in the impugned assessment year. The said provision was introduced (A.Y.2011-12) in the subsequent assessment year. The AO in original assessment proceedings had rightly accepted assessee’s claim of deprecation without raising any question with respect to additional depreciation. The ld. Counsel asserted that re-opening of assessment for AY 2011-12 is the result of ‘change of opinion’. The law does not permit the AO to re-open assessment on ‘change of opinion’. He thus prayed for quashing reopening of assessment.
3. Ms. Harpreet Kaur Hansra, representing the department vehemently defended the action of AO in reopening of assessment, reiterating findings of the CIT(A) in para 5.2 to 5.6 of the impugned order, the ld. DR submits that similar submissions were made by the assessee before the CIT(A), the CIT(A) after considering the submissions of the assessee, dismissed assessee’s objection on reopening of assessment.
Both sides heard, orders of the authorities below examined. The limited issue that has been raised before us in the instant appeal is with respect to validity of reassessment proceedings u/s.148 r.w.s. 147 of the Act. Undoubtedly, assessment has been reopened in the instant case after more than four years from the end of relevant assessment year. The relevant excerpts from the reasons recorded for reopening assessment are reproduced herein below: “The assessment in this case for A.Y. 2011-12 was completed on 26.02.2014 u/s 143(3) of I. T. Act, 1961, determining an income at Rs.324,09,14,854/- under normal provision and Rs. 108,03,68,621/- under 115JB after allowing 80IA deduction of Rs.9,24,14,545/-, income derived from power generation.
Now it is noticed that the assessee had 2 power plant units: (i) MCPP unit 1-3) commenced during F.Y. 2005-06 & (i) MCPP (unit 4) commenced during F.Y. 2009-10. During the current A.Y. 2011-12, the assessee had claimed depreciation on Plant & Machinery related to both 80IA units @15% without claiming of additional depreciation. The assessee had made additions to Plant and Machinery related to power plant units of (A.Y.2011-12) Rs.7,81,91,769/- (Rs.2,44,30,003/- for more than 180 days and Rs.5,37,61,766/- for less than 180 days). The additional depreciation on these assets amounting to Rs.1,02,62,176/-@20% for more than 180 days & @ 10% for less than 180 days. The non claim of additional depreciation of Rs. 1,02,62,176/- has resulted excess claim of 80IA deduction by the same amount.
In view of the above facts, I have reason to believe that income chargeable to tax amounting to Rs.1,02,62,176/- has escaped the assessment, within meaning of provision of section 147 of the Income Tax Act, 1961, warranting reopening of assessment for A.Y. 2011-12 Accordingly, assessment for A.Y. 2011-12 is reopened & notice u/s 148 of Income Tax Act 1961 is issued after obtaining approval of higher authority - Pr. Commissioner of Income Tax, Panaji.”
A bare perusal of the reasons would show that there is no allegation by the AO that income chargeable to tax has escaped assessment for the impugned assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in the return of income. There is no allegation in the reasons for reopening either that any new tangible material has come into possession of Assessing Officer subsequent to the original assessment. Whenever, the assessment is reopened beyond four years, first proviso to section 147 of the Act gets triggered. Accordingly, the Assessing Officer has to show that income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in the return of income for that assessment year. From the reasons recorded by the AO for reopening the assessment it is lucid that the conditions set out by the first proviso to section 147 of the Act are not satisfied. The Hon’ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. vs. CIT, 175 Taxman 262 (Del.) held that the proviso to section 147 of the Act, carves out an exception from the main provisions of section 147. If a case falls within the proviso, whether or not it was covered under (A.Y.2011-12) the main provisions of section 147 of the Act would not be material. Once the exception carved out by the proviso comes into play, the case would fall outside the ambit of section 147 of the Act. The Hon’ble High Court thus held: “20. In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in Wel Intertrade (P.) Ltd.'s (supra) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania (supra) that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 2-3-2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above.”
The Hon’ble Delhi High Court in the case of CIT vs. Orient Craft Ltd., 215 Taxman 28 (Delhi) held that in the absence of any fresh tangible material, the re- opening of assessment u/s.147 of the Act is without jurisdiction.
In the instant case, the reasons for reopening states that the assessment has been reopened as the assessee has not claimed additional depreciation on plant and machinery, thus, resulting in excess claim of deduction u/s.80IA of the Act. The information regarding assessee’s claim of deduction was already (A.Y.2011-12) available with the Assessing Officer when the assessment was originally framed. This is clearly a case of reopening of assessment on the basis of change of opinion. It is a settled legal principle that assessment cannot be reopened based on change of opinion [RE: CIT vs. Kelvinator of India Ltd. 187 Taxman 312 (SC)]. Thus, in light of facts of the case and settled legal principle, we hold reassessment proceedings are without jurisdiction, hence, is quashed.
Thus, the assesssee succeeds on ground no. 2 of appeal.