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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-3’ NEW DELHI
Before: SMT DIVA SINGH
ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 05.05.2014 of CIT(A)-XII, New Delhi pertaining to 2005–06 assessment year on the following grounds:-
1. “The Ld.CIT(A) has erred in law and on facts in annulling the proceedings initiated u/s 147/148 by the AO thereby allowing consequential relief.
2. The appellant craves to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.” 2. The Ld. Sr. Dr relying upon the assessment order dated 21.03.2013 u/s 147/143(3) of the Act submitted that the re-opening has been necessitated as the rate of depreciation quoted by the assessee has been blindly accepted by the AO by his order u/s 143(3). It was his submission that in terms of Explanation to section 147, income has escaped assessment and since the wrong rate of depreciation was quoted by the assessee, it is a case where full and true disclosure has not been made by the assessee and the objection of the assessee and the re-joinder to the I.T.A .No.-4396/Del/2014 rejection of the objections, both have been dealt with by the AO by way of a speaking order. Accordingly on account of the failure of the assessee by quoting a wrong rate of depreciation the re-opening on facts it was argued was justified.
Heavy reliance was placed upon the assessment order.
The Ld.AR submitted that the order dated 29.12.2016 is an order passed u/s 143(3) by the AO and is a speaking order. The AO tabulating the calculation of the depreciation on the basis of the block assessment order u/s 158BC dated 29.11.2002 has not accepted the same and re-worked/calculated in the year under consideration as per the Annexure to the assessment order placed at Paper Book page 4. Accordingly it was argued that by no circumstances, it can be said to be a case of lack of inquiry or a case where full and true disclosure was not made.
3.1. Inviting attention to Paper Book page 5 it was his submission that the AO also contemplated rectification proceedings u/s 154 on the very same issue as an undated copy of the said notice is placed at Paper Book page 5. It was submitted that whatever the reasons may have been ultimately he chose to drop the same and thereafter in these circumstances the proceedings are re-opened after 4 years on the issues which have already been considered in the original round, it was submitted is an abuse of the provisions. Referring to para 3 of the order u/s 147/143(3) it was his submission that the sole reason for re-opening is what has been already considered by the AO in his order u/s 143(3) and what has been the subject matter of issuance of notice u/s 154.
3.2. Apart from that it was also submitted there is nothing in the order which shows what is the failure on the part of the assessee as the calculation has been I.T.A .No.-4396/Del/2014 done by the AO himself. Thus relying upon the principle laid down by the Hon’ble High Court in the case of CIT vs Usha International Ltd. (page 57 & 59) order dated 21.09.2012, it was submitted that the departmental appeal be dismissed.
Specific attention was invited to the observation made in para 13 of the said order at page 62 and paras 23 and 24 at page 76 of the Paper Book filed.
Reliance was also placed upon Nawany Corp. (I) Ltd. vs ITO [2012] 21 taxmann.com 217 (Mum.) [D.o.D.-20.04.2012] at pages 1 to 6 in the supplementary case law Paper Book filed for the proposition that when rectification proceedings under section 154 have been initiated, on the very same reasons notice for reassessment cannot be issued.
5.1. Attention was also invited to the case of Shivalik Bimetal Controls Ltd. vs ITO 2013-TIOL-75-HC-DEL-IT (DoD-24.01.2013) copy placed at Paper Book page 13 to 16. For the proposition that the reasons recorded must refer to what is the failure on the part of the assessee.
5.2. Inviting attention to the order of the ITAT Ahmedabad Bench in the case of National Dairy Development Board vs ACIT 2013-TIOL-732-ITAT-AHM [D.o.D- 26.07.2013]. Specific attention was invited to Para 4 of the same so as to canvass that no new material was available before the AO. Reliance was also placed upon the latest decision of the Hon’ble Delhi High Court in the case of HCL Technologies Ltd. vs DCIT in W.P.(C) 7948/2013 & CM 16840/2013 [DoD:16.07.2015].
I.T.A .No.-4396/Del/2014 5.3. It was submitted that all these facts have been taken into consideration by the CIT(A) and in the absence of any rebuttal on these facts, the claim of the Revenue should be dismissed.
I have heard the rival submissions and perused the material available on record. As far as the facts are concerned they are not in dispute as admittedly the issue sought to be addressed by the AO u/s 154 which was given up is the same issue which was subsequently picked up by him for re-opening. Admittedly the assessment originally was made u/s 143(3) and the issue has been enquired into and examined by the AO himself as the calculation of the depreciation allowable was done by the AO himself. In these facts, I find the reliance placed by the Ld.AR on paras 13, 23 and 24 in the case of CIT vs Usha International Ltd. (cited supra) is justified. For ready-reference, these specific paras are extracted hereunder:-
“It is therefore clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of a change of opinion. (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make.” ……………………….. 23. “On the first question referred to this Full Bench as to the meaning of the term a change of opiniona , I have nothing to add to the draft proposed. As to the first part of the second question my answer would be that the assessment proceedings cannot be validly reopened under section 147 of the Act even within four years, if an assessee has furnished full and true particulars at the time of original assessment with reference to the income alleged to have escaped assessment, if the original assessment was made
I.T.A .No.-4396/Del/2014 u/s 143(3). My answer to the second part of the second question is that the issue is concluded by the judgment of the Full Bench of this court in Kelvinator (supra).
My answer to the third question is this. So long as the assessee has furnished full and true particulars at the time of original assessment and so long as the assessment order is framed under section 143(3) of the Act, it matters little that the assessing officer did not ask any question or query with respect to one entry or note but had raised queries and questions on other aspects. Again the answer to this question stands concluded by the judgment of the Full Bench of this court in Kelvinator (supra)……………….” (emphasis provided)
6.1. Similarly following the ratio of the decision of the Hon’ble Calcutta High Court in the case of Berger Paints or CIT [2010] 322 ITR 369 (Cal.) followed by the ITAT in the case of Nawany Corp. (I) Ltd. (cited supra). I find that re-opening in the peculiar facts and circumstances of the case by the AO in the absence of any new material justifying the re-opening and on the very same facts tantamounts to abuse of his power. In the peculiar facts and circumstances of the case in the absence of any rebuttal on facts and law, I find that the following conclusion of the CIT(A) cannot be faulted with:-
1.14. “Since there was no failure on the part of the appellant to disclose fully and truly the material facts necessary for its assessment, the conditions laid down in the proviso to section 147 to reopen the assessment were not met before exercising the jurisdiction u/s 148. This is a necessary pre-condition condition for exercising jurisdiction u/s 148 of the Act. Since this statutory condition was not fulfilled, the proceedings initiated u/s 148 are invalid and the assessment is hereby annulled. The appeal of the assessee stands allowed.”