INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - No new tangible material - Change of opinion

Assessee-company was engaged in power generation, real estate, securities, etc. Its case was reopened on the ground that the assessee claimed depreciation @100% on windmill having capacity of 1.25 mw, which was so eligible only if the windmill was put to use for more than 180 days during the relevant previous year. However, since the windmill was put to use for less than 180 days, the assessee was not eligible to claim the depreciation @100% and accordingly, there was excess depreciation claim made by the assessee. On appeal, CIT(A) concurred that the assessee's claim of depreciation was duly verified during original assessment proceedings. Further, the AO was not in possession of any new material to conclude that the income had escaped assessment. The whole basis of formation of belief was only existing record as available with the AO. Therefore, reopening of assessment on mere change of opinion, was not justified. Aggrieved, Revenue was in appeal.Held: It was quite evident that original return of income was scrutinized under section 143(3), wherein assessee' claim of depreciation was duly examined by AO and the claim was allowed after due application of mind. The requisite documents and details were already furnished by the assessee during original assessment proceedings. However, subsequently, on the basis of existing material available on record, AO formed an opinion of escapement of income, which was nothing but mere change of opinion. There was no new tangible material that would demonstrate any escapement of income in the hands of assessee. That being so, CIT(A) was justified in declaring reassessment proceedings as invalid and hence, the decision of the CIT(A) was upheld.

CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 : 2010 TaxPub(DT) 1335 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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