INCOME TAX ACT, 1961

Section 147

Reassessment - Reason to believe - No fresh tangible material -

AO reopened assessment on the ground that assets purchased by assessee were previously used by its holding company and assessee was claiming additional depreciation on previously used assets.Held: It was quite evident that there was no fresh tangible material in possession of AO to trigger reassessment proceedings against assessee. In fact, reassessment proceedings were triggered merely by making certain observations during the course of assessment proceedings of parent entity without establishing that certain income escaped in the hands of assessee. Also, original assessment was framed under section 143(3) and there was complete disclosure of claim of additional depreciation in the financial statements. Perusal of assessee's financial statements established that there was clear disclosure of addition in Plant & Machinery and claim of additional depreciation was separately shown in the depreciation schedule. After considering the same, AO chose not to make any additions in this respect. Therefore, revisiting the same issue in reassessment proceedings would tantamount to review of order, which is impermissible under law. Accordingly, reassessment was set aside.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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