Ilesh J. Vora, J.
1. By filing this writ application under Article 226, the writ applicant seeks to challenge the notice dated 27.03.2019 issued by the respondent under Section 148 of the Income Tax Act, 1961 ('the act' for short) seeking to reopen the applicant's income assessment for the A.Y 2012-13.
2. The brief facts can be summarized as under:
2.1 The writ applicant assessee Company filed its return of Income for the A.Y. 2012-13 on 29.09.2012 declaring total loss at Rs. 34,77,129/- and an assessment under Section 143(3) of the Act was completed on 18.03.2015.
2.2 The Assessing Officer has reopened the assessment under Section 147 by issuing impugned notice dated 27.03.2019 under Section 148 of the Act.
2.3 At the request, the reasons recorded have been furnished to the assessee on 15.07.2019, which reads as under :
"1. The assessee Baroque Pharmaceuticals Private Limited engaged in pharmaceutical business, filed his return of income on 29.09.2012 declaring total loss of Rs.34,77,129/-. Assessment under Section 143(3) was completed on 18.3.2015 by determining total loss of Rs. 25,47,129/and allowed carried forward unabsorbed loss of A.Y. 2008-09 to 2012-13.
2. On examination of case records, it is observed that the assessee has claimed depreciation on addition of new fixed assets before 30.09.2011 as follows: * Plant and machinery of Rs. 2,36,67,132/(claimed depreciation @ 15% + additional depreciation @ 20% of Rs. 82,83,496/-,
* Factory building 2,37,47,290/claimed depreciation @ 10% 23,74,729/
* Laboratory equipment Rs. 63,96,975/claimed depreciation @ 15% of Rs. 9,59,846/-
* Electric installation Rs. 36,98,715/(claimed depreciation @ 10% of Rs. 3,69,87 1/-, It is further noticed that the auditor has not mentioned the date on which these new project assets were put to use as required in column no. 18(d) of 3CD report.
3. As per section 32 of the Act, depreciation is allowed if the assets is acquired and put to use for the purpose of business or profession during the relevant financial year. Further the assessee is also eligible for additional depreciation as per the provisions of section 32(1)(iia). The basic condition for claiming depreciation is that the assets is acquired and put to use for the purpose of business or profession during the relevant financial.,In addition to this, information regarding, addition/deletion in fixed assets is required to be furnished in column no. 18(d) of 3CD report by the auditor. In this case, the assessee has claimed depreciation and additional depreciation amounting to Rs. 1,19,87,942/- for AY 2012-13. From the perusal of the 3CD report, it is noticed that the auditor has not furnished the date of put to use for the assets which have been acquired during the year under consideration. Therefore it is clear that the assessee has not put to-use the assets which were acquired during the year and is not eligible for claiming depreciation on such assets. As such the assets have not been put to use during the year under consideration, the depreciation claimed by the assessee amounting to Rs. 1,19,87,942/- is required to be disallowed. In view of the above, I have reasons to believe that there is an escapement of income from fax of Rs. 1,19,87,942/- and. it is a fit case for issuing notice u/s. 148 of the Act.
4. In this case, a return of income was filed for the year under consideration and assessment u/s. 143(3) of the Act was completed on 18.03.2015. Since 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceedings u/s 147 of the Act are reason to believe that income for the year under consideration has escaped, assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above.
5. I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the facts in respect of depreciation claimed. Moreover the assessee has not disallowed suo-moto the depreciation claimed which were not put to use during the year under consideration and never furnished any information in this regard. Hence there is failure on assessee's part as the assessee intentionally claimed deprecation on assets which were not eligible for deprecation. It is true that the assessee has filed a copy of annual report and audited P&L A/c and balance sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is important to highlight here that material facts relevant for the assessment on the issue under consideration were not fled during the course of assessment proceedings and the same may be embedded in annual report, audited P&L Account, balance sheet and books of account in such a manner that it would require due diligence by the AO to extract these information. For aforestated reasons, it is not a case of change of opinion by the AO.
6. Further, in this case more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice u/s. 148 is requested from the Pr. Commissioner of Income Tax as per the provision of section 151 of the Act. "
2.4 The writ applicant raised the objections vide its communication dated 19.07.2019, mainly on the following issues on facts and law:
(i) No failure on the part of the company to disclose fully and truly all material facts necessary for the assessment;
(ii) It is not open for the respondent to reopen the assessment merely on the basis of change of opinion and reconsideration of the same without any new and tangible material available on record.
2 (iii) No reasons to believe that income chargeable to tax escaped assessment.
2.5 The objections came to be rejected by the respondent vide order dated 20.08.2019.
3. Being aggrieved by the disposal of the objections against the notice for reopening of the assessment, the writ applicant has come up before this Court with the present writ application.
4. We have heard Mr. Chintan Dave, the learned advocate appearing for the writ applicant and Mrs. Mauna Bhatt, the learned Standing Counsel appearing for the revenue.
5. Mr. Chintan Dave, the learned Counsel appearing for the writ applicant vehemently submitted that in this case, the impugned notice and reopening proceedings are patently bad, illegal and contrary to the law. He further submitted that in view of proviso to section 151 of the Act, where an assessment under Section 143 had been made for the assessment year in question, no action could be taken for reassessment under Section 147 after the expiry of 4 years from the end of the relevant year unless it could be shown that any income chargeable to tax had escaped assessment, by reason of failure on the part of the assessee to make a return under Section 139 or in response to notice issued under Section 142(1) or to disclose fully and truly all material facts necessary for the year under consideration. The learned counsel submitted that the case of the revenue is that the assessee company failed to disclose fully and truly the facts in respect of the depreciation claimed and in the 3D report, auditor did not have mentioned the date of put to use for assets which had been acquired during the year under consideration. In this regard, he has urged that in the previous assessment proceedings, the assessee had furnished all the details of purchases of the assets and disclosed the date on which the assets were put to use and further clarified with regard to transfer of assets from new project with supporting evidences. In this circumstances, when there was a complete disclosure with regard to depreciation claimed, the reopening beyond 4 years is illegal, bad in law.
6. Mr. Chintan Dave, the learned counsel appearing for the applicant has submitted that the issuance of notice is nothing but a change of opinion as all the details were available during the course of original assessment proceedings and after verification by the Assessing Officer the claim of depreciation was allowed. Therefore, on the same set of facts without any tangible material, the reopening cannot be permitted.
7. In view of the aforesaid contention, the learned counsel for the writ application submitted that, the impugned notice as well as the order of disposing off the objections are bad, illegal and without jurisdiction and therefore, the same deserve to be quashed and set aside and accordingly, the writ application may be allowed.
8. On the other hand, Mrs. Mauna Bhatt, learned Standing Counsel appearing for the revenue has vehemently opposed the writ application, contending that while filing return of income for the year under consideration, the writ applicant had not fulfilled the condition for claiming deduction under Section 32 of the Act. In this regard, it was pointed out that though the writ applicant was knowing the requirement for claiming the benefit under Section 32, it was not brought to the notice of the respondents during the course of earlier assessment, which has resulted into escapement of income. In that view of the matter, she submitted that the auditor of assessee failed to mention date of put to use the assets during the year while submitting Form 3CD, which clearly established that the assets which had been acquired during the year under consideration, were not put to use during the under consideration. She further submitted that when it has come to the notice of the Assessing Officer that there was no full and true disclosure by the assessee, fulfilling the condition of deduction under Section 32 of the Act, the revenue is justified in reopening the assessment.
9. In view of the above contentions, the learned counsel for the revenue urged that the writ application may not be entertained.
10. Having heard the learned counsel appearing for the respective parties and having gone through the materials on record, the only question that falls for our consideration is whether the revenue is justified in reopening the assessment.
11. It is not disputed that during the previous scrutiny assessment proceedings, the Assessing Officer vide letter dated 28.11.2014 (Annexure I, page-215) had called for file copies of purchase bills of new assets and the evidence as to date on which the assets were put to use and also asked to furnish the clarification with regard to transfer of assets from new project and supporting evidences. In response to the letter dated 28.11.2014, the assessee had furnished the complete details as called for and further submitted the copies of invoices / challans / ledger accounts. It is also required to be noted that while passing the order disposing of objections filed against the notice under Section 148, the Assessing Officer has observed that "date of put to use" given by the assessee is not acceptable as it was not certified by the auditor and therefore, the objection raised by the assessee is not sustainable.
12. We take the notice of the fact that on the basis of details furnished by the assessee and after thorough verification of the same, the then Assessing Officer vide order dated 25.03.2015 framed the assessment under Section 143(3) of the Act and thought it not fit to disallow the claim of depreciation and additional depreciation amount Rs. 1,19,87,942/- for the year under consideration.
13. We have carefully examined the reasons recorded for the reopening of the assessment. The assessment is sought to be reopened mainly on the ground that assessee is not eligible to claim the depreciation and additional depreciation under Section 32 of the Act as auditor of the assessee had not mentioned the date of put to use assets, which had been acquired during the year under consideration. The Assessing Officer has noticed that the auditor has not mentioned the date in the Form 3CD and raised the inference that the assets were not used in the year under consideration.
14. In the background of the aforesaid facts, in the case on hand, we have examined all the material facts and upon plain reading of the reasons recorded, we are of the view that the impugned notice is bad in law and contrary to the Section 147 of the Act and reopening is not permissible in eye of law mainly on the ground of "change of opinion" and there was no failure on the part of the assessee to disclose fully and truly primary materials for the assessment of the year under consideration.
15. We have considered the earlier case materials of the previous assessment proceedings, more particularly, the letter dated 28.11.2014 and the explanation dated 22.12.2014 in support of the claim of depreciation under Section 32 of the Act, it cannot be stated that the assessee failed to disclose the necessary dates of put to use for assets acquired during the year under consideration. The assessee had furnished the details of the additions before 30.9.2011 and after 30.9.2011 which clearly established that there was no suppression of true facts with regard to date of use of the assets. Even this very facts having been admitted by the revenue while passing the order of disposing the objection raised by the assessee. The technical mistake of the auditor detected by the revenue is that he failed to mention the date in the Form 3CD at the time of submitting the report. We are of the view that at the relevant time, the then Assessing Officer had examined the issue at length and did not disallow the depreciation claim. Therefore, in our view, now on the same set of facts and material, which were earlier examined by the Assessing Officer, the initiation of the reassessment proceedings under Section 147 by issuing notice is nothing but a change of opinion in the hands of the Assessing Officer.
16. Mrs, Mauna Bhatt, the learned Standing Counsel for the revenue has raised the contention that principle of change of opinion would not applicable in the present case as in the previous assessment proceedings the issue of depreciation was not dealt with by the Assessing Officer while passing the order.
17. We do not agree with the contention raised by the learned counsel for the revenue. In our opinion the issue of depreciation examined by the erstwhile Assessing Officer is enough to invoke the principle of change of opinion. In this context, we may refer and rely of the judgment of this Court in case of Gujarat Power Corporation Ltd Vs. ACIT, (2013) 350 ITR 266, wherein, it was held that merely because of the Assessing Officer does not set out the details reasons for not making the dis-allowance, it cannot be inferred that the Assessing Officer has not formed an opinion on the issue. So far as the formation of opinion is concerned, all that is necessary, the matter should have been examined by the Assessing Officer. We quote para 5 and 6 of the judgment, which read thus :
"5. ********** in a situation where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition.
6. Having noticed the fact that the Assessing Officer had raised specific questions vide requisite notice dated 15.10.2010 with respect to allowability on "loss on sale of stores" and that the assesses had explained the same without any follow-up question by the Assessing Officer in this regard, in our considered view, the Assessing Officer had indeed formed an opinion about the deductability of loss on sale of stores. It is also not in dispute that no new material has come to the light on account of which the present assessment proceedings were reopened. On these facts, in our considered view, the reopening was clearly on account of change of opinion by the Assessing Officer something which is impermissible under the scheme of the Act and in the light of binding judicial precedent. In the light of there discussions and respectfully following the esteemed views of Hon'ble jurisdictional High Court in the case of Gujarat Power Corpn. Ltd. (supra), we uphold the grievances of the assessee and quash the impugned reassessment proceedings."
18. It is the contention of the revenue that the assessee has not disclosed requisite full and true material facts with regard to claim of depreciation.
19. We have perused the necessary materials produced on record as indicated above, which adequately establishes that during the previous scrutiny assessment proceedings the assessee had disclosed the necessary documents, statements along with dates with regard to the assets which were put to use during the year under consideration. The only technical mistake committed by the auditor was the failure to mention the date in the prescribed Form 3CD. The materials on record i
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ndicate that the primary facts with regard to the date of put to use of the assets had been disclosed and same was examined by the Assessing Officer at the relevant time. In this context, we may refer to the case of Calcutta Discount Company Ltd, (1961) AIR SC 372. In para-9, the Apex Court held that once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inference is have ultimately to be drawn. In the case on hand, upon disclosure made by the assessee with regard to the date for put to use of the assets, the Assessing Officer thought fit not to disallow the depreciation claimed by the assessee. Therefore, when primary materials having been disclosed bonafide, a mere technical mistake committed by the auditor, could not be said to be an "omission" or "failure" to disclose fully and truly all material facts for the assessment by the assessee. Therefore, the contention raised by the revenue that there was a nondisclosure of the material facts by the assessee has no merits. 20. In view of the aforesaid discussions made hereinabove and reasons thereof, we hold that the Assessing Officer is not justified in reopening the assessment of the assessee and he could not have issued the impugned notice under Section 148 of the Act and initiation of proceedings is without jurisdiction and contrary to law. 21. Accordingly, present writ application succeeds and impugned notice dated 27.03.2019 issued under Section 148 of the Act is hereby quashed and set aside. We have been informed that after filing the present writ application, the final assessment order has been framed by the respondent. However, once the notice is held invalid, then subsequently proceedings on the basis of the notice also cannot be sustained and therefore, the assessment order dated 22.10.2019 is also quashed and set aside.