IMPORTANT POINT
Reopening of assessments under section 148 requires fresh tangible material; reliance on prior records or audit objections alone is insufficient.

JUDGMENT :

Bhargav D. Karia, J.

1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Ms. Maithili D. Mehta for the respondent.

2. Having regard to the issue involved which is in a very narrow compass, with the consent of learned advocates for the respective parties, the matter is taken up for hearing.

3. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili D. Mehta waives service of notice of rule on behalf of the respondent.

4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice issued under section 148 of the Income Tax Act, 1961 (For short “the Act”) dated 31.03.2021 for Assessment Year 2014-2015.

5. Brief facts of the case are that the assessee company is engaged in developing, operating, maintenance of power projects and sale of power. The petitioner had filed its return of income for Assessment Year 2014-2015 on 29.11.2014 declaring total loss of Rs.2041,13,27,813/- under the normal provisions and loss of Rs.327,21,42,998/- under section 115JB of the Act.

6. Case of the petitioner company was selected for scrutiny and questionnaires were issued which were replied by the petitioner. Thereafter notices were issued on 08.06.2016, 24.08.2016, 25.07.2017 and 13.11.2017. The petitioner replied to such notices on 23.06.2016, 16.10.2017 and 23.11.2017.

7. During the assessment proceedings, in relation to the claim of the depreciation of the petitioner, the Assessing Officer disallowed the excess depreciation of Rs.5,80,87,237/- vide assessment order dated 07.12.2017.

8. Against the assessment order, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals) which was partly allowed vide order dated 12.03.2020 and order giving effect to the same was also passed on 28.07.2020.

9. Respondent thereafter issued the impugned notice under section 148 of the Act dated 31.03.2021 seeking to reopen the assessment for the Assessment Year 2014-2015. The reasons for reopening the assessment which were supplied vide letter dated 12.05.2021 reads as under :

“2. Brief details of Information collected/received by the AO:

On verification of the case records it has been noticed from balance sheet, profit and loss account, notes on account, 3CD report and computation of income that assessee has claimed depreciation of Rs.3,3049,91,75,122/-.

It is evident from these two tables that assessee has claimed depreciation of Rs.2991,11,66,989/- on this class of assets as under:

(1) Depreciation @ 15% on Rs.18001,48,04,377/- being opening WDV of Rs.16978,10,68,589/- plus P&M of Rs.4.57.12,120/- put to use on or before 30.09.2013 plus Rs.1017.23,59,719 being increase in exchange rate liability less Rs.53,36,000 being reduction in P&M=Rs.2700,22,20,657/-,

(2) Depreciation @ 7.5% on Rs.496,07,54,080/- being P&M of Rs.459,57,93,053/- put to use on or after 01.10.2013 plus Rs36,49,61,027/- being increase in exchange rate liability = Rs.37,20,56,556/-

(3) Additional depreciation on Rs.1021,90,71,839/- 20% claimed on Rs.467,12,120/- put to use on or before 30.09.2013 plus Rs.1017,23,59,719/-being increase in exchange rate liability = Rs.204,38,14,367/-

(4) Additional depreciation 10% claimed on Rs.496,07,54,080/- being P&M of Rs.459,57,93,053/- put to use on or after 01.10.2013 plus Rs.36,49,61,027/- being increase in exchange rate liability =Rs.49,60,75,409/-

Total depreciation claimed Rs.2991 41,66,989 (2700,22,20,65737,20,56,556 + 204,38,14,367+49,60,75,409)

Note. Actual depreciation claimed and allowed is Rs.2991:11,66,989/- which is less than 30 lakh calculated which appears that assessee has mistakenly calculated by taking figure of 4 as 1.

It is clear that assessee has claimed additional depreciation on exchange rate fluctuation of Rs.1017,23,59,719/- arisen on 29.09.2013 being its liability enhanced on earlier years Imported plant and machinery acquired and put to use. It is also evident from the fact that during