Reassessment on ground that assessee had applied SLM instead of WDV of dep. is change of opinion: HC

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Reassessment on ground that assessee had applied SLM instead of WDV of dep. is change of opinion: HC

 

There was an interesting issue before Bombay HC in the case on the reopening of assessment for change of opinion . The case detail is as under:

Sunjewels India (P.) Ltd.

[2022] 141 / 16 (Bombay)

Let us have a short over view of the case:

The case was with regard to Section 32, read with section 148 of the Income-tax Act, 1961 on allowability of Depreciation.

-The issue was with regard to Allowance/rate of Straight line method v. Written Down Value method &  Assessment year involved was 1998-99

 – Assessee was a company engaged in business of manufacturing and export of gold jewellery

– It filed its return of income under section 139(1) declaring total income at Rs. Nil after claiming depreciation on straight line method

– It was stated so in notes to account in balance sheet filed along with return of income in respect of exemption under section 10A

– Assessment order under section 143(3), after scrutiny, was issued on 31-1-2001

 – Thereafter, notice under section 148 was issued to assessee, proposing to reassess income of assessee

 – However, it was found that there was not even an assertion that there was failure on part of assessee to disclose fully and truly all material facts, which was a mandatory requirement to assume jurisdiction by Assessing Officer

 – Assessing Officer proceeded on ground that assessee had applied straight line method instead of written down value method in respect of depreciation which was a clear change of opinion

 – The question before court was Whether therefore, there being absolutely no failure on part of assessee to disclose facts, reopening of assessment was not justified

The court held it as Yes. The court held that where assessee filed its return of income under section 139(1) declaring total income at Rs. Nil after claiming depreciation on straight line method and it was stated so in notes to account in balance sheet filed along with return of income in respect of exemption under section 10A and assessment order after scrutiny was issued, reopening of assessment on ground that assessee had applied straight line method instead of written down value method in respect of depreciation being a clear change of opinion was not justified

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