ITAT declined to direct reopening as Department have enough powers to tax escaped income

Tribunal declined to issue direction to AO to reopen cases under section 147 as Department have enough powers u/s 147, 263 and 154 to tax escaped income

ABCAUS Case Law Citation:
ABCAUS 2701 (2019) (01) ITAT

Important Case Laws Cited/relied upon:
ITO Vs. Muralidhar Bhagwan das 52 ITR 335

In the instant case, the appellant assessee company had claimed the depreciation on the tempo at the rate 50% whereas the Assessing Officer (AO)  was of the view that the assessee was eligible for depreciation at the rate of 15%.

Accordingly, the AO disallowed excess depreciation claimed by the assessee and added to the total income of the assessee.

Aggrieved assessee preferred an appeal before the Ld. CIT(A) who confirmed the order of the AO.

Before the Tribunal, the assessee agreed for the addition of the amount representing the excess depreciation claimed beyond 15% on the value of the impugned assets. The assessee further agreed that the assessee is eligible for depreciation at the rate of 15% on the WDV brought forward from the earlier year and the tempos purchased in the year under consideration after adjusting the sale of the tempo.

The Department requested the bench to give a direction to reopen the cases where the assessee had claimed excess depreciation.

The Tribunal observed that vast powers have been given to the income tax authorities under section 147, 263 and 154 of the Income Tax Act, 1961 (the Act) to bring the income under the net of tax which escaped assessment. But the authorities below have not exercised their powers by resorting to the provisions of these sections in respect of those where the assessee has claimed excessive depreciation on the tempos.

The Tribunal declined to adjudicate the contention raised by the Revenue for issuing a direction to the AO to reopen the cases under section 147 of the Act on account of the excess claim of depreciation.

In this regard, the Tribunal relied upon the judgment of Hon’ble Supreme Court of India wherein it was held as under:

“Section 33(4) of 1922 Act only refers to a finding or direction made by an appellate authority and does not itself confer any power on an appellate authority to make a finding or direction. Indeed, section 34 of 1922 Act deals with entirely a different aspect, that of empowering an ITO to bring to assessment escaped income, and has no concern with the powers of an appellate authority. The provision which deals with the powers of an appellate authority is section 31 of 1922 Act”.

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