ORDER
M.K. Sarkar, A.M.:
Both the appeals relating to assessment years 1993-94 and 1994-95 are against the order passed by the assessing officer under section 147. The appellant- company, in its grounds of appeal, has basically challenged the reopening of assessment which was upheld by the Commissioner (Appeals) in his order dated 20-8-2002.
2. The facts of the case are that the assessee purchased 30 number of light commercial vehicles in the assessment year 1993-94. These vehicles were given on lease to DCM Financial Services and such vehicles were sub-leased to individual truck owners and were used for commercial hiring. Clause 3(h) of the agreement of lease furnished with the paper book at p. 17 stipulated that the vehicles shall be registered as public transport vehicles and shall be maintained as per the relevant rules of the Motor Vehicle department of the relevant States.
3. In its returns for assessment years 1993-94 and 1994-95, the assessee claimed higher rate of depreciation on the ground that the vehicles were used for public/ commercial hiring and all statements with requisite information for claiming depreciation at higher rate were filed along with the returns. The assessment for assessment year 1993-94 was taken up for scrutiny and was completed under section 143(3) accepting the claim of higher rate of depreciation. The assessment for assessment year 1994-95 was, however, completed under section 143(l)(a) by issuing the intimation.
4. Later on, the assessing officer reopened both the assessments on the ground that depreciation was wrongly allowed at a higher rate since the assessee itself was not using the vehicles for commercial hiring but was realising only lease rent whereas as per the assessing officer, for the purpose of claiming higher rate of depreciation, the assessee should itself have used the vehicles for public/commercial hiring.
5. The assessee contended that the vehicles were used for public/commercial hiring by the sub-lessee was not disputed and that it was the use of the vehicles which was determinative for the purpose of allowance of depreciation and not who used the vehicles. The assessee filed copy of lease agreement and certificate from the motor vehicle department showing that the vehicles were registered with the registrar as public transport vehicles.
6. The assessing officer appears to have reopened the assessment on the basis of a finding of Hon’ble Calcutta High Court in the case reported in Soma Finance & Leasing Co. Ltd. v. CIT (2000) 244 ITR 440 (Cal). In this case the Hon’ble Calcutta High Court held that in view of the finding of the income tax authorities that the vehicles were not used by the assessee on hire, the admissible depreciation was only 30 per cent and not 40 per cent as claimed by the assessee. This case was on the basis of rectification under section 154, whereas in the present case, the assessing officer reopened the assessment after having accepted the contention of the assessee that higher depreciation was allowable. Therefore, the assessee contended that the facts of the two cases are different and, therefore, the ratio of the decision of the Hon’ble Calcutta High Court (cited supra) would not be applicable in the present case. On the other hand, the assessee referred to the decision of the jurisdictional High Court in the case of Allahabad bank v. CIT (1993) 199 ITR 664 (Cal) in which it has been held by the Hon’ble High Court that when statement claiming the depreciation was filed along with the return and depreciation was allowed on the basis of such statement in the original assessment, it could not be said that the assessing officer had not applied his mind and there was non-disclosure of facts. It was also held that reopening of the case was bad in law. The Hon’ble High court also held that there was mere change of opinion on the part of the assessing officer. The condition precedent for reopening the assessment under section 147(b) of the Act was not fulfilled in the case and accordingly, the reassessment proceedings would not be said to have been validly initiated.
7. The learned authorised representative, appearing on behalf of the assessee, also referred to the decision of the Hon’ble Gujarat High Court in the case of CIT v. Gujarat Ginning & Manufacturing Co. Ltd. (1994) 205 ITR 40 (Guj) in which also it had been held that once the assessee had disclosed all the material facts in a proceeding, the assessment could not be reopened under section 147. The decision of the Hon’ble Delhi High Court in the case of CIT v. Bansal Credits Ltd. & Ors. (2003) 259 ITR 69 (Del) was also referred. ‘In this case the Hon’ble Delhi High Court had held that higher rate of depreciation would be available for the business of leasing out motor vehicles. It was held that on a plain reading of section 32 of the Act and entry III(2)(ii) in Appendix I to the Rules, it was clear that it is the end user of the specified asset which is relevant for determining the percentage of depreciation. Section 32 requires that the assets should be used for the purpose of the assessee’s business and the entry in the appendix refers to the user it should be put to. Once it is accepted that the leasing out of the vehicles is one of the modes of doing business by the assessee and in fact the income from such leasing is treated as business of the assessee, it would be clearly contradictory in terms to hold that the vehicles in question were not used wholly for the purpose of assessee’s business. It was also mentioned that the department went in appeal before the Supreme Court against the decision of the Hon’ble Delhi High Court in the case reported in (2003) 259 ITR 69 (Del) (supra) and that the Hon’ble Supreme Court had declined to admit the SLP which was reported in (2003) 263 ITR 3 (St). Hence, it was argued that the judgment of the Hon’ble Delhi High Court (supra) has become final. The Hon’ble Supreme Court declined to grant SLP to the department. In this decision the Hon’ble Supreme Court, after referring to the arguments of learned authorised representative, held that the reopening itself was bad in law. There was no failure on the part of the assessee to disclose in the covering letter or material necessary for assessment and further in a case here two views are possible, the one view which was legally sustainable is taken, there cannot be any satisfaction of the assessing officer that the income has escaped assessment and on mere change of opinion, the assessment cannot be reopened under section 147. Reference was also made to the decision of the Hon’ble Delhi High Court in the case of Jindal Photo Films Ltd. v. Dy. CIT & Anr. (1998) 234 ITR 170 (Del) in which it was held that mere change of opinion would not provide jurisdiction to the assessing officer to initiate proceedings under section 147. The learned authorised representative, appearing on behalf of the assessee relied on the orders of the authorities below.
8. We have considered the rival submissions. Apart from all the cases cited by learned authorised representative, on behalf of the assessee, we had an occasion to go through the decision of Hon’ble Supreme Court in the case of CIT & Anr. v. Foramer France (2003) 264 ITR 566 (SC), where it has been held that reassessment cannot be initiated on the basis of mere change of opinion.
9. Having taken into consideration the decisions of several High Courts and that of the Hon’ble Supreme Court, we are of the view that in this case what the assessing officer actually did was only changed his opinion while initiating the proceedings under section 147. Full facts regarding the claim of depreciation at higher rate was available before the assessing officer in assessment year 1993-94 where the assessment was done after scrutinising all the facts and the assessing officer has consistently taken a view that higher depreciation was available. If subsequently he changed his view that, higher depreciation was not available, he should not take recourse to section 147 in view of the decisions of various High Courts and the view taken by the Apex Court in this regard. Thus, we find that the authorities below were not within their rights to initiate proceedings under section 147 far less making an assessment on the basis of a mere change of opinion. In reversing their orders, we allow the grounds taken by the assessee.
10. In the result, the appeals of the assessee are allowed.