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/-. 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 the FY 2013-14 (AY 2014-15) on or before 30.09.2013 (on 29.09.2013 to be exact) new P&M only of Rs.4,67,12,120 acquired and put to use, This has resulted in claiming of excess depreciation of Rs.203,11,71,943/- 3. Analysis of information collected/received: Scrutiny of records, it is noticed from balance sheet, profit and loss account, notes on account, 3CD report and computation of income that assessee has claimed depreciation of Rs.3049,91,75,122/-. As per section. 32(1)(ii) of the Act, depreciation is allowed in the case of any block of assets, such percentage on the written down value thereof as may be prescribed. As per section. 32(1)(ii) of the Act, depreciation is allowed in the case of any block of assets, such percentage on the written down value thereof as may be prescribed. As per section 32(1)(iia) of the Act, in the case of any new machinery or plant(other than ships and aircrafts), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture or production of any article or thing or in the business of generation, transmission or distribution) of power, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) of section 32(1) of the Act. As per proviso below section 32(1) of the Act. where an asset referred to in clause (ii) or clause(ii) or clause (iia) or the first proviso to clause (iia), as the case may be is acquired by the assessee during the previous year and is put to use for the purposes of business or profession for a period of less than one hundred and eighty that previous year, the deduction under this sub-section in respect of such asset shall be restricted to fifty percent of the amount calculated at the percentage prescribed for an asset under clause (1) or clause(ii) or clause (iia), as the case may be. As per section 43A of the Act, notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset in any previous year from a country outside India for the purposes of his business or profession and in consequence of a change in the rate of exchange during any previous year after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency (as compared to the liability existing at the time of acquisition of the asset) at the time of making payment (a) towards the whole or a part of the cost of the asset; or (b) towards repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly in any foreign currency specifically for the purpose of acquiring the asset along with interest, if any. the amount by which the liability as aforesaid is so increased or or reduced during such previous year and which is taken into account at the time of making the payment, irrespective of the method of accounting adopted by the assessee, shad be added to or as the case may be, deducted from the actual cost of the assets and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset as aforesaid. The combined reading of above mentioned provisions gives the following conclusions: 1. Additional depreciation @ 20 percent (10 percent, if put to use less than 180 days in the year of acquisition) of cost of acquisition of new plant and machinery is allowable. 2. Effect of fluctuation in exchange rate on liability in foreign currency for acquiring a plant and machinery from outside India or foreign loan for such acquisitions of plant and machinery has to be given in written down value of assets and depreciation is allowable accordingly. 3. Additional depreciation is not allowable on addition in value of old plant and machinery due to exchange rate fluctuation as it is allowable only on new machinery acquired and put to use during the year. 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.4,67,12,120/- 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 (2700,22,20,657 + 37,20,56,556 + 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 the FY 2013-14 (AY 2014-15) on or before 30.09.2013 (on 29.09.2013 to be exact) new P&M only of Rs.4,67,12,120 acquired and put to use. This has resulted in claiming of excess additional depreciation of Rs.203, 11,71,943/-.” 10. The petitioner filed objections against the reasons recorded on 05.07.2021 which were disposed of vide order dated 09.11.2021. 11. Respondent simultaneously issued notice under section 142(1) of the Act on 9.11.2021 itself asking the petitioner to supply the details in relation to reassessment by 24.11.2021. 12. Being aggrieved by the impugned notice under section 148 of the Act for reopening the assessment for Assessment Year 2014-2015 and the impugned order disposing of the objections raised by the petitioner, the petitioner has preferred the present petition. 13. Referring to the reasons recorded, learned advocate Mr. B.S. Soparkar submitted that there is no fresh tangible material distinct from what was made a part of the assessment proceedings being recorded in the reasons and reopening is sought to be made based on material already on record. It was submitted that in absence of fresh tangible material after the scrutiny assessment is over, reopening in such circumstances is not permissible. Reliance was placed on the decision in case of Shanti Enterprise reported in (2016) 76 taxmann.com 184. 14. It was further submitted that as per proviso to section 147 of the Act, reopening beyond the period of four years from the end of relevant assessment year is also not tenable as there is no failure on part of the assessee to disclose fully and truly all facts necessary for the assessment. It was submitted that on perusal of the above reasons recorded, it clearly shows that the case records available was scrutinised and only on basis of audit objection, the reopening is made without there being any independent application of mind on part of the Assessing Officer. It was submitted that on perusal of the above reasons recorded, it clearly shows that the case records available was scrutinised and only on basis of audit objection, the reopening is made without there being any independent application of mind on part of the Assessing Officer. It was also pointed out that there is no reason to reopen the assessment as there is no failure on part of the petitioner to disclose any material relevant for assessment or any allegation to that effect is made in reasons recorded. Reliance was placed on the following decisions : (i) Intercontinental (India) reported in (2016) 73 taxmann.com 232 (Gujarat) (ii) Jivraj Tea Ltd. reported in (2016) 386 ITR 298 , (iii) Paladiya Brothers reported in 376 ITR 576, and (iv) Rantnamani Metals & Tubes reported in 371 ITR 301. 15. It was further submitted that the assessment has been reopened due to audit objection, which was not acceptable to the Assessing Officer. Reliance was placed on the decision in case of Reckitt Benckiser Healthcare India (P.) Ltd. reported in (2017) 392 ITR 336. 16. On the other hand, learned Senior Standing Counsel Ms. Maithili Metha submitted that the petitioner has claimed depreciation on the amount capitalised on account of Foreign Exchange Fluctuation which could not be allowed under the provisions of section 32(1) of the Act. It was pointed out from the assessment order that such aspects of claiming depreciation on foreign exchange fluctuation was never an issue during the course of regular assessment and the Assessing Officer has only considered the excess depreciation claimed by the assessee on depreciation capitalised during the project development phase. It was therefore, submitted that the respondent Assessing Officer after application of mind has come to the conclusion that the assessee could not have claimed depreciation on Foreign Exchange fluctuation. 17. Learned Senior Standing Counsel Ms. Mehta referred to the following averments in affidavit in reply filed on behalf of the respondent in support of her submissions : “6. Without prejudice to the above, the para-wise reply to the petition is as under: (i) With reference to paragraphs 1 to 2.6 of the petition, the contents of the said paragraphs are factual in nature and hence do not warrant any specific response from the Respondents. However, I state and submit that the contention raised by the petitioner is without any base and not tenable in law. However, I state and submit that the contention raised by the petitioner is without any base and not tenable in law. The notice u/s. 148 of the Act has been issued to the petitioner after following the due procedure of law mandated in the Income-tax Act, 1961. All the statutory requirements as per the Income-tax Act have been followed prior to the issuance of notice. The Assessing officer has recorded the reasons in writing after due application of mind and forming independent opinion. (ii) With reference to paragraphs 3 (3.1 to 3.4) of the petition, I deny the contents of the said para in its entirety. I state that the contention raised by the assessee is without any base and not tenable in law. The notice u/s. 148 of the Act has been issued to the assessee after following the due procedure of law mandated in the Income-tax Act, 1961. All the statutory requirements as per the Income-tax Act have been followed prior to the issuance of notice. The Assessing officer has recorded the reasons in writing after due application of mind and forming independent opinion. The procedural requirements such as proper recording of reasons, issuing of notices within limitation date and forwarding of reasons have been met. Notice u/s 148 was issued after recording reasons as per provisions of sub-section (2) of section 148 read with section 151 of the Income Tax Act. Necessary approvals of the competent authority were also taken before such reopening proceedings. Further the, objections raised by the assessee against the Notice issued u/s. 148 of the Act disposed off in accordance with the guidelines laid down by the Hon'ble Apex Court in the case of GKN Driveshaft (India) Ltd. V/s. ITO (2003) 259 ITR 19 (SC) and guidelines laid down by the Hon'ble High Court in the case of Shakari Khand Udhyog Mandal Ltd. Vs. ACIT in the Special civil application No. 3955 of 2014. Therefore, the Assessing officer has recorded his reasons in writing after due application of mind and forming independent opinion. Hence, notice u/s. 148 of the Act dated 31.03.2021 and order dated 09.11.2021 of preliminary objections disposed are not bad, illegal, contrary to law. The petitioner's contention regarding change of opinion is found to be devoid of any merit. Therefore, the Assessing officer has recorded his reasons in writing after due application of mind and forming independent opinion. Hence, notice u/s. 148 of the Act dated 31.03.2021 and order dated 09.11.2021 of preliminary objections disposed are not bad, illegal, contrary to law. The petitioner's contention regarding change of opinion is found to be devoid of any merit. The AO on verification of the details has noticed that the assessee has wrongly claimed additional depreciation of Rs.203,11,71,943/- on exchange rate fluctuation of Rs.1017,23,59,719/-. Considering the above facts, the AO has reasonable belief that by omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, the income of the assessee has escaped assessment. The submission of the assessee that all the details are in the file and the present action of the AO is only change of opinion is also not acceptable. Explanation-1 of Section 147 of the Act provides that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclose within the meaning of the foregoing proviso. If 'reason to belief’ of the Assessing Officer is founded on an information which might have been received/obtained from proper verification of case records by the Assessing Officer after completion of assessment, it may be a sound foundation for exercising power u/s. 147 r.w.s. 148. Reliance is also placed on the decision in the case of Ram Prasad v. ITO [1995] 82 Taxman 199 (All.) where it is held that "there is nothing in section 147 to suggest that an Assessing Officer cannot reopen as assessment where he had failed to investigate and find out truth at initial stage." Thus, it is seen that when an income liable to tax has escaped assessment in the original assessment proceedings, he has jurisdiction to reopen the assessment. In view of the above, the assessee's objection in this respect is not tenable in law. (iii) With reference to paragraphs 3.5 to 3.8 of the petition. I deny the contents of the said para in its entirety I state that the contention raised by the assessee is without any base and not tenable in law. In view of the above, the assessee's objection in this respect is not tenable in law. (iii) With reference to paragraphs 3.5 to 3.8 of the petition. I deny the contents of the said para in its entirety I state that the contention raised by the assessee is without any base and not tenable in law. Scrutiny of records and from balance sheet, profit and loss account, notes on account, 3CD report and computation of income, it revealed that the assessee has claimed depreciation of Rs. 3049,91,75,122/-. However, on the basis of analysis of records and on the basis of facts and after proper investigation from the materials on record, it is substantiated that during the year under consideration, the assessee has wrongly claimed additional depreciation 203,11,71,943/- fluctuation on of exchange of Rs. rate Rs.1017,23,59,719/-. Hence, it is found that income of Rs.203,11,71,943/- for the year under consideration has escaped assessment within the meaning of section 147 of the I.T. Act and is required to be disallowed. The contention raised by the petitioner is not acceptable. It is well settled that audit objection on the point of fact can be a valid ground for reopening of assessment. In this regard reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT vs. P.V.S. Beedies Pvt. Ltd (237 ITR 13). The Hon'ble Supreme court ruled that, We are of the view that both the Tribunal and the High Court were in error in holding that the information given by internal audit party could not be treated as information within the meaning of Section 147(b) of the Income Tax Act. The audit party has merely pointed out a fact which has been overlooked by the Income Tax Officer in the assessment. The dispute as to whether reopening is permissible after audit party expresses an opinion on a question of law is now being considered by a larger Bench of this Court. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law. In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law." In view of the above settled legal position, the objection raised by the assessee on this count has not merits.” 18. Having heard the learned advocates for the respective parties and considering the facts of the case, it is apparent from the perusal of the reasons recorded that the Assessing Officer has formed a reason to believe only on the basis of material available on record in absence of any fresh tangible material having live nexus with the reasons recorded. It is also not in dispute that there is no failure on part of the assessee to disclose fully and truly all material facts relevant for assessment in absence of any allegation or even remote reference to that effect made in the reasons recorded. On perusal of the assessment order under section 143(3) of the Act, the Assessing Officer in the regular course of assessment has considered the issue of depreciation and has chosen to make addition only on the point of depreciation claimed on depreciation on the project development phase which clearly shows that the Assessing Officer after considering the claim of entire depreciation has made addition only on excess depreciation claimed by the assessee on the above issue. 19. In view of above facts and considering settled legal position, the impugned notice under section 148 of the Act is therefore, not tenable and is accordingly quashed and set aside. Consequently order disposing of the objections raised by the petitioner also stands quashed and set aside. 20. Petition is disposed of. Rule is made absolute to the aforesaid extent. No order as to cost.