2003 (9) TMI 47 - HC - Income Tax

Notice of reassessment reason to believe - relevant AY is 1997-98 - It is not in dispute that for the subsequent AY 1998-99 the AO has already determined that the relevant agreements executed by the petitioner were with a view to finance the vehicles and that those were not leasing agreements. That finding of the AO was affirmed by the CIT (Appeals). Feeling aggrieved by the orders of the CIT (Appeals) the petitioner has preferred an appeal before the Income-tax Appellate Tribunal which is pending - In view of the findings recorded by the AO in the case of the assessee for the AY 1998-99 we are clearly of the view that the AO had sufficient reason to believe to issue a notice u/s 148

Summary

Issues:
1. Reopening of assessment for the relevant assessment year based on depreciation claimed on alleged leased vehicles.
2. Validity of the notice issued under section 148 of the Income-tax Act, 1961.
3. Assessment of income for the relevant assessment year 1997-98.

Analysis:
1. The judgment addresses the issue of reopening the assessment for the relevant year due to the depreciation claimed on alleged leased vehicles. The Assessing Officer concluded that the depreciation claimed was not valid as the lease arrangement was considered as financing, not leasing. The petitioner objected to the reopening, but the objections were rejected by the Assessing Officer in a detailed order. The court noted that for the subsequent assessment year, it was already determined that the agreements were for financing, not leasing. The court upheld the Assessing Officer's reason to believe that income had escaped assessment, allowing the notice under section 148 of the Act to stand.

2. The validity of the notice issued under section 148 of the Income-tax Act, 1961 was challenged by the petitioner. The court considered the Assessing Officer's findings for the subsequent assessment year, affirming that the agreements were for financing, not leasing. Despite the petitioner's objections, the court found that the Assessing Officer had sufficient reason to believe that income had escaped assessment for the relevant year. The court emphasized that the petitioner could raise all pleas before the assessing authority and have the right to appeal if aggrieved, declining to interfere with the notice under section 148 at that stage.

3. The judgment also focused on the assessment of income for the relevant assessment year 1997-98. The court highlighted that the Assessing Officer's findings for the subsequent assessment year supported the reason to believe that income had escaped assessment. The court emphasized the importance of following statutory remedies under the Act, allowing the petitioner to raise all pleas before the assessing authority and exercise the right to appeal if needed. Ultimately, the court dismissed the writ petitions, affirming the validity of the notice under section 148 of the Act and the Assessing Officer's actions.