2002 (8) TMI 53 - HC - Income Tax

By this writ petition, the assessee-petitioner has challenged initiation of reassessment proceedings against it for the assessment years 1981-82, 1982-83, 1983-84, 1984-85 and 1985-86 by issuing notices under section 147/148 of the Income-tax Act, 1961, on March 29, 1990, on multiple grounds including that the notices are barred by time and that there exists no material on the basis of which a satisfaction about escapement of income for the relevant assessment years from tax could be reached. - in my opinion, merely a change of opinion, is not permissible for assuming jurisdiction under section 147 of the Act. Moreover, in the facts and circumstances of this case, as noticed above, when the principle regarding computation of depreciation on the acquisition valuation of the asset, i.e., Umaid Bhawan Palace, by the petitioner-company has become final for the periods prior to the period in question, and for the periods subsequent to the period in question, no useful purpose will be served in permitting the Assessing Officer to continue the reassessment proceedings now. - Accordingly, this writ petition is allowed and the notices for reopening the assessment are set aside and quashed.

Summary

Issues:
Challenging initiation of reassessment proceedings under section 147/148 of the Income-tax Act, 1961 for assessment years 1981-82 to 1985-86 based on the grounds of being time-barred and lack of material for income escapement.

Detailed Analysis:
The petitioner challenged the initiation of reassessment proceedings for the mentioned assessment years, arguing that the notices were issued without informing the reasons recorded by the Assessing Officer, a mandatory requirement under section 147 of the Act. The petitioner contended that the notices were issued in March 1990, and the writ petition was filed in September 1990. The court, upon perusal, found that the primary reason for reopening the assessments was the computation of depreciation of Umaid Bhawan Palace for the years in question.

The court noted that for the assessment years up to 1985-86, the only reason for reopening assessments was the change in the basis of depreciation computation for the asset. It was observed that no satisfaction regarding non-disclosure of material facts or default by the assessee was recorded. The court emphasized that without satisfaction by the Assessing Officer, as required by the proviso to section 147, no action could be taken after four years from the end of the relevant assessment year.

Regarding the assessment year 1985-86, the court found that the reason for reopening the assessment was merely a change of opinion, which is impermissible under section 147. The court also considered that since the principle on depreciation computation had become final for prior and subsequent periods, continuing reassessment proceedings for 1985-86 would serve no useful purpose.

Consequently, the court allowed the writ petition, setting aside and quashing the notices for reassessment for the assessment years 1981-82 to 1985-86. The court also ruled that no costs shall be awarded in this case.