1996 (6) TMI 62 - HC - Income Tax

Summary

Issues Involved:
The judgment involves issues related to the issuance of notice under section 148 of the Income-tax Act, 1961, for assessment years 1992-93 and 1993-94, based on claims made by a public limited company regarding surplus on cancellation of forward contracts and excise duty paid on certain items included in closing stock.

Assessment Year 1992-93:
The company claimed deductions for surplus on cancellation of forward contracts and excise duty paid on yarn, cloth, and engineering components included in closing stock. The Assessing Officer raised questions regarding these items, and the company provided detailed explanations supported by legal references. The Assessing Officer considered various decisions and ultimately held that there was no transfer of a capital asset on cancellation of forward exchange contracts by the company. Similarly, the claim for deduction of excise duty was accepted after considering relevant decisions, leading to the passing of an assessment order.

Assessment Year 1993-94:
For this assessment year, a notice under section 148 of the Act was issued by a new incumbent, alleging that income chargeable to tax had escaped assessment due to incorrect claims made by the company. The court observed that the reasons recorded for issuing the notice indicated a change of opinion rather than new information. It was noted that the company had fully and truly disclosed all relevant facts during the assessment process, and there was no evidence of non-disclosure. The court concluded that the notice was based on a mere change of opinion and did not amount to income escapement. Consequently, the court quashed and set aside the notices issued under section 148 for both assessment years, ruling in favor of the petitioner.

This judgment highlights the importance of full and truthful disclosure of facts during assessments and emphasizes that a mere change of opinion by the Assessing Officer does not justify the issuance of notices under section 148 of the Income-tax Act.