1995 (9) TMI 24 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notice u/s 148 of the Income-tax Act, 1961.
2. Application of mind by the Assessing Officer.
3. Change of opinion and its impact on jurisdiction u/s 147.

Summary:

1. Validity of Notice u/s 148:
The petitioner challenged the notice dated February 23, 1995, issued by the Assessing Officer requiring the petitioner to furnish the return for the assessment year 1991-92 u/s 148 of the Income-tax Act, 1961. The notice stated that the deduction u/s 80P(2)(d) was wrongly allowed due to the provisions of section 80AB, as the net result of the bank interest and commission was an expenditure, not income.

2. Application of Mind by the Assessing Officer:
The petitioner contended that the notice was issued without the Assessing Officer applying his mind to the facts, leading to a mere change of opinion, which does not confer jurisdiction u/s 148. The court noted that the Assessing Officer had previously considered the provisions of section 80AB while allowing the deduction u/s 80P(2)(d) in earlier assessments. The court found that the Assessing Officer had consistently treated the interest income from investments without adjusting the interest paid on other accounts, indicating a conscious decision.

3. Change of Opinion and Jurisdiction u/s 147:
The court observed that the Assessing Officer's action of issuing the notice appeared to be a mere change of opinion, which is not a valid ground for assuming jurisdiction u/s 147. The court referenced the Division Bench decision in VXL India Ltd. v. Asst. CIT, which held that a mere change of opinion does not justify action u/s 148. The court concluded that the impugned notice was issued without due application of mind and was arbitrary and unreasonable.

Conclusion:
The petition was allowed, and the impugned notice dated February 23, 1995, was quashed. The court ruled that the Assessing Officer's action was based on a mere change of opinion and lacked the necessary application of mind, thus failing to meet the requirements for assuming jurisdiction u/s 147. Rule was made absolute with no order as to costs.