2010 (10) TMI 494 - HC - Income Tax

Reopening of the assessment - U/s 143(3) read with section 147 - The Assessing Officer has accepted the claim of the petitioner while framing the assessment u/s 143(1) of the Act - Even while passing the order u/s 143(3) read with section 147 of the Act, he has referred to the previous history stating therein that the assessee had filed the return of income for assessment year 1995-96 on 29-11-1995, declaring loss of Rs. 1,25,35,115 after deducting deduction u/s 32 of Rs. 10,09,97,023 and expenses u/s 35D, amounting to Rs. 3,03,704 - Since the claim of the petitioner was accepted u/s 143(1)(a) of the Act, the said assessment was not disturbed, even after calling for the details u/s 143(2) of the Act - Despite the fact that there being an evidence on record which was not considered and under that misconception, the notice for reopening was issued, therefore, of the view that there is no basis for reopening of the assessment and even reasons recorded by him are not sufficient to reopen the assessment which is framed after considering all the relevant materials on record - Therefore, quash and set aside the notice issued for reopening of the assessment - Decided in favour of assessee.

Summary

Issues:
Challenge to notice for reopening assessment under section 148 of the Income-tax Act, 1961 based on change of opinion.

Analysis:
The petitioner filed a petition under Article 226 of the Constitution of India to challenge the notice for reopening issued under section 148 of the Income-tax Act, 1961. The petitioner claimed deduction of depreciation for a high efficiency boiler purchased at Rs. 20,00,00,000. The respondent initially accepted the claim of depreciation under section 143(1) of the Act. However, the respondent later issued a notice for reopening the assessment for the assessment year 1995-96, stating that income from business had escaped assessment. The petitioner contended that the notice for reopening was based on a mere change of opinion, which is impermissible under section 148 of the Act.

The petitioner argued that the Assessing Officer had already formed an opinion while allowing the depreciation claim, and hence, there was no valid reason for reopening the assessment. The petitioner further claimed that the reasons recorded for reopening were vague and lacked consideration of the evidence on record. The respondent, on the other hand, asserted that the notice for reopening was valid as it fell within the four-year period and was based on audit reports.

The Court examined the submissions and evidence on record. It noted that the Assessing Officer had applied his mind while accepting the petitioner's claim during the original assessment under section 143(1) of the Act. The Court found that the Assessing Officer had referred to previous history and details provided by the petitioner before accepting the claim. Despite this, the notice for reopening was issued without considering all the relevant materials on record, including evidence of installation before 31st March, 1995. The Court concluded that there was no valid basis for reopening the assessment under section 147 of the Act and quashed the notice for reopening.

In light of the above analysis and the provisions of the Act, the Court allowed the petition, making the rule absolute and setting aside the notice for reopening the assessment without any order as to costs.