2012 (2) TMI 284 - HC - Income Tax

Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y. - wrong cliam of depreciation since business was yet to commence no failure or omission on the part of the petitioner to furnish fully and truly all material facts Held that - Petitioner had disclosed full and true particulars relating to the claim of depreciation at the time of original assessment. The notice u/s 148 has been issued beyond the period of 4 years from the end of relevant A.Y. Therefore, primary jurisdictional condition for issue of such notice has not been satisfied Decided in favor of assessee.

Summary

Issues Involved:
1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Validity of the re-assessment order under Section 147 of the Act.
3. Alleged non-disclosure of full and true particulars by the petitioner.

Issue-wise Detailed Analysis:

1. Legality of the notice issued under Section 148 of the Income Tax Act, 1961:
The petitioner, M/s. Vatika Limited, filed a writ petition to quash the proceedings initiated pursuant to the notice issued under Section 148 of the Income Tax Act, 1961. The notice was issued on 20.03.2009 on the grounds that income chargeable to tax had escaped assessment due to the petitioner's claim of depreciation amounting to Rs.74,85,196/-. The court observed that the notice was issued beyond the period of 4 years from the end of the relevant assessment year. It was held that the primary jurisdictional condition for issuing such a notice was not satisfied as there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment.

2. Validity of the re-assessment order under Section 147 of the Act:
The petitioner contended that the re-assessment notice issued under Section 148 was without jurisdiction. The court noted that the original assessment was completed under Section 143(3) of the Act after scrutiny, and the petitioner had furnished all relevant facts and primary details regarding the claim of depreciation in response to the queries raised by the respondent during the original assessment proceedings. The court found merit in the petitioner's contention that the re-assessment was based on the same facts already disclosed during the original assessment, and there was no new information or ground to believe that the averments made by the petitioner were false or incorrect. Thus, the re-assessment order was deemed invalid.

3. Alleged non-disclosure of full and true particulars by the petitioner:
The court examined whether there was any failure on the part of the petitioner to furnish full and true particulars necessary for the completion of its assessment. It was observed that the petitioner had disclosed all primary facts relating to the claim of depreciation in its letter dated 23.11.2004, including the acquisition of plant and machinery, the setting up of the business, and the commencement of services. The court concluded that the petitioner had indeed disclosed full and true particulars at the time of the original assessment, and it was the duty of the Assessing Officer to draw appropriate inferences regarding the allowability of the claim of depreciation. The court held that the notice under Section 148 was issued without satisfying the primary jurisdictional condition, as there was no failure on the part of the petitioner to disclose material facts.

Conclusion:
The court issued a writ of certiorari quashing the notice under Section 148 of the Income Tax Act, 1961, and consequently quashed all further proceedings. The petitioner had disclosed full and true particulars at the time of the original assessment, and the notice was issued beyond the permissible period, rendering it invalid. There was no order as to costs.