2008 (7) TMI 192 - HC - Income Tax

Reopening of assessment u/s 147 - claim for special deduction u/s 80HH and 80-I was allowed after considering the material hence relief granted earlier cannot be denied mere for change of opinion on the same facts, which were available before the Assessing Officer notice after four year for withdrawal of special deduction is not valid further, it is held that successor AO cannot issue notice on the basis of reasons recorded by predecessor AO

Issues Involved:
1. Validity of notices issued under Section 148, read with Section 147 of the Income Tax Act, 1961, for reopening assessments.
2. Alleged failure of the assessee to disclose fully and truly all material facts.
3. Whether the reopening of assessments constitutes a mere change of opinion.
4. Jurisdiction and procedural compliance in issuing notices for reopening assessments.
5. Allowability of deductions under Sections 80HH and 80-I of the Act.
6. Allowability and rate of depreciation on transport vehicles.

Detailed Analysis:

1. Validity of Notices Issued Under Section 148, Read with Section 147 of the Act:
The core issue in all four petitions revolves around the validity of notices issued by the Assessing Officer for reopening assessments. The court observed that the reasons recorded for reopening the assessments for the years 1990-91, 1991-92, and 1992-93 were similar. The Assessing Officer noted that the assessee's activities of refining various oils did not amount to manufacturing or production, thus disqualifying them for deductions under Sections 80HH and 80-I. The court found that the notices for the years 1990-91 and 1991-92 were issued by an officer different from the one who recorded the reasons, rendering these notices invalid.

2. Alleged Failure of the Assessee to Disclose Fully and Truly All Material Facts:
The court examined whether there was any omission or failure on the part of the assessee to disclose all material facts fully and truly. It was noted that the assessee had been granted deductions under Sections 80HH and 80-I in previous years based on the Commissioner of Income-tax (Appeals)'s decisions. The court concluded that there was no failure on the part of the assessee to disclose material facts, as the same facts were available to the Assessing Officer at the time of the original assessments.

3. Whether the Reopening of Assessments Constitutes a Mere Change of Opinion:
The court emphasized that the reopening of assessments based on a different view taken by another Assessing Officer constitutes a mere change of opinion. The court held that such a change of opinion does not empower the Assessing Officer to issue a notice for reopening assessments beyond the period of four years.

4. Jurisdiction and Procedural Compliance in Issuing Notices for Reopening Assessments:
The court highlighted that the officer recording the reasons for reopening and the officer issuing the notice under Section 148 must be the same person. Since this was not the case for the years 1990-91 and 1991-92, the notices were deemed invalid. Additionally, for the years 1990-91, 1991-92, and 1994-95, the notices were issued beyond the period of four years, violating the proviso to Section 147.

5. Allowability of Deductions Under Sections 80HH and 80-I of the Act:
The court found that the assessee was granted deductions under Sections 80HH and 80-I in previous years based on the Commissioner of Income-tax (Appeals)'s decisions. The court held that the reopening of assessments on this ground was unjustified, as it constituted a change of opinion rather than a failure to disclose material facts.

6. Allowability and Rate of Depreciation on Transport Vehicles:
The court noted that the assessee had claimed depreciation at the rate of 40% on transport vehicles used in its own business. The court observed that this issue was academic, as the total depreciation claimed would not exceed 100% of the asset's cost over time. The court concluded that reopening the assessment on this ground was unnecessary and invalid.

Conclusion:
The court quashed the notices issued under Section 148 for the assessment years 1990-91, 1991-92, and 1994-95, as they were issued beyond the period of four years and constituted a change of opinion. The notice for the year 1992-93 was also held invalid as it was based on a change of opinion. All four petitions were allowed, and the rule was made absolute without any order as to costs.

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