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TMI Blog2012 (11) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned notice issued under section 148 of the Act cannot be sustained - petition succeeds and is, accordingly, allowed. The impugned notice dated February 27, 2003, issued by the respondent seeking to reopen the assessment of the petitioner for the assessment year 1996-97 is hereby quashed and set aside. - 8467 of 2003 - - - Dated:- 12-6-2012 - AKIL KURESHI, HARSHA DEVANI MS., JJ. JUDGMENT Ms. Harsha Devani J.- 1. This petition challenges notice dated February 27, 2003, issued by the respondent under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), seeking to reopen assessment of the petitioner for the assessment year 1996-97. 2. The petitioner, a partnership firm, filed its return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to tax has escaped assessment, but that the Assessing Officer wants to make a fishing inquiry upon scrutiny of the material on record to examine as to whether any income chargeable to tax has escaped assessment. 3.2 Next it was contended that the reopening of assessment is also bad on the count that it is based upon a mere change of opinion inasmuch as during the course of the assessment proceedings under section 143(3) of the Act, the petitioner had submitted detailed written submissions with supporting evidence explaining the loss by embezzlement of funds. The Assessing Officer after due application of mind upon being convinced that the petitioner was entitled to the said claim had given set-off for the loss of Rs. 9,59,423 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for bad debts having been erroneously allowed by the Assessing Officer at the relevant time on the basis of entries made in the profit and loss account, the Assessing Officer is justified in invoking the powers under section 147 of the Act. 5. Before adverting to the merits of the case, it may be germane to notice the legal position in this regard. It is by now well settled by a catena of decisions of the Supreme Court that in view of the proviso to section 147 of the Act, an Assessing Officer acquires jurisdiction to reopen assessment under section 147 of the Act after the expiry of a period of four years from the end of the relevant assessment year only if he has reason to believe that income chargeable to tax has escaped assessment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be reflected in the reasons recorded by him as contemplated under sub-section (2) of section 148 of the Act. It would, therefore, be necessary to advert to the reasons recorded for reopening the assessment. 7. The record of the case indicates that the petitioner had by a letter dated April 11, 2003, requested the Assessing Officer to furnish a copy of the reasons recorded for reopening the assessment, pursuant to which the Assessing Officer had by a letter dated May 29, 2003, informed the petitioner that the reason for reopening the assessment is to scrutinise the assessee's claim for the bad debts of Rs. 9,59,423 which had been claimed by it on account of embezzlement of funds by the accountant during the financial year 1993-94. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of section 147 of the Income-tax Act". 8. From the reasons communicated to the petitioner it is apparent that all that is stated is that the Assessing Officer wants to scrutinise the petitioner's claim for bad debt of Rs. 9,59,423 on account of embezzlement of funds by the accountant. Even if the detailed reasons are seen, it is evident that it is the case of the Assessing Officer that the claim of the petitioner which was not in consonance with the abovereferred decisions of the Supreme Court had been wrongly allowed by the then Assessing Officer at the relevant time. In the entire reasons recorded there is not even a whisper as regards any failure on the part of the petitioner to make full and true disclosure of all material facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ascertain as to whether or not income chargeable to tax has escaped assessment. The learned counsel for the petitioner is, therefore, justified in contending that even on the merits the reopening of assessment is not valid. 10. In so far as the applicability or otherwise of the decisions of the Supreme Court on which reliance has been placed by the Assessing Officer for the purpose of reopening the assessment, firstly, the said decisions are old decision of the year 1965 and as such are deemed to have been within the knowledge of the Assessing Officer at the time when the original assessment came to be framed, and, secondly, in the light of the fact that the conditions precedent for exercise of powers under section 147 of the Act aft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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