2008 (6) TMI 596

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..... n though income chargeable to tax has escaped by virtue of claiming excess depreciation and the Tribunal has not adjudicated the other issues raised by the assessee is valid ? 2. The facts culled out from the records proceed as follows : The relevant assessment year is 1998-99. The assessee company filed a return of income for the said assessment year declaring a net income of ₹ 1,54,640 on 30th Nov., 1998. The assessment was completed under section 143(3) of the IT Act. Later on, the AO, taking a view that there was an escapement of income, issued a notice under section 148 of the IT Act on 14th March, 2001 calling upon the assessee to file a return of income for the said assessment year. The reason sought for by the assesse .....

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..... xcess of what was eligible to the assessee. But this reason did not really exist, as the assessee had filed a revised return within the time allowed under section 139(5) of the Act on 31st March, 1999 and this fact of filing of revised return has been ignored by the assessing authority. 3. It is relevant to state here that while making the reassessment, the AO has made certain other additions also. Learned counsel for the Revenue assailed the order of the Tribunal on the ground that the filing of the revised return for the asst. yr. 1998-99 is a consequence of wrong claim of depreciation made for the asst. yr. 1996-97. That return cannot be treated as valid return. The Tribunal, while allowing the appeal, has not considered whether the .....

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..... escapement of assessment, the assessment can be reopened only in cases where the AO has reason to believe that income chargeable to tax has escaped assessment. The belief must be based on some prima facie materials. [See Raymond Woollen Mills Ltd. vs. ITO [1999] 152 CTR (SC) 418 : [1999] 236 ITR 34 (SC)]. 8. The Tribunal, the ultimate fact finding authority, has concluded that on the date when the AO decided to reopen the assessment, he had reason to believe that the escapement of assessment of income was with regard to claim of depreciation in excess of what was eligible to assessee. That reason was not in existence when the AO initiated reopening proceedings under section 147 of the Act because of the reason that the assessee had alre .....

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