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TMI Blog2006 (9) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... either in the order rejecting the objections raised by the assessee, nor in the affidavit in reply and not even before this court, the Revenue has pressed the ground for reopening the assessment on account of excess depreciation. Thus, the only ground on which the assessments are sought to be reopened in all the years is that the expenditure/loss incurred at the Bombay office cannot be allowed as there is hardly any activity from the Bombay office of the assessee. In our opinion, the reopening of the assessments based on the above ground which is totally vague and devoid of any substance cannot be the basis for reopening the assessments. – Notices are quashed - - - - - Dated:- 5-9-2006 - Judge(s) : H. L. GOKHALE., J. P. DEVADHAR. JUDG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off against the other income and the same was allowed on processing the returns of income. By the impugned notices all dated March 30, 2004, the Assessing Officer sought to reopen the assessments for the assessment years in question, so as to disallow the loss/expenditure incurred at the administrative office of the petitioner at Bombay. The reasons recorded by the Assessing Officer for reopening the assessments in all the assessment years in question are more or less similar. The reasons recorded for reopening the assessment for the assessment year 1997-98 are: "In this case, the return of income was filed on October 28, 1997 declaring total income of Rs. 28,55,120. The same was processed under section 143(1)(a) without any variation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax (Appeals) on October 4, 2004. However by an order dated March 17, 2006, the objections filed by the petitioners were rejected by the Assessing Officer. Hence, these petitions are filed to challenge the notices issued under section 148 of the Income-tax Act, 1961. Mr. Kaka, learned counsel appearing on behalf of the petitioner submitted that the reopening of the assessment on the ground that "there was hardly any activity from Bombay office" is ex facie erroneous, incorrect and contrary to the 80 days old record of the petitioner available with the Department. He submitted that the issue as to whether the loss incurred by the administrative office at Bombay is allowable or not has been considered in the assessment orders passed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were issued, the Assessing Officer had reason to believe that the income had escaped assessment. He submitted that the reasons recorded by the Assessing Officer for reopening the assessments have been approved by the Commissioner of Income-tax. In this view of the matter, he submitted that the reopening of the assessments cannot be faulted and it is open to the petitioner to agitate all the issues before the Assessing Officer and the same would be considered in accordance with law. Accordingly, Mr. Shah submitted that there is no merit in the petitions and the same are liable to be dismissed. Having considered the rival submissions, we are of the opinion that in 1 the facts of the present case, the notices issued under section 148 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has disallowed such expenditure on the ground that there is "hardly any activity from the Mumbai office". The words "hardly any activity" does not mean that there is no activity carried on at Bombay. It simply means that the business activity carried on from the Bombay office is negligible. The contention of the assessee has always been that the Bombay office is the liasion office and the same has been scrutinised and approved in the regular assessments passed under section 143(3) of the Income-tax Act for several assessment years including the assessment year 1992-93 and the assessment year 1995-96. Therefore, when the expenditure incurred at the Bombay office has been consistently allowed to be deducted for several deca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial or information based on which the Assessing Officer could form a reasonable belief that the income chargeable to tax has escaped assessment. Therefore, it is evident that the reopening of the assessments is based on pure change of opinion and there is no material whatsoever to constitute any basis for reopening the assessments. We may note that for the assessment year 2002-03 the Assessing Officer has recorded an additional ground for reopening the assessment, namely, excess depreciation has been allowed on account of failure to deduct the capital subsidy from the written down value of fixed assets while claiming depreciation. The assessee in its objection to the reopening of the assessment has clearly stated that the capital subsid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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