Gujarat High Court
Birla Vxl Ltd. vs Assistant Commissioner Of Income Tax on 7 September, 1995
Equivalent citations: [1996]217ITR1(GUJ)
JUDGMENT Rajesh Balia, J.
1. The petitioner challenges in this petition reassessment notice dt. 31st March, 1995, issued by the Assessing Officer (AO) under s. 148 r/w s. 147 of the IT Act, for the asst. yr. 1990-91.
2. The reasons recorded by the AO for issuing notice reads as under :
"The assessee-company filed its return of income on 28th Dec., 1990, declaring total income of Rs. 1,80,72,380 which was revised to Rs. 1,89,22,173 by way of revised return filed on 30th Dec., 1991. Income was assessed at Rs. 1,89,22,173 by way of order under s. 143(3), dt. 30th March, 1993, which was the income computed as per the special provisions under s. 115J of the Act. The assessment order was disputed in appeal and after giving effect to the CIT(A)'s order the income was determined at Rs. 1,89,22,173 as per the provisions of s. 115J. While working out the book profit under s. 115J certain items were excluded. However, as per the provisions of s. 115J these items were required to be included in the book profit. These are IT refund of Rs. 28.20 lacs credited to P&L appropriation account which has been excluded, amount Rs. 1.77 lacs being depreciation revaluation reserve which has been deducted in computing the book profit. Also incorrect set off of investment allowance has been given.
I, therefore, have reasons to believe that income has escaped assessment to the extent mentioned above. Accordingly notice under s. 148 is issued."
3. Learned counsel for the parties state that for identical reasons, notice under s. 148 r/w s. 147 had been issued to the petitioner for the asst. yr. 1989-90 also on 18th March, 1994, which was challenged by way of Special Civil Application No. 6291 of 1994. The said petition has been decided on 26th April, 1995, in favour of the petitioner by which the notices for reassessing the income for the asst. yr. 1989-90 had been quashed by holding that the essential requirement for initiating proceedings under s. 148 of the Act is that the AO must have reasons to believe that any income chargeable to tax has escaped assessment for any assessment year. Expln. (2) to s. 147 of the Act as appended to newly substituted s. 147, makes certain provisions where in certain circumstances, the income is deemed to have escaped assessment giving jurisdiction to the AO to act under the said provision. Another requirement which is necessary for assuming jurisdiction is that the AO shall record his reasons for issuing notice. This requirement necessarily postulates that before the AO is satisfied to act under the aforesaid provisions, he must put in writing as to why in his opinion or why he holds belief that income has escaped assessment. "Why" for holding such belief must reflect from the record of reasons made by the AO. In a case where AO holds opinion that because of excessive loss or depreciation allowance the income has escaped assessment, reasons recorded by the AO must disclose that by what process of reasoning, he holds such belief that there has been excessive loss or depreciation allowance has been computed in original assessment. Merely saying that excessive loss or depreciation allowance has been computed without disclosing reasons which led the assessing authority to hold such belief, in our opinion, does not confer jurisdiction on the AO to take action under ss. 147 and 148 of the Act. We are also of the opinion that howsoever wide the scope of taking action under s. 148 of the Act be, it does not confer jurisdiction on change of opinion on interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion whether there has been excessive loss or depreciation allowance or there has been underassessment at lower rate or for applying other provisions of Expln. (2), there must be material that have nexus to hold opinion contrary to what has been expressed earlier. Scope of s. 147 of the Act is not for reviewing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having a second thought about inferences drawn earlier. According to the learned counsel for the parties, this decision governs this petition as well.
4. In the aforesaid circumstances, following the decision in Special Civil Application No. 6291 of 1994 decided on 26th April, 1995 [reported as VXL India Ltd. vs. Asstt. CIT, this petition is allowed by holding that necessary conditions for issuing notice under s. 148 r/w s. 147 of the Act has not been satisfied. Hence, notice dt. 31st March, 1995 (Annexure B) is not sustainable and is hereby quashed. Rule is made absolute. There shall be no order as to costs.