Delhi High Court
Commissioner Of Income-Tax vs Mesco Laboratories Ltd. on 10 July, 2006
Equivalent citations: (2007)207CTR(DEL)495, [2007]288ITR219(DELHI)
Bench: Madan B. Lokur, Vipin Sanghi
JUDGMENT
1. The Revenue is aggrieved by an order dated September 9, 2005, passed by the Income-tax Appellate Tribunal, Delhi Bench "F", for the assessment year 1995-96 arising out of I.T.A. No. 93/Del./2002.
2. The only question that has arisen in this case is whether the Assessing Officer recorded reasons for issuance of a notice for initiation of reassessment proceedings.
3. The "reasons" recorded by the Assessing Officer are quoted in the order of the Tribunal and are as follows:
Recording of reasons under Section 147 in this case the assessed has moved an application before the Settlement Commission for the assessment years 1989-90 to 1994-95. The Settlement Commission has passed an order under Section 245D(1) of the Income-tax Act on July 17, 1996, allowing the application to be proceeded with for the assessment years 1989-90 to 1994-95.
In view of this fact, I have reason to believe that the taxable income of the assessed for the financial year 1994-95 relevant to the assessment year 1995-96 has escaped assessment.
Issue notice under Section 148 of the Income-tax Act.
4. A perusal of the order shows that the sole basis for issuance of the notice was that the Settlement Commission has passed an order under Section 245D(1) of the Income-tax Act in respect of an application moved by the assessed for the assessment years 1989-90 to 1994-95.
5. The assessment year that we are concerned with is 1995-96. This was not the subject-matter of any application before the Settlement Commission. The application was moved by the assessed in respect of the assessment years other than 1995-96, while the Assessing Officer sought to initiate reassessment proceedings for the assessment year 1995-96.
6. The Tribunal while allowing the appeal filed by the assessed came to the conclusion that first of all the nature of the income that has escaped assessment ought to have been indicated and in any case there was no rational or intelligible nexus between the "reasons" given by the Assessing Officer and the action taken by him.
7. Admittedly, no application was filed by the assessed before the Settlement Commission with regard to the assessment year 1995-96. Merely because an application was filed in respect of some other years cannot be a rational or intelligible ground for initiating reassessment proceedings for the assessment year 1995-96.
8. The Tribunal relied upon Ganga Saran and Sons P. Ltd. v. ITO wherein the Supreme Court observed as follows (page 11):
...If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income-tax Officer could not have reason to believe that any part of the income of the assessed had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessed to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid.
9. In our view, no substantial question of law arises.
10. Dismissed.
11. The assessed will be entitled to costs of Rs. 1,500.