If notice under sec 148 is issued in the absence of any failure on the part of assessee than the notice and subsequent proceedings liable to be struck down

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
Adverting first to ground no.1 in the appeal, facts, in brief, as per relevant orders are that return filed on 31.03.2002 by the assessee, a financial services company, was selected for scrutiny with the service of a notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the ‘Act’) issued on 13.10.2003. The aforesaid return was revised on 31.03.2004, declaring income of Rs.12,10,34,127/-.Subsequently, assessment was completed on 25.02.2005 on an income of Rs.28,54,17,720/-. Later, the Assessing Officer (A.O. in short) recorded the following reasons, in writing, for reopening the assessment completed on 25th February, 2005: “The original return of income was filed on 31.10.2002. Later on, the revised return was filed by the assessee on 31.03.2004 at an income of Rs.12,10,34,127/- and order u/s 143(3) was passed on 25.02.2005 at assessed income of Rs.28,54,17,720/-. “Section 32 of the Act, provides that in respect of depreciation of buildings, machinery, plant or furniture, being tangible assets, owned wholly or partly by the assessee and used for the purpose of the business or profession, the following deductions shall be allowed. In case of any block of assets, such percentage on the written down value thereof as may be prescribed. Further, as per depreciation table, computers including computers software, depreciation @60% is allowed under the Act and not for the accessories/peripherals.” The perusal of asstt. records for the assessment year 2002-3 reveals that the assessee company has availed depreciation @60% on additions of fixed assets during the year on all items including UPS, Cables, CD Writers etc. besides computer and software, that was not admissible as other items as computer peripherals/accessories. The items in the list of addition to fixed assets except computers and software fall in the category of part of plant and machinery and depreciation on these items are to be allowed @25%/12.50%(assets used less than 180 days). This has resulted in escapement of income of Rs.Rs.11,65,426/-. In view of above facts of the case, I have reasons to believe that the income to the tune of Rs.11,65,426/- has escaped assessment because of failure on part of assessee to disclose fully and truly material facts necessary for asstt. and hence notice u/s 148 is hereby issued for reopening u/s 147 of the I.T. Act.”

Citation :
Deputy C. I .T. Circle 3(1),New Delhi(Appellant)V/s. M/s City Financial Consumer Finance India Ltd., 3 Local Shopping Centre, Pushp Vihar,New Delhi(Respondent)