VATIKA LIMITED Vs. ITO

JUDGEMENT

(1.) By this writ petition filed by M/s. Vatika Limited (Formerly known as Vatika Space Management Pvt. Ltd.), it is prayed that a writ of certiorari be issued to quash the proceedings initiated pursuant to the notice issued under Section 148 of the Income Tax Act, 1961 ('the Act', for short). A prayer is also made for the issue of a writ in the nature of mandamus or an order prohibiting the respondent, who is the Income Tax Officer, Ward 17(2), New Delhi, from framing the re-assessment order under Section 147 of the Act. The petitioner-company is engaged in the business of maintenance of properties. It filed a return of income on 30.11.2002 declaring a loss of Rs. 74,90,450/-. The return was accompanied by the Tax Audit Report and audited financial statements. In the return of income, the petitioner claimed depreciation of Rs. 74,85,196/- on fixed assets. The Assessing Officer issued a questionnaire on 05.10.2004 under Section 143(2) of the Act and called upon the petitioner to furnish the details of the new assets acquired during the relevant accounting year amounting to Rs. 5,98,81,568/- along with copy of the bills and also to furnish the details of working of depreciation of Rs. 74,85,196/- as claimed in the return. He also required the petitioner to furnish the details about the items with bill number, bill date, cost, date on which the asset was put to use and the depreciation claimed thereon. In the questionnaire the petitioner was also required by the respondent to explain why depreciation claim should not be disallowed since no business activity was carried on by the petitioner during the year.

(2.) In response to the questionnaire referred to above, the petitioner submitted a reply dated 23.11.2004. It was stated therein that the company entered into the business of maintenance of a Commercial Complex in Gurgaon and acquired plant and machinery at a cost of Rs. 6.5 crores with a view to start the business. It was also submitted as under:

(3.) Another notice under Section 143(2) of the Act was issued to the petitioner on 07.02.2005 in response to which the petitioner appeared before the respondent on 14.02.2005. Thereafter, the assessment was completed under Section 143(3) of the Act by order dated 24.02.2005. In the order the Assessing Officer stated that the assessee furnished the details and books of accounts, which were verified on test check basis and the assessment was ultimately completed on the loss return filed by the petitioner.