COMMISSIONER OF INCOME TAX Vs. RAJ FINLEASE LTD

JUDGEMENT

(1.) BY formulating the following question of law, the revenue has come forward with the above appeals as against the order of the Tribunal dated 13.07.2007 passed in ITA Nos.990 and 789/Mds/2003 :

(2.) THE facts culled out from the records proceed as follows : THE relevant assessment year is 1998-99. THE assessee company filed a return of income for the said assessment year declaring a net income of Rs.1,54,640/- on 30.11.1998. THE assessment was completed under section 143(3) of the Income Tax Act. Later on, the assessing officer, taking a view that there was an escapement of income, issued a notice under section 148 of the Income Tax Act on 14.03.2001 calling upon the assessee to file a return of income for the said assessment year. THE reason sought for by the assessee for the reopening has not been furnished. However the assessee, by his letter dated 24.02.2002, informed the assessing officer that the return filed by him originally could be treated as the return filed in response to the notice under section 148 of the Act. THE assessing officer reopened and framed the assessment on the premise that the assessee has withdrawn the claim for depreciation on plant and machinery leased out in the assessment years 1996-97 and 1997-98, however, failed to file a revised return withdrawing the depreciation as in the earlier years. Thus, the reopening was based on the ground that there was excess claim of depreciation of Rs.16,74,008/- which escaped assessment. As against that order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) who, by observing that the assessee himself having has requested to treat his return filed earlier on 31.03.1999 as the return filed in response to the notice under section 148 of the Act, cannot re-agitate now by saying that the assessing officer has no reason to reopen the assessment. THE said order was carried on appeal to the Tribunal by the assessee. Before the Commissioner as well as before the Tribunal the assessee relied on the reasoning he obtained from the assessing officer for reopening of assessment, by filing an application under the Right to Information Act. On the basis of that information so furnished, the Tribunal has come to the conclusion that when the assessing officer decided to reopen the assessment, the only item which has escaped assessment was claim of depreciation in excess of what was eligible to the assessee. But this reason did not really exist, as the assessee had filed a revised return within the time allowed under section 139(5) of the Act on 31.03.1999, and this fact of filing of revised return has been ignored by the assessing authority.

(3.) THE reasoning for invoking the provisions of section 147 of the Act, i.e., for issuance of notice under section 148 of the Act for re-assessment furnished to the assessee, is as follows : "THE assessee has withdrawn their claim for 100% depreciation on plant and machinery leased out in the assessment years 1996-97 and 1997-98. In line with the same the assessee has not filed any revised return withdrawing the depreciation as in earlier years. THE assessee has claimed depreciation at Rs.16.74,408/-. As income chargeable to tax has escaped assessment by virtue of claiming depreciation in excess of what is eligible, the assessment finalized has to be reopened under section 147 of the Act. I have reason to believe that income chargeable to tax has escaped assessment and I propose to re-open the assessment under section 147 of the Income Tax Act".