Court quashes reassessment notice lacking jurisdiction; petitioner not required to return to Assessing Officer

The court found that the notice issued under section 148 of the Income-tax Act, 1961 for reassessment of income for the assessment year 1995-96 lacked jurisdiction due to insufficient evidence of non-disclosure of material facts by the petitioner. As a result, the notice was quashed, and the writ petition was allowed. The court highlighted that the petitioner should not be required to return to the Assessing Officer to raise objections, avoiding unnecessary prolongation of proceedings. No costs were awarded in the case.

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Issues:
Validity of notice under section 148 of the Income-tax Act, 1961 for reassessment of income alleged to have escaped assessment for the assessment year 1995-96.

Analysis:
The petitioner, a public limited company, challenged the validity of a notice under section 148 of the Income-tax Act, 1961, initiating proceedings under section 147 to reassess income for the assessment year 1995-96. The petitioner had claimed exemption under section 10B and deduction under section 80HHC in its return of income. The Assessing Officer issued the impugned notice on the grounds of alleged escapement of income. The petitioner requested the reasons recorded for the notice, which were not provided despite reminders. The respondent contended that the writ petition was not maintainable against the notice, arguing that the petitioner had not fully disclosed material facts. The petitioner cited judgments to support its claim that the notice was without jurisdiction due to the lack of satisfaction regarding non-disclosure of material facts.

The Assessing Officer's reasons for the notice highlighted the alleged double relief claimed by the petitioner under sections 10B and 80HHC for the same export sales, leading to excessive deduction under section 80HHC. The Assessing Officer believed that income had escaped assessment for the assessment year 1995-96 due to the allowed deduction under section 80HHC for the export turnover of the 100% EOU, despite claiming exemption under section 10B. The petitioner argued that the notice lacked the necessary finding of non-disclosure of material facts, rendering it without jurisdiction, as per previous judgments.

The court agreed with the petitioner, noting that the reasons recorded by the Assessing Officer did not establish non-disclosure of material facts by the petitioner, as required for jurisdiction under section 147. As the notice was found to be without jurisdiction, it was quashed, and the writ petition was allowed. The court emphasized that requiring the petitioner to return to the Assessing Officer to raise objections would unnecessarily prolong the proceedings. No costs were awarded in the case.

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