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of <h1>Invalid Notice under Section 148 of Income Tax Act 1961 for AY 2005-06</h1> <h3>MUNJAL SHOWA LTD. Versus DEPUTY COMMISSIONER OF INCOME TAX</h3> MUNJAL SHOWA LTD. Versus DEPUTY COMMISSIONER OF INCOME TAX - TMI Issues:Validity of notice under Section 148 of the Income Tax Act, 1961 for the assessment year 2005-06.Analysis:The High Court considered the validity of a notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2005-06. The notice was issued to reassess the income of the assessee due to an alleged wrong claim of expenditure. The court noted that the re-assessment notice was issued after 4 years from the end of the assessment year, requiring two conditions for valid initiation of reassessment proceedings: absence of a change of opinion and failure to fully and truly disclose all material facts necessary for assessment.During the original assessment proceedings, the petitioner had provided detailed information regarding royalty payments, including agreements, approval from the Ministry of Commerce and Industry, and royalty calculation certificates. The Assessing Officer had called for and received these documents, indicating that the question of royalty was specifically considered during the original assessment. The court cited precedents to establish that if an issue was raised by the Assessing Officer and the assessee provided a satisfactory reply, it does not constitute a change of opinion.The court further held that there was no failure on the part of the assessee to furnish all material facts, as all details and particulars related to royalty payments were provided and available to the Assessing Officer. The new Assessing Officer's observation that royalty payment should have been disallowed as capital in nature was deemed a legal inference drawn from the same material facts on record. As there was no omission or failure to disclose material facts, the court quashed the notice under Section 148, the order dismissing objections to the reassessment proceeding, and the re-assessment order itself.In conclusion, the writ petition was disposed of with no costs, affirming the quashing of the notice and related orders.
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