TaxTMI 
TaxTMI 
2014 (5) TMI 481
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....er section 148 of the Income Tax Act, 1961 ('the Act' for short). Under such notice, the respondent desired to reopen the assessment of the petitioner for the assessment year 2000-01. Brief facts are that the petitioner is a company registered under the Companies Act. For the assessment year 2000-01, the petitioner filed its return of income on 30.11.2000. In such return,the petitioner had declared nil income. The petitioner had carried forward business loss of Rs.5.72 crores (rounded off). The petitioner did not claim any depreciation of the current year in the return filed. This return was not taken in scrutiny. Intimation under section 143(1) was issued on 31.12.01. To reopen such assessment, the Assessing Officer issued the impugned ....
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.... Table showing the current year business loss, depreciation and unabsorbed business loss, depreciation is given hereunder: B/f A.Y. Business Profit/loss Current year Depreciation Investment allowance Business loss Current year Depreciation Investment allowance 1989-90 0 0 -1854364 0 0 -1854364 1990-91 0 0 -470451 0 0 -2324815 1996-97 -79434515 0 0 -79434515 0 -234815 1997-98 -87388064 0 0 -166822579 0 -470451 1998-99 3244063 -3244063 0 -166822579 0 0 1999-00 19006895 0 0 -147815684 0 0 2000-01 18824857 0 0 -128990027 ....
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....ed with effect from 1.4.2002. As held by several courts, it has prospective effect. On the other hand, learned counsel Shri Sudhir Mehta for the department raised following contentions: (1) That the return was accepted with scrutiny. As held by the Supreme Court in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. 291 ITR 500 (SC) , the department would have considerable latitude to reopen the assessment. (2) That the Supreme Court in the case of CIT v. Mother India Refrigeration Indus. P. Ltd., 155 ITR 711, held that set off of unabsorbed business loss of the earlier years would be available only after depreciation of current year is exhausted. We are conscious that the original assessment was not made after scrutin....
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.... Act or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment." xxxxx xxxxx 16. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Officer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Lt....
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.... not accepted on the premise that such explanation cannot take away the effect of declaration of law made by the Supreme Court in the case of Mahendra Mills (supra). It was observed that the memorandum explaining the said provisions also clarified that the same will take effect from 1.4.2002. Accordingly, when the assessee had not made claim for depreciation for the assessment year 1989-90, it was held that the Assessing Officer was not justified in allowing such deduction. In the case of CIT v. Sree Senha Valli Textiles P. Ltd. 259 ITR 77, similar view was adopted by the Madras High Court. For the assessment year 1998-99, the assessee had filed a revised return withdrawing the claim will not be applicable to prim for depreciation made e....