TaxTMI 
TaxTMI 
2012 (7) TMI 958
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....me came to be issued under section 143(1) of the Act on 12.03.2003. Thereafter, by the impugned notice dated 30.03.2004, the respondent proposed to make assessment under section 147 of the Act for assessment year 2002-03. Upon receipt of such notice, the petitioner requested the respondent to furnish a copy of the reasons recorded. Pursuant to such request the reasons came to be furnished which read thus: "Reasons for Re-opening Assessment u/s. 147 The return of income is filed on 31.10.2002 declaring total income of Rs. 7,65,11,550/-. The same was processed u/s. 143(1) of the I.T.Act on 12.03.2003. In Annexure-C Cluase-14 of particulars of depreciation allowance as per I.T. Act, 1961 it is seen that the assessee has claimed depreciation on Non-Compete Territory Rights of Rs. 65,62,500/-. The depreciation is not available on the Non-Complete Territory Rights. As the reason of wrong claim of depreciation the income of Rs. 65,62,500/- has escaped assessment within the meaning of section 147 of the I.T.Act. In view of the above, I have reason to believe that income of Rs. 65,62,500/- has escaped assessment for A.Y.2002-03 for which an assessment is required to be reopened u/s. 147....
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....oner, it was observed that on verification of the assessee's claim it is clear that the assessee had not furnished the complete evidence and details about the purchase of so called rights. Thus, the assessee has clearly omitted and failed on its part to disclose true and full facts required for computing the correctness of its claim of depreciation. Being aggrieved the petitioner has filed the present petition. 5. Mr. S. N. Soparkar, Senior Advocate, learned counsel for the petitioner submitted that for the purpose of assumption of jurisdiction under section 147 of the Act, the Assessing Officer has to form a belief that income chargeable to tax has escaped assessment. Such reason to believe must be that of an honest and reasonable person based upon reasonable ground and must lead to a conclusion that the income has escaped assessment and such reasons should have nexus with the assumption of jurisdiction. Referring to the reasons recorded, it was submitted that the sole ground for reopening the assessment is that depreciation is not available on the Non-Compete Territory Rights and as such, by claiming depreciation at Rs. 65,62,500/-, income chargeable to tax has escaped assessmen....
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....ssessment under section 147 of the Act is in accordance with law. It was, accordingly, urged that the action taken by the Assessing Officer by issuing the impugned notice is just, legal and proper and in accordance with the provisions of law, and as such there is no warrant for interference by this court. 7. The facts reveal that this is a case where prior to issuance of notice under section 148 of the Act, only an intimation under section 143(1) of the Act had been issued. In other words no scrutiny assessment leading to an order under section 143(3) had taken place. This is, therefore, a case of assessment under section 147 of the Act and not a case of reassessment. It is by now well settled that in a case where no assessment has been framed under section 143(3) of the Act, the scope of challenge to a notice under section 148 of the Act is very limited. The Supreme Court in the case of Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITR 500 (SC,) was dealing with a case wherein the powers under section 147 were sought to be exercised in respect of a case where only an intimation under section 143(1) of the Act had been issued. The court o....
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.... would be without jurisdiction. It is well settled as a result of several decisions of the Supreme Court that the words "has reason to believe" are stronger than the words "is satisfied". The belief entertained by the Assessing Officer must not be arbitrary or irrational and must be reasonable. In other words, it must be based on reasons which are relevant and material. The court cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Assessing Officer in coming to the belief, but the court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 148. If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonable entertain the belief, the conclusion would be inescapable that the Assessing Officer could not have reason to believe that any part of the income of the assessee has escaped assessment and the notice issued by him would be liable to be struck down as invalid. (See Ganga Saran & Sons P. Ltd. v. Income-....
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....er. No additions can be made to those reasons. The reasons recorded cannot be supplemented by filing an affidavit more so when no foundation is laid in the reasons. In the facts and circumstances of the present case, as narrated hereinabove, on the reasons recorded by the Assessing Officer it cannot be said any belief as contemplated under section 147 of the Act could be founded upon the same. When the requirements of section 147 of the Act are not satisfied, the notice issued under section 148 of the Act is wholly illegal and invalid. 12. As regards the say of the respondent that necessary particulars/details in respect of the claim of depreciation on Non-Compete Territory Rights had not been furnished by the petitioner, the learned counsel for the petitioner had during the course of hearing of the matter, drawn the attention of the court to the statement of total income submitted alongwith the return of income to demonstrate that the claim of depreciation in respect of intangible assets had been specifically stated therein. In Annexure "C", Clause 14 which contains particulars of depreciation allowance as per the Income Tax Act, 1961 details in respect of Non-Compete Territory R....