TaxTMI 
TaxTMI 
2006 (6) TMI 88
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....April 18, 2000, a scheme was approved to amalgamate MIs. Deccan Hospital Corporation Limited (hereinafter referred to as "DHCL") running a hospital at Hyderabad, which is equipped with various diagnostic, radiological and pathological departments with the petitioner-company. DHCL had an unabsorbed depreciation of Rs. 11,60,29,077 as on March 31, 1999, which under the scheme of amalgamation belonged to vested with the petitioner-company. The scheme had necessary approvals of the Andhra Pradesh High Court and this court. (ii) In respect of the assessment year 2000-01 the petitioner submitted returns and claimed the benefit of section 72A of the Income-tax Act (hereinafter referred to as the Act") to have the unabsorbed depreciation of DHCL as the depreciation of the petitioner. The respondent examined the details of the case and in his letter in G.I.No. AX1-015/2000-01 dated March 7, 2003, inter alia, under section 142 vide paragraph 7 stated as follows: "7. It is seen that during the previous year, Deccan Hospitals has got amalgamated with the assessee-company. In this connection, you are requested to furnish the following: Amount of loss accumulated in the case of Deccan H....
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....y. In the instant case, the assessee is neither an industrial undertaking nor a company owning a ship and hence the provisions of section 72A will not apply. Hence, the set off of loss to the tune of Rs. 11,60,29,077 has resulted in under assessment and income to that extent has escaped assessment". (vi) It is the contention of the petitioner that the reasons as communicated prima facie contained no reasons except to communicate a conclusion after setting out the ingredients of the section which do not constitute the reason. The respondent has stated that the petitioner is not an industrial undertaking nor a company owning a ship and that section 72A will not apply. Overlooking the fact that the status of the assessee for the relief under section 72A of the Act is not relevant but what is relevant is the status of the amalgamating company, namely, DHCL. On December 9, 2005, the petitioner addressed a letter through their authorized representative stating: (i) that there was no opinion justifying the notice, that the present exercise was a mere change of opinion, (ii) that the Central Board of Direct Taxes (in short "the CBDT") vide Circular No. 549 dated October 31, 1989, had....
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....06, which are already forming part of the record of the original assessment. (ix) The respondent has no jurisdiction to bypass or ignore binding orders of this court rendered in CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727. A detailed counter affidavit has been filed by the respondent containing the following contentions: (i) The petitioner set off the accumulated depreciation of DHCL against its income-tax for the assessment year 2000-01 without satisfying the twin conditions stipulated in section 72A of the Act. Section 72A which defines industrial undertaking refers to the activity of manufacturing or processing of goods. In the case of a hospital, there is no manufacturing activity and whether DHCL was processing any goods and if SO, what was the installed capacity on the effective date of amalgamation is the point for consideration. (ii) Section 72A read with rule 9C stipulates certain conditions to claim benefits under that section and in the event of failure to comply with the said conditions within five years from the date of amalgamation, the unabsorbed depreciation shall be considered as income in the hands of the amalgamated company in the year in which t....
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....easons thereon and not merely on the basis of audit objection." (vii) It is further contended that the assessee has failed to discharge the onus that the amalgamating company had an industrial undertaking. The amalgamating company was a hospital and that it could own an industrial undertaking was sufficient to believe that the claim of the amalgamated company was incorrect as far as the claim of set off of unabsorbed depreciation is concerned and the assessment proceedings referred to, did not convey that there was conscious application of mind on the issue agitated and hence reopening of the assessment within four years from the end of the assessment year is justified and is in accordance with law. The proceedings are not on account of change of opinion as no opinion was formed during the course of the earlier assessment proceedings. It is further contended that the reasons to believe communicated on December 9, 2005, are adequate enough to form the reason to believe that income has escaped assessment. The reasons communicated on December 9, 2005, wherein it was mentioned that the assessee did not own an industrial undertaking, did not vitiate the proceedings and the Assessi....
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....ment order. According to learned senior counsel all the relevant facts were disclosed to the Assessing Officer and the Assessing Officer having been deliberated upon the entitlement of the petitioner had allowed the claim. The assessment was sought to be reopened merely on the ground of "change of opinion" by the respondent on the same facts. The respondent cannot simply review the assessment order passed by his predecessor, a power which is not conferred on him by the Act. The respondent had "no reason to believe" that any income had escaped assessment within the meaning of section 147 of the Act and the notice issued under section 148 is therefore without jurisdiction. Referring to the averments contained in paragraph 13 of the counter affidavit wherein it is stated that the particulars said to have been furnished by the petitioner in response to letter dated March 7, 2003, before the Assessing Officer are not available on record, the learned senior counsel submitted that if the original records are perused it could be seen that the petitioner actually furnished all the details sought for. Accordingly, the files produced by learned standing counsel for the Income-tax Department w....
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.... the impugned proceedings. Learned senior counsel relied upon the following passage found at page 177 of the decision rendered in the case of Jindal Photo Films Ltd. v. Deputy CIT reported in [1998] 234 ITR 170 (Delhi), which reads as follows: "Where the Income-tax Officer (very often successor-officer) attempts to reopen the assessment because the opinion formed earlier by himself (or more often, by a predecessor-Income-tax Officer), was in his opinion. incorrect, judicial decisions have consistently held that this could not be done. (see Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC) and A. L. A. Firm v. CIT [1991] 189 ITR 285 (SC))." Based on that learned senior counsel submitted that the Deputy Commissioner of Income-tax, Company Circle I (1), who was the appropriate assessing authority at the relevant time, after perusing the particulars furnished by the petitioner and after conducting an enquiry and after hearing the representatives of the petitioner on March 20, 2003, and on being satisfied about the eligibility of the petitioner under section 72A and after taking note of an opinion filed on behalf of the petitioner along with the returns passed th....
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....d official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasijudicial function to take benefit of its own wrong". Learned senior counsel submitted that the above extracted passage effectively answers the contention of learned standing counsel for the Income-tax Department. It is seen from the above judgment that the decision reported in Praful Chunilal Patel v. M. J. Makwana/Asst. CIT [1999] 236 ITR 832 (Guj) relied upon by learned standing counsel for the Incometax Department has been dissented from. Hence, the said submission of learned senior counsel merits acceptance as the contention of learned standing counsel for the Income-tax Department is liable to be rei.ected. Learned senior counsel further submitted that only when there is a change of law or new materials come on record or information is received, the respondent can initiate the proceedings under section 147 of the Act, but not otherwise. He further contend....