2002 (11) TMI 14

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....hen the assessee had agreed that depreciation claim will not be allowed for the period of five months, i.e., for the assessment year 1982-83, it was open to the assessee to claim depreciation on the ground that the condition imposed was illegal? 2. Whether, when in view of changing the accounting period, a condition was imposed by the Income-tax Officer and accepted by the assessee it was open to the assessee to subsequently challenge the said condition on the ground that it was illegal and not binding and that the assessee was entitled to depreciation for the period of five months for the assessment year 1982-83?" Learned standing counsel for the Central Government, Shri B.B. Nayak has appeared for the Revenue, whereas nobody has app....

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....assessee was aggrieved by the imposition of the condition, the assessee should have either challenged the validity of the order imposing the condition by filing an appeal or by filing a writ petition before the High Court. In the circumstances, the Commissioner of Income-tax (Appeals) confirmed the assessment order. The assessee thereupon challenged the validity of the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 1982-83 before the Tribunal. The Tribunal allowed the appeal on the ground that the condition imposed by the Income-tax Officer was beyond his powers and, therefore, the condition imposed by the Income-tax Officer was illegal. Shri B.B. Nayak, learned standing counsel for the Central Govern....

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....en held that the condition, which might be imposed by the authority, should be legal and reasonable. In our opinion, when a discretionary power has been given to an authority like the Income-tax Officer or an Assessing Officer, he should exercise his discretionary power in a reasonable manner. In the instant case, the discretionary power with regard to permitting change of previous year was exercised by the Income-tax Officer in an arbitrary manner. Moreover, by virtue of the condition imposed by the Income-tax Officer, the assessee was deprived of the benefit given to it under the statute and, therefore, the said exercise of power was not in consonance with the provisions of the Act. Such a condition could not have been imposed by the I....