TaxTMI 
TaxTMI 
2003 (7) TMI 35
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.... sheets and industrial laminates. The petitioner filed its return of income for the assessment year 1997-98. This was on November 28, 1997. The return was initially processed under section 143(1)(a). This was on December 17, 1997, accepting the returned loss. Thereafter, the Assessing Officer issued notice under section 143(2) calling upon the petitioner to give certain details. Thereafter, he completed the assessment vide order dated January 31,2000, made under section 143(3) of the Act and assessed the petitioner to a total loss of Rs. 6.39 lakhs. Subsequently, by the impugned notice dated January 22, 2003, issued under section 148, the Assessing Officer stated that he had reason to believe that the petitioner's income chargeable to tax for the assessment year 1997-98 had escaped assessment and the Assessing Officer called upon the petitioner to file its return of income within 30 days. By letter dated February 14, 2003, the petitioner assessee called upon the Assessing Officer to furnish copy of reasons in order to enable the assessee to furnish return of income. These reasons were not furnished, inter alia, on the ground that the petitioner had failed to file its return of inco....
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....d that, in this case, the Assessing Officer seeks to reopen the assessment after a period of four years from the end of the assessment year and in view of the judgment of this court in the case of IPCA Laboratories Ltd. v. Gajanand Meena, Deputy CIT (No.2) [2001] 251 ITR 416, the Assessing Officer cannot act in the matter of reopening of assessment beyond four years, unless he has reason to believe that income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. He submitted that a bare reading of the reasons shows that reopening is sought to be effected only on the basis of the case records. He submitted that on two out of three points mentioned in the reasons, the Assessing Officer merely states "that the issue needs to be looked into". That, on those two issues regarding subsidy and provident fund being disallowed, the Assessing Officer does not even say that there is escapement of income from assessment. He therefore submits that the proviso to section 147 is not attracted. That, on the said two points, there is nothing to indicate escapement of income. That, on the said two points,....
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....amount of Rs. 34.92 lakhs had escaped assessment as it represented interest expenditure (financial cost) relating to capital work-in-progress and, therefore, it should have been capitalized to the cost of the assets. He contended that this alleged ground was on pure assumption that the borrowings had financed the capital work-in-progress. He submitted that, in this case, on the facts, the borrowings did not finance the capital work-in-progress. In this connection, he invited our attention to the schedule attached to the balance-sheet which indicates absence of any addition to the capital work-in-progress. He contended that if the borrowings had funded the capital work-in-progress then the net book value as on March 31, 1997, would have increased above Rs.433.92 lakhs (representing cost as on March 31, 1996, corresponding to the assessment year 1996-97) whereas, in fact, the net book value during the assessment year in question has fallen from Rs. 433.92 lakhs to Rs. 194.02 lakhs which indicates that the borrowings did not finance the capital work-in-progress and, therefore, the assumption of the Assessing Officer was erroneous. In the alternative, Mr. Pardiwala contended that even ....
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.... connection, Mr. Desai has placed reliance on the judgment of the Supreme Court reported in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19. Mr. Desai contended that the petitioner should be directed to file the return and to seek reasons and, thereafter, the petitioner-assessee should be directed to file objections which objections would be disposed of by the Assessing Officer by passing a speaking order and it is only thereafter in the event of any adverse order being passed that the writ petition may lie. He contended that in view of the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19, this writ petition should be dismissed in limine. He contended that, at this stage, all the arguments on the merits advanced on behalf of the petitioner were not required to be considered. That, the issues raised by the petitioner, on the merits, would be gone into by the Assessing Officer after the petitioner files the return and after the petitioner files its objections to the issuance of notice. He contended that in view of the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19, there is no question of this court, ....