The Bombay High Court quashed re-assessment on no omission or non-disclosure on the part of the assessee, Mukand Limited.
The Petitioner has filed the writ petition challenging the legality and validity of notice issued by the Deputy Commissioner of Income Tax under Section 148 of the Income Tax Act, 1961. It is petitioner’s case that the notice having been issued more than four years after the expiry of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year, the notice issued would be without jurisdiction.
The Counsel for the petitioner submitted that that there is nothing in the reasons to believe, to indicate that there was any failure to disclose and that even in the affidavit in reply opposing the petition, infact, there is an admission that petitioner had disclosed unabsorbed depreciation for Assessment Year 2000-2001 and 2001-2002.
The Gujarat High Court in the case of General Motors India Pvt. Ltd. V/s. Deputy Commissioner of Income Tax, has allowed unabsorbed depreciation to be set off against other income without the time limit of eight years and, therefore, has impliedly overruled the decision of the Mumbai Special Bench in the case of Deputy Commissioner of Income Tax V/s. Times Guaranty Limited, relied upon by the Assessing Officer.
The Counsel for the respondents submitted that the issue of unabsorbed depreciation and adjustment against capital gains or profit and gains of business and profession was not subject of the scrutiny assessment under Section 143(3) of the Income Tax Act.
A Division Bench consisting of Justices KR Shriram and Firdosh P Pooniwalla observed that “In this case, petitioner had filed all details and the subject of brought forward unabsorbed depreciation was also considered while passing the assessment order under Section 143(3) of the Income Tax Act. Therefore, the Assessing Officer had in his possession all primary facts and it was for him to draw proper inference as to whether the brought forward unabsorbed depreciation should be adjusted against capital gains or profit and gains from business or profession.”
“Whether it is a disclosure or not within the meaning of Section 147 of the Income Tax Act would depend on the facts and circumstances of each case and nature of document and circumstances in which it is produced. The duty of the assessee is to fully and truly disclose all primary facts necessary for the purpose of assessment. It is not part of his duty to point out what legal inference should be drawn from the facts disclosed. It is for the Income Tax Officer to draw a proper inference” the Court concluded.
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