INCOME TAX ACT, 1961

--Reassessment--Full and true disclosureNotice under section 148 after four years--By this writ petition filed by petitioner it is prayed that a writ of certiorari be issued to quash the proceedings initiated pursuant to the notice issued under section 148. A prayer is also made for the issue of a writ in the nature of mandamus or an order prohibiting the respondent, who is the ITO, from framing the re-assessment order under section 147. The petitioner-company is engaged in the business of maintenance of properties. It filed a return of income on 30-11-2002 declaring loss. The return was accompanied by the Tax Audit Report and audited financial statements. In the return of income, the petitioner claimed depreciation on fixed assets. The AO issued a questionnaire, on 5-10-2004 under section 143(2) and called upon the petitioner to furnish the details of the new assets acquired during the relevant accounting year along with copy of the bills and also to furnish the details of working of depreciation as claimed in the return. He also required the petitioner to furnish the details about the items with bill number, bill date, cost, date on which the asset was put to use and the depreciation claimed thereon. In the questionnaire the petitioner was also required by the respondent to explain why depreciation claim should not be disallowed since no business activity was carried on by the petitioner during the year. In response to the questionnaire referred to above, the petitioner submitted a reply dt. 23-11-2004. It was stated therein that the company entered into the business of maintenance of a Commercial Complex in Gurgaon and acquired plant and machinery with a view to start the business. Another notice under section 143(2) was issued to the petitioner on 7-2-2005 in response to which the petitioner appeared before the respondent on 14-2-2005. Thereafter, the assessment was completed under section 143(3) by order dt. 24-2-2005. In the order, the AO stated that the assessee furnished the details and books of accounts, which were verified on test check basis and the assessment was ultimately completed on the loss return filed by the petitioner. Thereafter, it would appear that the respondent had called upon the petitioner to reply to a query pertaining to its assessment for the assessment year 2002-03 on the basis of an audit objection to the effect that the claim of depreciation had been wrongly allowed in the assessment made under section 143(3), despite the fact that the assessee did not carry any business in the relevant year. The petitioner accordingly wrote a letter to the respondent, which is marked as Annexure-8 to the writ petition. In this letter, the petitioner drew the attention of the AO to its reply submitted to the queries raised under section 143(2) by notice dt. 5-10-2004. The attention of the respondent was also drawn to the Note No. II(3) to the financial statements in which it was stated that the petitioner company planned to undertake the business of providing and maintaining certain basic common services for a building developed by one of its group companies and for the said purpose has acquired, during the year, all the assets from it in relation thereto. It was explained that there was no admission in the note that the petitioner had not started its business activity. On 20-3-2009, the respondent issued notice under section 148 on the ground that the income chargeable to tax had escaped assessment and called upon the petitioner to file a return of income. In response to the notice the petitioner filed a return of income under protest and requested the respondent to furnish a copy of the reasons recorded under section 148(2). The respondent was supplied with the copy of the reasons recorded on 18-3-2009. On receipt of the reasons recorded by the respondent, the petitioner filed objections to the same by letter dt. 6-11-2009 as per the procedure prescribed by the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 259 ITR 19 (SC) : 2003 TaxPub(DT) 734 (SC). It was pointed out therein that there was no failure on the part of the petitioner to furnish full and true particulars necessary for the completion of its assessment and, therefore, the re-assessment notice issued under section 148 of the Act was without jurisdiction. The aforesaid objections were disposed of by the respondent by order dt. 3-12-2009, which is the impugned order. A perusal thereof shows that the respondent has stated therein that depreciation on assets taken over on the basis of an agreement was wrongly allowed in the assessment made under section 143(3), that the inference was drawn on the basis of information and belief that income chargeable to tax had escaped assessment and that belief is not a judicial decision but an administrative decision which is not open to challenge and that so long as the assessing officer honestly comes to the conclusion that income chargeable to tax had escaped assessment, he is duty bound, as administrator of law, to bring to tax such income. In this view of the matter, he rejected the objections of the petitioner and called upon it to furnish the details as per questionnaire issued separately under section 143(2). Held: There was no failure on the part of the petitioner to furnish full and true particulars relating to the claim of the depreciation. In its letter dt. 23-11-2004 filed in response to the query raised under section 143 (2), in the course of the original assessment proceedings, the petitioner had furnished the relevant and primary facts and submitted that it had acquired plant and machinery at a cost of Rs. 6.5 crores with a view to start its business and that though no income from the said business had been declared in the return for the year under consideration, still the claim of depreciation on fixed assets was allowable as the business had already been set up. After drawing the attention of the respondent to all these facts, the petitioner submitted that it had started its business and, therefore, the claim of depreciation was allowable. The respondent had completed the assessment under section 143(3) after scrutiny. Now, it cannot be alleged that the petitioner had not furnished full and true particulars relating to the claim of depreciation at the time of original assessment. All the primary facts relating to the claim had been disclosed by the petitioner and it was for the respondent to draw the appropriate inferences regarding the allowability of the claim of depreciation. It is not part of the duty of the petitioner to inform the assessing officer as to what inferences should be drawn from the primary facts disclosed. It is not alleged or stated in the reasons that there was any further or new information or ground to believe that the averment made in the letters written by the petitioner-assessee were false or incorrect.