High Court Of Delhi
CIT vs. Mesco Laboratories Ltd.
Section 147
Asst. Year 1995-96
Madan B. Lokur & Vipin Sanghi, JJ.
IT Appeal No. 910 of 2006
10th July, 2006
Counsel Appeared
R.D. Jolly, for the Appellant : Salil Aggarwal with Prakash Kumar, for the Respondent
ORDER
By the court :
The Revenue is aggrieved by an order dt. 9th Sept., 2005 passed by the Tribunal, Delhi Bench ‘F’ for the asst. yr. 1995-96 arising out of ITA No. 93/Del/2002.
The only question that has arisen in this case is whether the AO recorded reasons for issuance of a notice for initiation of reassessment proceedings.
The “reasons” recorded by the AO are quoted in the order of the Tribunal and are as follows :
“Recording of reasons under s. 147
In this case the assessee has moved an application before Settlement Commission for asst. yrs. 1989-90 to 1994-95. The Settlement Commission has passed an order under s. 245D(1) of the IT Act on 17th July, 1996 allowing the application to be proceeded with for asst. yrs. 1989-90 to 1994-95.
In view of this fact, I have reason to believe that the taxable (income) of the assessee for the financial year 1994-95 relevant to asst. yr. 1995-96 has escaped assessment. Issue notice under s. 148 of the IT Act.”
A perusal of the order shows that sole basis for issuance of the notice was that the Settlement Commission has passed an order under s. 245D(1) of the IT Act in respect of an application moved by the assessee for the asst. yrs.1989-90 to 1994-95.
The assessment year that we are concerned with is 1995-96. This was not the subject-matter of any application before the Settlement Commission. The application was moved by the assessee in respect of assessment years other than 1995-96, while the AO sought to initiate reassessment proceedings for the asst. yr. 1995-96.
The Tribunal while allowing the appeal filed by the assessee came to the conclusion that first of all the nature of the income that has escaped assessment ought to have been indicated and in any case there was no rational or intelligible nexus between the “reasons” given by the AO and the action taken by him. Admittedly, no application was filed by the assessee before the Settlement Commission with regard to the asst. yr. 1995-96. Merely because an application was filed in respect of some other years cannot be a rational or intelligible ground for initiating reassessment proceedings for the asst. yr. 1995-96.
The Tribunal relied upon Ganga Saran & Sons (P) Ltd. vs. ITO & Ors. (1981) 22 CTR (SC) 112 : (1981) 130 ITR 1 (SC) wherein the Supreme Court observed as follows :
“…. If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the ITO could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid.”
In our view, no substantial question of law arises. Dismissed. The assessee will be entitled to costs of Rs. 1,500.
[Citation : 288 ITR 219]
