TMI Blog2012 (7) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... vate limited company, has challenged a notice dated 30.03.2004 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) seeking to assess the petitioner under section 147 of the Act for the assessment year 2002-03. 2. The petitioner filed its return of income for the assessment year 2002-03 on 31.10.2002 declaring total income of ₹ 7,65,11,550/. In its return of income, the petitioner had claimed depreciation of ₹ 65,62,500/- in respect of intangible assets being Non Compete Territory Rights. Along with the return, the petitioner had filed its statement of total income giving details in respect of the depreciation claimed by it. The return was processed under section 143(1) of the Act and intimation accepting the return of income came to be issued under section 143(1) of the Act on 12.03.2003. Thereafter, by the impugned notice dated 30.03.2004, the respondent proposed to make assessment under section 147 of the Act for assessment year 2002-03. Upon receipt of such notice, the petitioner requested the respondent to furnish a copy of the reasons recorded. Pursuant to such request the reasons came to be furnished whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation on Non Compete Territory Rights is contrary to the section as well as the CBDT Circular which is binding. 4. By a speaking order dated 10.12.2004, the respondent rejected the objections raised by the petitioner on the ground that after the return of income filed by the petitioner was processed under section 143(1) of the Act, on scrutiny of Annexure-C of clause 14 of particulars of depreciation allowance it was noticed that no details/particulars have been furnished for the claim of depreciation of intangible assets. Thus, prima facie the assessee did not furnish the necessary details of its claim so as to verify the correctness of the huge claim of depreciation amounting to ₹ 65,62,500/- being 50% of the normal depreciation allowable on intangible assets. Dealing with the contentions raised by the petitioner, it was observed that on verification of the assessee s claim it is clear that the assessee had not furnished the complete evidence and details about the purchase of so called rights. Thus, the assessee has clearly omitted and failed on its part to disclose true and full facts required for computing the correctness of its claim of depreciation. Being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer has recorded therein that on scrutiny of Annexure-C of Clause-14 of particulars of depreciation allowance, it was noticed that no details/particulars had been furnished for the claim of depreciation of intangible assets. Thus, the assessee did not furnish necessary details for its claim so as to verify the correctness of the huge claim of depreciation amounting to ₹ 65,62,500/- being 50% of the normal depreciation allowable on intangible assets. It was submitted that thus, upon verification of the assessee s claim it was clear that the assessee had not furnished the complete evidence and details about the purchase of so called rights and as such had omitted to disclose full and true facts required for computing the correctness of its claim of depreciation. Under the circumstances, initiation of proceedings for assessment under section 147 of the Act is in accordance with law. It was, accordingly, urged that the action taken by the Assessing Officer by issuing the impugned notice is just, legal and proper and in accordance with the provisions of law, and as such there is no warrant for interference by this court. 7. The facts reveal that this is a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. The court observed that in case where in the past intimation under section 143(1)(a) has been issued, the only condition which is required to be satisfied is as to whether income, profit or gain chargeable to income tax have escaped assessment. 8. Thus, for the purpose of making an assessment under section 147 of the Act where earlier only an intimation under section 143(1) of the Act has been issued, only one condition is required to be satisfied before the Assessing Officer can assume jurisdiction to issue notice under section 148 of the Act, namely that he must have reason to believe that income chargeable to tax has escaped assessment. If the said condition is not satisfied the notice would be without jurisdiction. It is well settled as a result of several decisions of the Supreme Court that the words has reason to believe are stronger than the words is satisfied . The belief entertained by the Assessing Officer must not be arbitrary or irrational and must be reasonable. In other words, it must be based on reasons whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete Territory Rights. 11. From the facts noted hereinabove, it is apparent that the formation of belief on the part of the Assessing Officer that income chargeable to tax has escaped assessment is without any basis in asmuchas the only ground for reopening the assessment is that depreciation is not available on Non-Compete Territory Rights. The order, disposing of all the objections, makes it amply clear that even according to the Assessing Officer; it is not as if depreciation is not available on Non-Compete Territory Rights, but that the assessee had not furnished sufficient particulars in respect of such claim. Thus, in the order disposing of the objections, the respondent has switched to a ground other than that stated in the reasons recorded. It is by now well settled that the reasons are to be read as they were recorded by the Assessing Officer. No additions can be made to those reasons. The reasons recorded cannot be supplemented by filing an affidavit more so when no foundation is laid in the reasons. In the facts and circumstances of the present case, as narrated hereinabove, on the reasons recorded by the Assessing Officer it cannot be said any belief as contemplated u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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