TMI Blog2006 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... /015/2000-01 dated March 30, 2005, under section 148 of the Income-tax Act 1961, and quash the proceedings of the respondent in AX1/015/2000-01 dated March 30, 2005, as illegal and without jurisdiction. The short facts that are necessary for the disposal of the above writ petition and as culled out from the affidavit filed in support of the writ petition are as follows: (i) The petitioner is a registered company which is running hospitals for diagnosis, mitigation and treatment of ailments and diseases in different parts of the country. By an order of amalgamation dated April 18, 2000, a scheme was approved to amalgamate MIs. Deccan Hospital Corporation Limited (hereinafter referred to as "DHCL") running a hospital at Hyderabad, which is equipped with various diagnostic, radiological and pathological departments with the petitioner-company. DHCL had an unabsorbed depreciation of Rs. 11,60,29,077 as on March 31, 1999, which under the scheme of amalgamation belonged to vested with the petitioner-company. The scheme had necessary approvals of the Andhra Pradesh High Court and this court. (ii) In respect of the assessment year 2000-01 the petitioner submitted returns and claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able income. This loss of Rs. 11,60,29,077 represents that loss of the amalgamating company, M/s. Deccan Hospital Corporation Limited under a scheme of amalgamation. The assessee has claimed that set off of loss as per the provisions of section 72A of the Income-tax Act, vide Form No. 3CD. This section prescribes where there has been an amalgamation of a company owning an industrial undertaking or a ship with another company, then alone the accumulated loss or unabsorbed depreciation of the amalgamating company shall be deemed to be the loss of the amalgamated company. In the instant case, the assessee is neither an industrial undertaking nor a company owning a ship and hence the provisions of section 72A will not apply. Hence, the set off of loss to the tune of Rs. 11,60,29,077 has resulted in under assessment and income to that extent has escaped assessment". (vi) It is the contention of the petitioner that the reasons as communicated prima facie contained no reasons except to communicate a conclusion after setting out the ingredients of the section which do not constitute the reason. The respondent has stated that the petitioner is not an industrial undertaking nor a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question ought to have been whether the amalgamating company owned an industrial undertaking. The error is that the respondent was looking to the petitioner and would require to be an industrial undertaking which has nothing to do with the question. (viii) The very communication dated January 3, 2005, discloses that the proceedings have been initiated not on rational grounds but scanty enquiry and appreciation of the facts of the case as evidenced by questions No. 1, No. 3 and No. 5 of the letter enclosed to notice under section 142 dated January 3, 2006, which are already forming part of the record of the original assessment. (ix) The respondent has no jurisdiction to bypass or ignore binding orders of this court rendered in CIT v. Dr. V. K. Ramachandran [1981] 128 ITR 727. A detailed counter affidavit has been filed by the respondent containing the following contentions: (i) The petitioner set off the accumulated depreciation of DHCL against its income-tax for the assessment year 2000-01 without satisfying the twin conditions stipulated in section 72A of the Act. Section 72A which defines industrial undertaking refers to the activity of manufacturing or processing of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer thereof was also not borne out by the assessment order. Hence, when there is no opinion formed, it cannot be said that the reopening is consequent to change of opinion. (vi) In paragraph 18 of the counter affidavit, it is stated as follows: "18. The contention of the petitioner that the notice under section 148 was issued consequent to audit objection from audit general's office is not fully justified. The notice was issued only after the Assessing Officer satisfied himself about the escapement of income by duly recording the reasons thereon and not merely on the basis of audit objection." (vii) It is further contended that the assessee has failed to discharge the onus that the amalgamating company had an industrial undertaking. The amalgamating company was a hospital and that it could own an industrial undertaking was sufficient to believe that the claim of the amalgamated company was incorrect as far as the claim of set off of unabsorbed depreciation is concerned and the assessment proceedings referred to, did not convey that there was conscious application of mind on the issue agitated and hence reopening of the assessment within four years from the end o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 7 has been extracted supra. The petitioner furnished the particulars vide its letter dated March 19, 2003, and the Deputy Commissioner of Income-tax, Company Circle I (1), who was the appropriate assessing authority at the relevant time, after taking note of the opinion filed on behalf of the petitioner along with the return was satisfied about the eligibility of the petitioner under section 72A and passed the assessment order dated March 28, 2003, under section 143(3) of the Act. The benefit of section 72A was granted in the assessment order. According to learned senior counsel all the relevant facts were disclosed to the Assessing Officer and the Assessing Officer having been deliberated upon the entitlement of the petitioner had allowed the claim. The assessment was sought to be reopened merely on the ground of "change of opinion" by the respondent on the same facts. The respondent cannot simply review the assessment order passed by his predecessor, a power which is not conferred on him by the Act. The respondent had "no reason to believe" that any income had escaped assessment within the meaning of section 147 of the Act and the notice issued under section 148 is ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself'. Orders are not like old wine becoming better as they grow older." Therefore the contention of learned senior counsel has to be considered in the light of the "reasons to believe" as contained in the impugned proceedings. Learned senior counsel relied upon the following passage found at page 177 of the decision rendered in the case of Jindal Photo Films Ltd. v. Deputy CIT reported in [1998] 234 ITR 170 (Delhi), which reads as follows: "Where the Income-tax Officer (very often successor-officer) attempts to reopen the assessment because the opinion formed earlier by himself (or more often, by a predecessor-Income-tax Officer), was in his opinion. incorrect, judicial decisions have consistently held that this could not be done. (see Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC) and A. L. A. Firm v. CIT [1991] 189 ITR 285 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding under section 147 of the Act. The said submission is fallacious. An order of assessment can be passed either in terms of sub-section (1) of section 143 or subsection (3) of section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasijudicial function to take benefit of its own wrong". Learned senior counsel submitted that the above extracted passage effectively answers the contention of learned standing counsel for the Income-tax Department. It is seen from the above judgment that the decision reported in Praful Chunilal Patel v. M. J. Makwana/Asst. CIT [1999] 236 ITR 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and' further whether that material had any rational connection or a live link for the formation of the requisite belief." The above said two judgments of the honourable Supreme Court of India clearly lay down that the respondent cannot reopen the assessment order passed by a mere change of opinion or by drawing a different inference from the same facts as were earlier available. Admittedly, in this case there is no change of law and no fresh material has come on record enabling the respondent to invoke the powers under section 147 of the Act. The instant case is a case of mere change of opinion which does not provide jurisdiction to the respondent to initiate proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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