TMI Blog2003 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... MEHTA. JUDGMENT D.H. WAGHELA J.-In this petition under article 226 of the Constitution, notice for assessment, under section 148 of the Income-tax Act, 1961 (for short the Act ), is under challenge mainly on the ground of lack of jurisdiction. The facts as far as they are relevant for the purpose of deciding the issues raised in this petition are simple and in a narrow compass. The petitioner, a public limited company, filed its return of income on November 30, 1996, for the assessment year 1996-97 and, inter alia, claimed depreciation at 40 per cent, on the written down value of vehicles on which such depreciation was allowed in the assessment year 1995-96, and also claimed pro rata depreciation at 20 per cent, on the additions during the assessment year 1996-97. The Assessing Officer, by his letter dated October 21,1998, asked the petitioner to furnish details regarding various points of which one was details of the vehicles on which depreciation at 40 per cent, was claimed. In reply thereto, the petitioner stated that it was a finance company engaged in the business of leasing, the vehicles in question were given on lease and that the lessee had used the said vehicles in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer without discussing the issue in the assessment order and without looking to the provisions of the Act. It is, therefore, submitted that this was a clear case of claiming excess depreciation and was covered by the proviso to section 147 of the Act. The reasons recorded under section 148 of the Act are produced with the affidavit and the material part thereof reads as under: 3. On verification of the depreciation statement attached with the return of income, it is noticed that depreciation of ₹ 8,43,27,096 is inclusive of depreciation of ₹ 3,40,00,000 on motor vehicles (commercial) claimed at the rate of 40 per cent, on WDV/cost of ₹ 8,50,00,000. As per rule 5, the rate of depreciation on motor vehicle in the second column of the table in Appendix-I are as under: Block of assets Depreciation allowance as per percentage of WDV III (IA) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after first day of April, 1990 20% (2) (ii) Motor buses, motor lorries and motor taxis used in a business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h special emphasis on the following observations: The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the Constitution conferred on the High Courts the power to give relief, it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons. Where such action of an executive authority acting without jurisdiction subjects, or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against the Income-tax Officer acting without jurisdiction under section 34 of the Income-tax Act. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Section 147 of the Act empowers the Assessing Officer, if he has reason to believe that any income chargeable to tax has escaped assessment, to assess or reassess such income or recompute the depreciation allowance. This power is subject to the provisions of sections 148 to 153 and the proviso that where an assessment under sub-section (3) of section 143, or section 147 has been made for the relevant assessment year, no action can be taken under section 147 after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 2 says that, where an assessment has been made and excessive loss or depreciation allowance or any other allowance under the Act has been computed, it shall be deemed to be a case in which income chargeable to tax has escaped assessment. Section 147 of the Act expressly provides for reassessment not only of the income chargeable to tax which had escaped assessment but also of such other income which comes to notice subsequently du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief is based, is found to be so irrational as not to be worthy of being called a reason by any honest man, his conclusion that it constitutes a sufficient reason, cannot be overridden. What is, therefore, to be ascertained is, whether the alleged reason really existed, and if it did, whether it was so irrational as to be outside the limits of his administrative discretion with which the Assessing Officer is invested so as to be really in disregard of the statutory condition... Evidently, the Assessing Officer purporting to exercise powers under section 147 of the Act is not a party who has to not only state but establish before anyone the so-called jurisdictional facts. In the case of initiation of assessment proceedings under section 147 after four years, the alleged escapement has to be on account of failure of the asses-see to disclose fully and truly all material facts necessary for his assessment . Therefore, if all the facts that are material and necessary for assessment are fully and truly disclosed by the assessee, the power and jurisdiction under section 147 cannot be exercised. And the reply to the question whether all the material facts necessary for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken the view that the appellant could have taken all the objections in its reply to the notices issued under sections 148 and 143(2) of the Act and that the writ petition was premature. In the appeal preferred from that order, the Supreme Court found no justifiable reason to interfere. More importantly, it is further clarified that when a notice under section 148 of the Act was issued, the proper course of action for the noticee was to file a return, and if he so desires to seek reasons for issuing the notice. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of the notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. Thus, the Supreme Court has not only rejected the appeal against the order holding the petition to be premature, it has consciously prescribed the proper course of action for the noticee in all such cases. This prescription is the binding law under article 141 of the Constitution of India. In the facts of the present case, the petitioner being halfway through the process and now that reasons are revealed, what remains is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected and which constituted a valid decision or cause to form a belief in the first assessment as a result of which the income has escaped assessment, would constitute a reason to believe that the income had escaped assessment and such cases where mistakes and errors are detected and which constitute a valid justification or cause to form a belief sought to be corrected, cannot be said to be cases of mere change of opinion. The other contention of the petitioner that the respondent had already made up and revealed his mind on the issue and raising preliminary objection to the very assumption of jurisdiction and issuance of notice cannot serve any useful purpose, has to be stated to be rejected in view of the aforesaid discussion and the order made hereunder. The further argument, in substance, that, upon the decision of the preliminary objection or framing of the assessment the petitioner would find itself on the path of statutory remedies and that virtually amounts to denial of relief through the constitutional remedy, is prema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the said commercial vehicles for the business of running them on hire. The petitioner also invited the attention of the Assessing Officer to the fact that the provisions of section 32 of the Act or the relevant Rules did not require that the owner of the commercial vehicles was bound to use the vehicle himself for the business of hire. In support of the aforesaid contention, the petitioner placed reliance upon various decisions of the Tribunal, which have been referred to in the reply dated February 22, 1999. On March 24, 1999, the Assessing Officer passed the assessment order under section 143(3) of the Act and, though various additions and disallowances were made, in relation to the aforesaid item of depreciation, no disallowance has been made. On June 20, 2002, the notice under section 148 of the Act, came to be issued. On June 24, 2002, the petitioner called upon the Assessing Officer to supply a copy of the reasons recorded. On August 20, 2002, the Assessing Officer communicated to the petitioner that there was no statutory requirement of providing a copy of the reasons recorded before filing of the return of income and hence, the petitioner was called upon to furnish th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,70,00,000 has escaped assessment within the meaning of sub-clause (i) of Explanation 2 inserted to section 147 of the Income-tax Act. The assessee-company has failed to furnish full and true particulars of income. Mr. J.P. Shah, the learned advocate appearing on behalf of the petitioner, submitted that where the action of the respondent-authority was shown to be prima facie without jurisdiction, the court must exercise its jurisdiction and powers under article 226 of the Constitution of India and grant necessary consequential relief without subjecting the petitioner to lengthy proceedings by way of relegating the petitioner to avail of alternative remedy, resulting in harassment to the petitioner by way of incurring of substantial expenses as well as long drawn out litigation. It was contended that in the facts and circumstances of the case, taking into consideration the language employed by the proviso to section 147 of the Act, it was apparent that the impugned notice under section 148 of the Act had been issued after the expiry of four years from the end of the relevant assessment year and, hence, it was upon the respondent-authority to show that firstly, incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid objections by passing a speaking order. It was, therefore, submitted that in the present case, the petitioner can raise its objections and the Assessing Officer was bound to deal with the same and dispose of the same. At this stage, Mr. J.P. Shah, on behalf of the petitioner, joined issue and submitted that even assuming for the sake of argument that such a course of action could be adopted, in the present case, this court had admitted the matter after hearing the other side on this very contention, and, hence, the court should not relegate the petitioner to such a course of action. It was further submitted that even otherwise, the respondent-authority had already disclosed its reasons as well as given its view by way of the aforesaid show cause notice dated December 3, 2002, and hence, no fruitful purpose would be served by raising the same objections before the authority as the authority had already made up its mind. Mr. Shah also invited attention to the decisions of this court in the case of Arvind Polycot Ltd. v. Asst. CIT [1996] 222 ITR 280 and Gujarat Gas Co. Ltd. v. Joint CIT (Assessment) [2000] 245 ITR 84, to submit that the existence of alternative remedies such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999] 236 ITR 832 (Guj) ; and (xi) In the case of Sri Krishna Pvt. Ltd. v. ITO [1996] 221 ITR 538 (SC). In the light of the fact that both the sides made elaborate submissions in relation to existence of alternative remedy, and its effect, it is necessary to briefly recapitulate the law enunciated and reiterated by the apex court on this subject from time to time. Over and above the aforesaid case law, we have also taken into consideration two decisions of the apex court-one in the case of Calcutta Discount Co. Ltd. v. ITO reported in [1961] 41 ITR 191; AIR 1961 SC 372, and another in the case of Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1 for the purpose of deciding whether it would be proper to exercise jurisdiction under article 226/227 of the Constitution of India in the present case. The apex court in the case of Calcutta Discount Co. Ltd. [1961] 41 ITR 191, while dealing with the availability of alternative remedy has stated: The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be a sound exercise of discretion to refuse to interfere in a petition under article 226. This proposition was, however, qualified by the significant words, 'unless there are good grounds therefor', which indicated that alternative remedy would not operate as an absolute bar and that a writ petition under article 226 could still be entertained in exceptional circumstances. 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh, AIR 1958 SC 86; [1958] SCR 595 as under: 'But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies'. 18. This proposition was considered by a Constitution Bench of this court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani, AIR 1961 SC 1506; [1962] 1 SCR 753 and was affirmed and followed in the following words: The passages in the judgments of this court we have extracted would indicate (1) that the two exceptions which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. (ii) Such power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition or certiorari to ensure fundamental rights, but, also for any other purpose . (iii) The High Court, having regard to the facts of the case, has discretion to entertain or not to entertain the petition depending upon various facts and circumstances special to individual cases. (iv) The High Court, having imposed upon itself certain restrictive fetters, one of which is availability of alternative and efficacious remedy, would not normally exercise jurisdiction. (v) However, availability of alternative remedy per se does not operate as a bar in all contingencies. (vi) Rule requiring exercise of alternative remedy is a rule of policy, convenience and discretion. (vii) The court should exercise jurisdiction under article 226 taking note of legislative intent manifested by the provisions so as to be consistent with such provisions and not to frustrate them. (viii) The court should exercise jurisdiction under article 226 where enforcement of any of the fundamental rights is sought or where there is violation of principles of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1961, before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 139; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. The Income-tax Officer has also, before issuing such notice, to record his reasons for doing so. Section 149 prescribes the time-limit for the notice...Clause (a) of section 147 of the Act of 1961 corresponds to clause (a) of sub-section (1) of section 34 of the Act of 1922. The language of clause (a) of section 147 read with sections 148 and 149 of the Act of 1961 as also the corresponding provisions of the Act of 1922 makes it plain that two conditions have to be satisfied before the Income-tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income charge-able to tax has escaped ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts, disclosed, or otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable-See Calcutta Discount Co. v. ITO [1961] 41 ITR 191, 201 (SC). As further observed in that case: 'Does the duty, however, extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not founded on any existing material the same is liable to be interfered with. The correctness of his tentative opinion is not to be tested on the anvil of the final decision which may be reached after considering rival contentions and weighing them through the process of reasoning. But at the same time, if it appears from the reasoning which has been adopted by the Assessing Officer that no inference of escapement of income from assessment can at all be drawn therefrom, it must be held that the action is ultra vires the statute and does not confer jurisdiction on the Assessing Officer. Thus, the summary of the settled legal position is: (a) There must be material for the belief; (b) Circumstances must exist and cannot be deemed to exist for arriving at an opinion; (c) Reason to believe must be honest and not based on suspicion, gossip, rumour or conjecture; (d) Reasons recorded must disclose the process of reasoning by which the Assessing Officer holds reasons to believe and change of opinion does not confer jurisdiction to reassess; (e) There must be a nexus between the material on record and the belief held by the Assessing Officer; and (f) The reasons r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metime in October, 2001, notice under section 148 of the Act had already been issued in respect of commission, bad debt, and interest. The said items came to be added in the reassessment order and the petitioner succeeded before the Commissioner of Income-tax (Appeals) and the departmental appeal against the same is pending. This factual position is also a relevant factor. Though the court should not be understood as laying down the proposition that successive notices under section 148 of the Act cannot be issued, yet, once for the same assessment year, a notice under section 148 of the Act has been issued, bearing in mind the salutary principle that there should not be piecemeal assessment, successive notices under section 148 of the Act should not, normally, be issued. It is necessary for the Revenue to ensure that there is complete application of mind as and when it seeks to issue a notice for the purpose of reassessment. Otherwise it may be tantamount to change of opinion. The petitioner had made complete disclosure, the Assessing Officer had called for various details and explanation, which were duly furnished by the petitioner, and thereafter, assessment under section 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise. Once the stipulated period of four years has expired from the end of the relevant assessment year, the proviso stands attracted (other conditions being fulfilled), and the action of the authority will have to be tested on the anvil of the provisions of the proviso. The decision in the case of Praful Chunilal Patel v. M.J. Makwana, Asst. CIT [1999] 236 ITR 832 (Guj) relied upon by learned counsel for the Revenue, instead of assisting the case of the Revenue, supports the contention raised on behalf of the petitioner. This court has specifically dealt with two distinct situations: one arising within the period of four years and another arising beyond the period of four years in the following words: There is no dispute about the fact that the impugned notice under section 148 of the Act, has been issued within four years from the end of the relevant assessment year 1991-92. Under section 147 of the said Act, within four years from the end of the relevant assessment year, the Assessing Officer, where he had reason to believe that any income chargeable to tax has escaped assessment for any assessment year, may assess or reassess such income. However, after four years, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er would cease to be an order and become an epic tome. The reasons are not far to seek. Firstly, it would cast an almost impossible burden on the Assessing Officer, considering the workload that he carries and the period of limitation within which an order is required to be made; and, secondly, the order is an appealable order. An appeal lies, would be filed, only against disallowances which an assessee feels aggrieved with. The latter part of the statement is, to say the least, presumptuous. Every successor officer can make such a statement about his predecessor. As far as the absence of discussion in the assessment order is concerned, this is what has been laid down by this court in the case of Rayon Silk Mills v. CIT [1996] 221 ITR 155: In the first instance it was contended by learned counsel for the assessee that the very premise on which order under section 263 was made against the assessee, namely, that the Income-tax Officer has not at all examined the goodwill account is not existent. According to him, it is apparent from the record that the goodwill account was thoroughly examined by the Income-tax Officer before making the assessment and after examining when he ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion by the successor Assessing Officer. The law does not permit initiation of reassessment on this count after the expiry of a period of four years from the end of the assessment year and the respondent cannot claim to be vested with jurisdiction under section 147 of the Act in the factual matrix available on record. In the aforesaid decision in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, the apex court has also stated that when an officer relies upon his own records, for determining the amount of depreciation allowable to the assessee and makes a mistake in doing so, responsibility for that mistake cannot be ascribed to an omission or failure on the part of the assessee. The apex court concludes its judgment in the following terms: It has been said that the taxes are the price that we pay for civilisation. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this court, to support their reasonings. In Madhav Rao Jivaji Rao Scindia Bahadur v. Union of India [1971] 3 SCR 9; AIR 1971 SC 530, this court cautioned: 'It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment'. In the case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19, the Supreme Court was called upon to decide, whether the High Court had correctly rejected the petition, as being premature and that decision of the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20, 2002, and granted ad interim stay that no final assessment shall be made. The petition came to be admitted by another Division Bench on March 24, 2003, and status quo was ordered to be maintained till further orders in respect of the impugned notice. When the petition was heard for final hearing before the third Division Bench (Coram : hon'ble Mr. Justice D.H. Waghela and hon'ble Mr. Justice D.A. Mehta), there was a difference of opinion. The hon'ble Mr. Justice D.H. Waghela took the view that in view of the decision of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (hereinafter referred to as the GKN case ), the petitioner had an equally efficacious alternative remedy. The petitioner having filed return and having sought reasons for issuing the notice and the reasons having been supplied to the petitioner, the petitioner may file objections to issuance of notice and the Assessing Officer is bound to dispose of the assessee's objections by passing a speaking order dealing with the preliminary objections. If such order of the Assessing Officer on preliminary objections is adverse to the petitioner, the petitioner may challenge suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue was not able to prima facie show that there was any omission or failure on the part of the petitioner to disclose fully or truly all relevant particulars necessary for the assessment of the assessment year in question and that this was a fit case requiring this court to exercise its jurisdiction under article 226 of the Constitution. Accordingly, the hon'ble Mr. Justice Mehta took the view that the impugned notice under section 148 of the Act be quashed and set aside and all the consequential proceedings be also, as a corollary, quashed and set aside and thus the petition be allowed and rule be made absolute. In view of the above difference of opinion, the said Division Bench passed order dated October 3, 2003, directing the matter to be placed before the learned Chief Justice for passing appropriate orders. The matter is thereupon assigned to me. The facts, relevant to the controversy before me, briefly stated, are as under: The petitioner is a public limited company. On November 30, 1996, the petitioner filed its return of income for the assessment year 1996-97. The relevant accounting period is year ended on March 31,1996. Along with the return of income, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the petitioner was a leasing company and the motor vehicles had been used for leasing out and not for hiring and, therefore, excess depreciation on commercial vehicles had been allowed to the extent of ₹ 1.70 crores because, according to the Assessing Officer, the correct rate of depreciation ought to have been 20 per cent, and not the higher rate of 40 per cent., as claimed and allowed, while framing the assessment under section 143(3) of the Act. Along with the affidavit-in-reply, the reasons recorded by the respondent have been placed on record and the relevant portion thereof, reads as under: 3. On verification of the depreciation statement attached with the return of income, it is noticed that depreciation of ₹ 8.43 crores is inclusive of depreciation of ₹ 3.40 crores on motor vehicles (commercial) claimed at the rate of 40 per cent, on WDV/cost of ₹ 8.50 crores. As per rule 5, the rate of depreciation on motor vehicle in the second column of the table in Appendix-I are as under: Block of assets Depreciation allowance as per percentage of WDV III (1A) Motor cars, other than those used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question with a note that the motor vehicle is subject to a hire purchase agreement with Garden Finance Ltd. (the present petitioner). The registration book is issued by the RTO, Bhuj (Kutch). The deponent has accordingly submitted that from the above two documents, it becomes very clear that the hirer is the owner of the vehicle and the hirer is entitled to claim depreciation for the use of the said vehicle under the Income-tax Act and, therefore, the assessee is not entitled to claim depreciation for use of the said vehicle which has been given to the hirer under the terms and conditions of the hire purchase agreement and the assessee has wrongly claimed depreciation for the concerned assessment year and, therefore, the Assessing Officer has right to reopen the assessment under the provisions of the Income-tax Act and the notice issued by the Assessing Officer to reopen the assessment under sections 147 and 148 of the Act is legal and valid. At the hearing of this petition, Mr. J.P. Shah with Mr. Manish J. Shah, learned counsel for the petitioner, has submitted as under: The observations made by a Bench of two hon'ble judges of the Supreme Court in GKN case [2003] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 20 per cent, on vehicles purchased at the cost of ₹ 22.22 lakhs, the Assessing Officer had called for various details by letter dated October 21, 1998 (annexure B), including details of vehicles on which depreciation at the rate of 40 per cent, is claimed . In response to the said letter, the petitioner had by its letter dated February 22, 1999 (annexure C) clarified that in the financial year 1994-95 relevant to the assessment year 1995-96, the petitioner had purchased and leased commercial vehicles of the value of ₹ 11.25 crores and in the financial year 1995-96 relevant to the assessment year 1996-97 the assessee had purchased and leased commercial vehicles of the value of ₹ 22.22 lakhs, the assessee had claimed depreciation at the rate of 40 per cent, on commercial vehicles and on other vehicles at the rate of 20 per cent. The assessee had specifically stated as under: We have purchased commercial vehicles and the said vehicles were given on lease. The lessee has used the said commercial vehicles for the business of running them on hire. We also draw your kind attention that, there is no requirement in section 32 or in the rules thereunder that the owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing counsel for the Revenue has opposed the petition and made the following submissions: The decision of GKN Driveshafts (India) Ltd. [2003] 259 ITR 19 (SC) has laid down a binding principle and the weight of the said decision as a binding precedent is not to be undermined on the ground that the decision does not give reasons. Strong reliance has been placed on the decisions in Industrial Finance Corporation of India Ltd. v. Cannanore Spinning and Weaving Mills Ltd. [2002] 110 Comp Cas 685; [2002] 5 SCC 54 and Suganthi Suresh Kumar v. Jagdeeshan [2002] 110 Comp Cas 133; [2002] 2 SCC 420 in support of the contention that the decision of the apex court is a binding precedent under article 141 of the Constitution even if no reasons are given or even if a particular argument is not considered. The relevant facts in the present case are identical to the facts in GKN case [2003] 259 ITR 19 (SC) and, therefore, also the ratio of the decision in GKN case [2003] 259 ITR 19 (SC) is squarely applicable to the instant case and, therefore, the petition deserves to be dismissed on the ground that the petitioner has an equally efficacious alternative remedy available to him. Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the RTO under the Motor Vehicles Act. Mr. Naik has further submitted that when reopening of the assessment is justified, no useful purpose would be served by quashing the reassessment notice dated June 20, 2002, at annexure E and issuing another notice for giving the aforesaid reasons about suppression of clauses 9 and 14 of the hire purchase agreement. It is further submitted for the Revenue that even otherwise the Assessing Officer has the jurisdiction to consider whether the depreciation at 40 per cent, was admissible on the vehicles which the assessee is not plying on hire but which the assessee has given on lease/hire basis to another person who is engaged in the business of running the vehicles on hire. In this behalf, Mr. Naik has relied on the decision of the Calcutta High Court in Soma Finance and Leasing Co. Ltd. v. CIT [2000] 244 ITR 440 and the decision of the Rajasthan High Court in CIT v. Sardar Stones [1995] 215 ITR 350 and the Karnataka High Court in Gowri Shankar Finance Ltd. v. CIT [2001] 248 ITR 713. At the outset, the court would like to deal with the preliminary submission urged by Mr. Naik that in view of the decision of the apex court in GKN Dri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch in the Calcutta Discount Co. Ltd. v. ITO [1961] 41ITR 191, wherein the following principles were laid down: That though the writ of prohibition or certiorari would not issue against an executive authority, the High Courts had power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority, acting without jurisdiction subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Courts would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the Constitution conferred on the High Courts the power to give relief, it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons. It is also true that in CIT v. Foramer France [2003] 264 ITR 566, the apex court d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch relief and the courts would be failing to perform their duty if reliefs were refused without adequate reasons. What the Supreme Court has now done in the GKN case [2003] 259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the apex court in Calcutta Discount Co. Ltd. case [1961] 41 ITR 191 but to require the assessee first to lodge preliminary objection before the Assessing Officer who is bound to decide the preliminary objections to issuance of the reassessment notice by passing a speaking order and, therefore, if such order on the preliminary objections is still against the assessee, the assessee will get an opportunity to challenge the same by filing a writ petition so that he does not A have to wait till completion of the reassessment proceedings which would have entailed the liability to pay tax and interest on reassessment and also to go through the gamut of appeal, the second appeal before Income-tax Appellate Tribunal and then reference/tax appeal to the High Court. Viewed in this light, it appears to me that the rigour of availing of the alternative remedy before the Assessing Officer for objecting to the reassessment notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that there was no failure on the part of the assessee to disclose fully and truly all material facts for assessment and, therefore, the notices were without jurisdiction. When there was no reference to GKN case [2003] 259 ITR 19 (SC) by a Bench of the same strength as the Bench in GKN case [2003] 259 ITR 19 (SC), it cannot be said that the principle laid down in GKN case [2003] 259 ITR 19 (SC) does not hold the field. So also, the decision in Mahalaxmi Motors Ltd. v. Deputy CIT [2004] 265ITR 53 decided by the Andhra Pradesh High Court did not consider the decision in GKN case [2003] 259 ITR 19 (SC). The decision of the Bombay High Court in Ajanta Pharma Ltd. v. Asst. CIT [2004] 267 ITR 200 heavily relied upon by the assessee has not considered the aspects highlighted in paras. 11 to 13 above while interpreting the decision of the apex court in GKN case [2003] 259 ITR 19. Even in the said decision, the Bombay High Court has made the following pertinent observations in page 206 of the judgment: When certain facts are to be ascertained or various other materials are to be gone through to arrive at a finding about the absence of jurisdiction, in which case, certainly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter finally from deciding the issue, which goes to the root of the matter. In any case, the Division Bench did not have the occasion to consider the additional affidavit dated February 10, 2004, of the Commissioner of Income-tax, which is referred to in para 6.3 hereinabove and discussed in the paragraphs that follow. As regards the contention of learned counsel for the petitioner that only the reasons recorded in the notice are required to be considered and not any subsequent reasons given in the additional affidavit, while ordinarily the court would consider the challenge to the notice for reassessment on the basis of the reasons recorded, the following aspects cannot be overlooked-that the court would not issue a futile writ, quashing the impugned notice only for permitting issuance of another notice when the reasons disclosed in the additional affidavit are alternative and, therefore, interconnected with the reasons initially communicated by the Assessing Officer. The additional reasons as contained in the affidavit dated February 10, 2004, are on the basis of the document, namely, the hire purchase agreement which was produced by the assessee in the original assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where the assessee had produced the trust deed and the assignment deed under which the assessee had received ₹ 45 lakhs. After completion of the assessment, the Assessing Officer discovered from a perusal of the trust deed as well as the deed of assignment that the assessee had wrongly claimed exemption from levy of capital gains tax. When the Income-tax Officer issued a notice for reassessment, the assessee filed a writ petition challenging the notice and contending that the trust deed and the assignment deed were already on record before the Income-tax Officer in the original assessment proceedings. In this set of facts also, the Bombay High Court held that mere production of a trust deed or assignment deed by itself did not amount to a true and full disclosure of material facts necessary for the purpose of assessment, because the relevant clauses of those documents were not brought to the notice of the Assessing Officer in the original assessment proceedings. In the facts of the present case mere production of the hire purchase agreement did not exonerate the assessee from the liability to point out the aforesaid clauses of the hire purchase agreement under which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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