- (1.) This writ petition seeks quashing of notice dt. 31st March, 2005, Annex. P.2 issued under Section 148 of the IT Act, 1961 (for short, 'the Act') and notice dt. 19th Dec, 2005, Annex. P.7 for further proceedings.
(2.) Case of the petitioner is that it is engaged in the business of banking and its entire income was exempt from tax under Section 80P(2)(a)(i) of the Act. The petitioner was being allowed exemption from tax for about 40 years. For the asst. yr. 1999-2000, the petitioner filed return under Section 139(1) of the Act, claiming that its entire income was exempt under Section 80P(2)(a)(i) of the Act. The return was accepted under Section 143(1) of the Act and refund was also issued. Thereafter, on 31st March, 2005, impugned notice for reopening assessment was issued Reasons therefor were also supplied vide letter dt. 7th Nov., 2005, Annex. P.5. In the said letter, it was mentioned that during the course of assessment proceedings for the asst. yr. 2002-03, it came to light that claim of the assessee for deduction under Section 80P(2)(a)(i) of the Act was erroneous as the assessee was not registered under the Banking Regulation Act, 1949 and was not having any banking licence from the RBI. It was also not a member of clearing house and did not provide cheque book facilities to the public. In the judgment of the Hon'ble Supreme Court in U.P. Co-operative Cane Union Federation Ltd. v. CIT it was held that exemption under Section 80P(2)(a)(i) of the Act was not available to societies providing facilities to non-members. It was also pointed that exemption under the head of GPF fund, additional provident fund, loans, bonus, staff security, leave, salary, interest of call deposits, reserved fund, etc. were wrongly allowed. The petitioner filed objections which were rejected and notice Annex. P.7 was given.
(3.) Learned Counsel for the assessee submitted that reassessment Under Section 147/148 of the Act was permissible only if the AO had "reasons to believe" that income had escaped assessment, which did not mean mere change of opinion and jurisdiction to reassess could not be invoked except on existence of statutory conditions permitting such a course. Reliance has been placed on judgments of the Hon'ble Supreme Court in CIT and Anr. v. Foramer France and judgment of Delhi High Court in CIT v. Kalvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617 : (2002) 256 ITR 1 (Del)(FB).;