Rajesh Balia, J. - (1.) HEARD learned counsel for the parties.
(2.) THE petitioner challenges the notice issued under Section 148 of the Income-tax Act, 1961, on February 17, 1997, in respect of the assessment year 1986-87. No reply has been filed after notice was issued to the respondents. However, the following facts are not disputed by learned counsel for the respondents that the original assessment under Section 143(3) for the assessment year 1986-87 was completed on March 27, 1987. In respect of the machines in question, a claim of the assessee for depreciation at 30 per cent. on the old machinery and his claim to investment allowance under Section 32A in respect of new machinery, namely, rig machines, was allowed. On March 15, 1989, the first reassessment proceedings were initiated in respect of the assessment year 1986-87 and the assessment was completed on March 31, 1989. The claim to investment allowance was disallowed and the rate of depreciation on the machines in question was reduced to 15 per cent. from 30 per cent. On appeal the assessee was successful. The first appellate authority vide its order dated January 29, 1990, held that since there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment and about his claim to depreciation during the making of the earlier assessment, the conditions precedent for initiating proceedings under Section 147, as it then existed, did not exist and therefore reassessment proceedings were invalid. That order of the appellate authority was affirmed by the Tribunal and successive applications for reference under Section 256(1) before the Tribunal as well as Section 256(2) before this court were rejected successively. As a result of the reassessment proceedings having proved abortive, the Income-tax Officer has again taken recourse to initiate reassessment proceedings by issuing the impugned notice dated February 17, 1997, under Section 148 of the Act of 1961. The respondents have not placed on record the reasons that have been recorded for initiating the proceedings. However, it has been stated by Mr. Bhandawat, learned counsel for the respondents that reassessment has been resorted to by the Income-tax Officer on being satisfied that the tax has escaped assessment for the assessment period 1986-87 by reason of wrongful allowance of investment allowance in view of the decision of the Supreme Court in CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412. On coming to know this correct position of law after the earlier assessment proceedings, the Assessing Officer had reasons to believe that tax has escaped assessment.
(3.) LEARNED counsel for the petitioner has placed on record the reasons recorded by the Assessing Officer which have been noted by the authorised representative of the assessee while inspecting the record of the case after notice was served on the assessee. The reasons recorded on January 27, 1997, which are in consonance with the plea taken by learned counsel for the respondents, read as under : "Reason recorded: In this case investment allowance to the tune of Rs. 2,33,485 was granted white completing the assessment originally on March 27, 1987, under Section 143(3) thereafter on March 31, 1989, the same was withdrawn. However, the assessee went in an appeal before the Commissioner of Income-tax (Appeals) who in turn allowed this allowance as aforesaid. The Tribunal vide their order I. T. A. Nos. 346 and 347/JP of 1990, dated June 27, 1994, has rejected this appeal filed by the Department. Now the Supreme Court vide their decision reported in the case of CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412, the assessee's question is also not entitled for any investment allowance on rigs and other machineries used for contract and digging tubewells. It is, therefore, proposed to take action under Section 148 to withdraw the allowance already granted. I have, therefore, reasons to believe that income to the tune of Rs. 2,23,485 escaped by wrongly allowing investment allowances." Dated : 27-1-1997. (Sd.) Deepak Sehgal, A. C. I. T. (Invest) Circle". From the rival stands taken by learned counsel for the parties it is apparent that the only reason which has prevailed with the Assessing Officer for holding the belief that tax has escaped assessment for the year 1986-87 is wrong allowance of investment allowance under Section 32A in respect of new investment made in rig machines which are mining equipments. It is not the case of the Revenue nor it has been so stated in the recorded reasons that the belief held by the Assessing Officer is that escapement of tax has taken place by reason of any failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 or Section 148 or on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment of that assessment year. Obviously, this satisfaction could not have been there. This finding has been recorded in earlier proceedings in favour of the assessee that there has been no failure on the part of the assessee to disclose fully and truly all material facts for the assessment year in question. With these undisputed background it is apparent that recourse to proceedings under Section 147 on February 17, 1997, in respect of the assessment year 1986-87 was clearly beyond time within which the Assessing Officer could exercise his jurisdiction to initiate proceedings under Section 147. ;