Rajesh Balia, J. - (1.) BY this writ petition, the assessee-petitioner has challenged initiation of reassessment proceedings against it for the assessment years 1981-82, 1982-83, 1983-84, 1984-85 and 1985-86 by issuing notices under Section 147/148 of the Income-tax Act, 1961, on March 29, 1990, on multiple grounds including that the notices are barred by time and that there exists no material on the basis of which a satisfaction about escapement of income for the relevant assessment years from tax could be reached.
(2.) THE case of the assessee-petitioner is that it has not been informed of the reasons which have been recorded by the Assessing Officer before issuing notice, which is a mandatory requirement for assuming jurisdiction under Section 147 of the Act of 1961. It has been further contended that notices were issued on March 29, 1990, for all the assessment years in question and the writ petition was filed on September 12, 1990. No reply to the writ petition has been filed. However, in pursuance of the order dated May 27, 2002, passed by this court, photostat copies of the reasons which have been recorded by the Assessing Officer before issuing notices under Section 147 read with Section 148 of the Income-tax Act, 1961 (for short "the Act"), have been placed on record for the perusal of this court. It was apprehended by the petitioner that the reasons for reopening the assessments for the assessment years in question can at best be attributed to allowance of depreciation at the price at which the company had acquired the asset from a firm, Umaid Bhawan Palace, which stood dissolved after the formation of the company and acquisition of its assets by the company. The company has not received the asset, viz., Umaid Bhawan Palace, on written down value shown in the books of account of the firm but at a higher valuation. The assessee-petitioner has claimed depreciation on the valuation of the asset which was assessed at the time of its acquisition and has been adjusted in the books of account. The depreciation has been allowed on such valuation in the assessments for the assessment years in question which have been framed under Section 143(3) of the Act. But now the Department is seeking to reopen the assessments to reassess the depreciation by reducing the same by taking the cost of acquisition of Umaid Bhawan Palace at the written down value of the asset in the hands of the firm, Umaid Bhawan Palace. This apprehension has been entertained by the assessee-petitioner on the basis of the assessments made for the subsequent years. It has been contended by learned counsel for the assessee-petitioner that the claim of the assessee for computing the depreciation on the acquisition valuation of the asset by the company and not on the depreciated value at the hands of the firm had been accepted by the Income-tax Appellate Tribunal and subsequent thereto, the applications for making reference under Section 256 or an appeal against that order have been rejected and the matter has become final for subsequent years. It has also been pointed out that for the period prior to the assessment years in question, this controversy has also been decided in favour of the assessee. Be that as it may, we find on a perusal of the reasons recorded by the Assessing Officer that the apprehension of the assessee-petitioner is con- firmed that the primary reason for reopening the assessments was computation of depreciation of Umaid Bhawan Palace and for the assessment years 1981-82, 1982-83, 1983-84, 1984-85 and 1985-86, the only reason for reopening the assessments was change in the basis of computation of depreciation of the asset, viz., Umaid Bhawan Palace. No satisfaction about any non-disclosure of material fact by the assessee or default on the part of the assessee has been recorded.
(3.) IN the aforesaid circumstances, so far as initiation of reassessment proceedings for the assessment years 1981-82, 1982-83, 1983-84 and 1984-85 is concerned, apparently the proceedings could have been initiated on March 29, 1990, only if there was satisfaction of the Assessing Officer to the effect that any income chargeable to tax has escaped assessment for such assessment year by reason of the 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 to disclose fully and truly all material facts necessary for his assessment for that assessment year. IN the absence of any such satisfaction under the proviso to Section 147 of the Act as amended with effect from April 1, 1989, no action could be taken under Section 147 after the expiry of four years from the end of the relevant assessment year. A perusal of the reasons recorded by the Assessing Officer itself goes to show that no such failure on the part of the assessee has been attributed for the alleged escapement of assessment and, therefore, in the absence of any such failure on the part of the assessee as noticed under the proviso to Section 147 of the Act, the notice issued on March 29, 1990, for reopening of the assessments for the assessment years prior to 1985-86 were clearly barred. For the assessment year 1984-85, the last of the four assessment years 1981-82 to 1984-85, the period for initiated proceedings for reopening the assessments by issuing notice has expired on March 31, 1989. Therefore, initiation of proceedings for reassessments for the assessment years 1981-82, 1982-83, 1983-84 and 1984-85 in respect of which original assessments have been made under Section 143(3) deserves to be quashed as they have been initiated wholly without jurisdiction by the concerned Assessing Officer. So far as initiation of proceedings for reassessment for the assessment year 1985-86 by issuing notice dated July 29, 1990, is concerned, it cannot be held to be barred by time. However, as noticed above, the only reason disclosed for reopening the assessment for the assessment year 1985-86 is to change the basis of computation of depreciation from the valuation at which the company has acquired the asset, viz., Umaid Bhawan Palace, to the written down valuation in the books of account of its predecessor firm. This, in my opinion, was merely a change of opinion, which is not permissible for assuming jurisdiction under Section 147 of the Act. Moreover, in the facts and circumstances of this case, as noticed above, when the principle regarding computation of depreciation on the acquisition valuation of the asset, i.e., Umaid Bhawan Palace, by the petitioner-company has become final for the periods prior to the period in question, and for the periods subsequent to the period in question, no useful purpose will be served in permitting the Assessing Officer to continue the reassessment proceedings now. ;