Law:

Section:

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment years 1997-98, 1999-2000, 2000-01 and 2002-03 - Assessee filed return of income and claimed expenditure incurred at head office to be set-off against other income - Assessee's claim was allowed in assessment - Thereafter, notices under section 148 were issued to assessee for reason that in assessment year 2001-02, Assessing Officer disallowed expenditure incurred at head office of assessee on ground that there was hardly any activity from head office - Whether since expenditure incurred at head office had been consistently allowed to be deducted for several decades, in absence of any specific material to show that in past said expenditure had been erroneously allowed, Assessing Officer could not have reopened assessments by merely stating that there was hardly any activity from head office - Held, yes FACTS The assessee was carrying on the business of cotton ginning and pressing from its four factories, located at various places in Maharashtra. The head office of the assessee was situated at Bombay. The assessee filed the return of income for the assessment years 1997-98, 1999-2000, 2000-01 and 2002-03. In the said return of income, the assessee claimed the expenditure incurred at the head office to be set-off against the other income. The claim of the assessee was allowed. Thereafter, the notices under section 148 were issued to the assessee for the reason that in assessment year 2001-02 the Assessing Officer disallowed expenditure incurred at head office on ground that there was hardly any activity from head office. The assessee objected to the reopening of the assessments and pointed out that in the past the very same issue relating to the expenditure/loss at the Bombay office had been adjudicated and allowed in the regular assessment orders passed under section 143(3). It was pointed out that even in the assessment year 2001-02, the disallowance made in respect of the loss/expenditure incurred at the Bombay office had been deleted by the Commissioner (Appeals). However, the objections filed by the assessee were rejected by the Assessing Officer. On writ :…

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