1 wp55-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.55 OF 2011 Bai Kabibai and Hansraj Morarji Charity Trust & Anr. ..Appellants. V/s. Income tax, Exemption 1(1), Mumbai & Ors. ..Respondents. Mr. P.J. Pardiwala, senior Advocate with Jitendra Jain i/b. Kanga & Co. for appellants. Mr. Suresh Kumar for respondents. CORAM : J.P. DEVADHAR AND MRS. MRIDULA BHATKAR, JJ. DATED : 15TH FEBRUARY, 2011 P.C. :- 1. Heard. Rule. Rule returnable forthwith. 2. Mr. Suresh Kumar waives service for the respondents. By consent, petition is taken up for final hearing. 3. The petitions are challenging the notice dated 24/03/2010 issued under Section 148 of the Income Tax Act, 1961 whereby the assessment for AY 2003-04 is sought to be reopened beyond four years from the end of the relevant assessment. During the pendency of the petition, the reassessment order has been passed on 7/12/2010. Hence the said reassessment order is also challenged. 2 wp55-11 4. The reasons recorded for reopening of the assessment reads as under:- " The assessment for the year under consideration was finalized by the then Assessing Officer, wherein based upon the Assessee's claim he allowed depreciation of Rs.68,04,426/-. The depreciation is claimed and allowed on the asset, the capital expenditure incurred in respect of which was allowed as exemption on account of application of income u/s.11 of the Income Tax Act, 1961. This act of the Assessee amounts to claim of double deduction in contravention of the law laid by the Hon'ble Supreme Court of India in the case of Escorts Limited V/s. UOI 199 ITR(43). Further, the Assessee Trust has claimed deficit of Rs.15,72,000/- and which has been allowed by the Assessing Officer. Needless to say that the deficit arises on account of expenditure and application of funds over the receipts. The source of this expenditure and application of funds over the receipts of the Trust is a corpus fund and accumulation under section 11 of the I.T. Act, which has already been claimed and allowed as exemption u/s.11 of the I.T. Act. This very act of the Assessee amounts to claim of double exemption, contrary to the law laid down by the Hon'ble Apex Court cited in paragraph above. I have therefore reason to believe that the cause of escapement of income within the meaning of section 147 of Income Tax Act, 1961, is failure on the part of the Assessee Trust to make full and true disclosure of the material facts as far as both the above issues is concerned. The sanction u/s. 151 (1) of the Income Tax Act, 1961, is solicited for issuance of notice u/s.148 of the Act, from the DIT (Exemption) 3 wp55-11 as the assessment for the year under consideration has been finalized u/s.143(3) of Income Tax Act, and a period of four years have lapsed from the end of the relevant assessment year. " 5. From the aforesaid reasons recorded by the assessing officer, it is evident that the assessment is sought to be reopened on the basis of the material on record and there is no failure on the part of the assessee to disclose fully and truly all the materials facts for the purpose of assessment. As per the proviso Section 147, assessments beyond four years from the end of the relevant assessment year can be reopened only if there is failure on the part of the assessee to disclose fully and truly all the material facts. 5. Moreover, counsel on both sides agree that even on merits the question is covered against the revenue by the decision of this Court in the case of CIT V/s. Institute of Banking reported in [2003] 264 I.T.R. 110. In this view of the matter, the notice dated 24/03/2010 is quashed and set aside and in consequence thereof the reassessment order passed on 7/12/2010 pursuant to the aforesaid notice dated 24/03/2010 is also set aside.. 6. Rule is made absolute in the above terms with no order as to costs. (MRS. MRIDULA BHATKAR, J.) (J.P. DEVADHAR, J.)