Reassessment : S. 147 and S. 148 of Income-tax Act, 1961 : A.Ys. 1996-97 to 1998-99 and 2001-02 : Reason to believe : Satisfaction not of AO of the assessee but borrowed from another AO : Not sufficient : Reopening not valid.

II. Reported :

[CIT v. Shree Rajasthan Syntex Ltd., 313 ITR 231 (Raj.)]

The assessee company had leased out certain plant and
machinery to another company. The depreciation claimed by the assessee on the
capital asset so leased out was allowed by the Assessing Officer. The lessee
had claimed revenue expenditure for the lease rent paid to the assessee but
the Assessing Officer had allowed depreciation on the capital value of the
plant and machinery. On noticing this fact, the Assessing Officer of the
assessee, reopened the completed assessments and disallowed the claim for
depreciation. The Tribunal held that the reopening was not valid as the
satisfaction was not of the Assessing Officer of the assessee, but that of the
Assessing Officer of the lessee.

On appeal by the Revenue, the Rajasthan High Court upheld
the decision of the Tribunal and held as under :

“The reassessment proceedings had been initiated only on
account of the opinion of the Assessing Officer of the lessee and the
Tribunal was right in finding that it was ‘borrowed satisfaction’ which was
not sufficient to confer power on the Assessing Officer to initiate
reassessment proceedings against the assessee.”