J.P Devadhar, J.:— Rule, returnable forthwith. By the consent of the parties, both the petitions are taken up for final hearing.

2. In these two petitions, the ICICI Bank Ltd. has challenged the notices both dated 17-10-2002 (relating to the assessment years 1996-1997 and 1997-1998) issued under section 148 of the Income Tax Act, 1961 by the Income Tax Authorities at Ahmedabad to Anagram Finance Ltd. The said Anagram Finance Ltd. was a Company registered under the Companies Act, 1956 and was assessed to tax under the jurisdiction of the Assistant Commissioner of Income Tax, Ahmedabad. With effect from 1-4-1998, the said Anagram Finance Ltd. merged with ICICI Ltd. It is not in dispute that by a letter dated 27-11-2001, ICICI Ltd. had informed the Income Tax Authorities at Ahmedabad about the merger of Anagram Finance Ltd. with ICICI Ltd. and had requested to transfer all pending cases of the erstwhile Anagram Finance Ltd. to the Deputy Commissioner of Income Tax, Circle 3(1), Mumbai under whose jurisdiction ICICI Ltd. was assessed. Thereafter, the ICICI Ltd. merged with ICICI Bank Ltd. with effect from 30th March, 2002. Thus, the fact that Anagram Finance Ltd. had ceased to exist with effect from 1-4-1998 was made known to the Income Tax Authorities at Ahmedabad by ICICI Ltd. vide letter dated 27-11-2001.

3. In spite of the knowledge about the non existence of Anagram Finance Ltd., the impugned notices, both dated 17-10-2002 have been issued under section 148 of the Income Tax Act, 1961 (‘the I.T Act’ for short) to Anagram Finance Ltd. for the purpose of reopening the assessments for the assessment year 1996-1997 and 1997-1998. The validity of these notices are challenged in the present petitions by ICICI Bank Ltd. mainly on two grounds. Firstly, it is contended that the notices issued to a non existent Company namely, Anagram Finance Ltd. is in contravention of the conditions precedent required to be fulfilled before initiating proceedings under section 148 of the i.t act and secondly, it is contended that even on merits, there is no failure on the part of the assessee to disclose fully and truly all materials facts and, therefore, the notices issued to the assessee beyond the period of 4 years from the end of the relevant assessment year are liable to be quashed and set aside.

4. The Revenue in its affidavit-in-reply to the petition stated that issuance of notices in the name of Anagram Finance Ltd., which had merged with ICICI Ltd. on 1-4-1998 is at the highest a mere irregularity and not an illegality and as such the said irregularity is saved under section 292B of the I.T Act. It is further stated that the ICICI has in fact filed returns on 15-11-2002 pursuant to the said notices dated 17-10-2002 and, therefore, it is not open to the petitioners to contend that the notices are invalid. As regards the merits of the case, it is stated that the assessments for AY 96-97 and 97-98 have been reopened because it was noticed by the Assistant Commissioner of Income Tax that depreciation on leased vehicles in the relevant assessment year were claimed by the assessee at 40% instead of 20%, as a result whereof excess depreciation has been allowed to the assessee and, therefore, there is reason to believe that the assessee has failed to furnish fully and truly all materials facts. Thus, according to the Revenue, the proceedings for reopening of the assessments have been initiated in consonance with the provisions of sections 147 and 148 of the i.t act.

5. Ms. A. Vissanji, learned advocate appearing on behalf of the petitioners submitted before us that when the Income Tax Authorities at Ahmedabad were aware of the fact that Anagram Finance Ltd. had ceased to exist with effect from 1-4-1998, notices under section 148 of i.t act could not have been issued in the name of Anagram Finance Limited, a non existent company. She submitted that issuance of notices to a non existent Company renders the initiation of proceedings under section 148 of the i.t act ab initio void. She submitted that the provisions of section 292b of the i.t act were enacted to save purely technical obligations without substantially coming in the way of the validity of the assessment proceedings. She submitted that issue of a valid notice is a condition precedent for initiating proceedings under section 148 of the Income Tax Act and if the notice is invalid or is not served on the proper person in accordance with law, then the assessment will be illegal and without jurisdiction. She submitted that failure to issue notice or issuing notices in the name of a dead person is a fundamental infirmity and such a fundamental infirmity cannot be called as a technical infirmity or mere irregularity and such vital infirmity cannot be cured or obliterated by relying on section 292B of the I.T Act. In this connection, the learned Counsel for the petitioners relied upon the Judgment of the Kerala High Court in the case of P.N Sasikumar v. C.I.T, 170 I.T.R 80, decisions of the Allahabad High Court in the case of C.I.T, Lucknow v. Smt. Phoolmati Devi, 144 I.T.R 954 (All.), Modi Sugar Mills Ltd. v. Union of India, 144 I.T.R 29 (All), decision of the Calcutta High Court in the case of Gajendra Kumar Banthia v. Union of India, 222 I.T.R 632 (Cal.), and C.I.T v. Bibhuti Bhusan Mallick, 89 I.T.R 317, the decision of the Madhya Pradesh High Court in the case of Shaikh Abdul Kadar v. I.T.O, Sagar 34 I.T.R 451 and the decision of the Apex Court in the case of C.I.T, Andhra Pradesh v. K. Adinarayan Murthy, 65 I.T.R 607 (S.C).

6. Learned Counsel for petitioners further submitted that merely because the petitioners pursuant to the impugned notices have filed their returns under protest does not mean that the petitioners have waived their objections to the validity of the notices issued under section 148 of the i.t act. It was submitted that the notices which are otherwise invalid cannot be validated by consent of parties. In this connection, the learned Counsel for the petitioners relied upon the decisions of the Apex Court in the case of Supdt. of Taxes, Dhubri v. Onkarmal Nathmal Trust, AIR 1975 SC 2065 and Y. Narayan Chetty v. I.T.O, Nellore, 35 I.T.R 388 (SC).

7. As regards the merits of the case, the learned Counsel for the petitioners submitted that the assessee had disclosed in its return of income all material facts regarding the claim for depreciation. It was submitted that in the reasons recorded for reopening the assessment, nowhere it is stated that there is any failure on the part of the assessee to disclose fully and truly all material facts relevant for the purpose of assessment. It was submitted that the fact that the assessee was a financial Company was disclosed in the return of income. In fact, the list of the parties to whom the vehicles were leased by the assessee were also before the assessing officer at the time of assessment and from the said list it could be seen that depreciation at different rates were claimed by the assessee (See pages 101 to 128 of the petition) for different categories and in the assessment order passed under section 143(3) of the I.T Act, the assessing officer had extensively dealt with the claim for depreciation and after careful consideration has in fact disallowed the depreciation to the extent of Rs. 4,72,72,472/-. It was accordingly submitted that there was full and complete disclosure made by the assessee and by no stretch of imagination, the claim for higher rate of rebate can be said to be a failure on the part of the assessee to disclose fully and truly all materials facts. It was submitted that even assuming that on the leased vehicles, 40% depreciation was wrongly claimed and wrongly allowed by the assessing officer, then it may be a case of granting excess relief and not a case of any failure on the part of the assessee to disclose fully and truly all material facts. It was submitted that if there is no failure on the part of the assessee to disclose fully and truly all material facts, then the reassessment proceedings beyond the period of 4 years from the end of the relevant assessment year, cannot be initiated under section 147/148 of the I.T Act. In this connection, the learned Counsel for the petitioners relied upon the decisions of this Court in the case of IPCA Laboratories v. DCIT, 251 I.T.R 416 and Bhor Industries v. C.I.T, 183 C.T.R 248.

8. Mr. Desai, learned Senior Advocate appearing on behalf of the respondents, on the other hand submitted that issuing notices under section 148 of the i.t act to Anagram Finance Ltd. at the highest can be said to be a mere irregularity and not an illegality and such an irregularity is saved by the provision of section 292b of the i.t act. He submitted that though notices were issued to Anagram Finance Ltd., it was shown as “C/o. ICICI Bank Ltd.” and in fact the notice has been received by the ICICI Bank Ltd. Therefore the notices impugned in these petitions may not be held to be invalid as in substance and in effect the same are in conformity and in accordance to the intent and purpose of sections 147 and 148 of the i.t act. He submitted that the notices addressed to Anagram Finance Limited C/o. ICICI Bank Ltd. may be treated as a clerical error which does not have any adverse effect. He submitted that pursuant to the notices dated 17-10-2002, the petitioners have filed the returns of income and, therefore, in the facts of the present case, issuance of notices in the name of Anagram Finance Ltd. should be treated as procedural irregularity curable under section 292B of the I.T Act. In this connection, he relied upon the Judgment of this Court in the case of C.I.T v. Devidayal and Sons, 68 I.T.R 425 (Bom.), wherein it was held that the notice for reassessment of a dissolved firm in respect of pre-dissolution period issued in the name of the firm and served on one of the partners was held to be valid and proper and it was further held that the notice to the firm though not addressed to the partner will not render it invalid, if in fact, it is served on the partner and accepted by him and return of the firm has been submitted in pursuance thereof. He submitted that in the present case, notices for initiating reassessment proceedings in the case of Anagram Finance Ltd. were required to be served on ICICI Bank Ltd. and in fact the notices have been served upon the ICICI Bank Ltd. and therefore, there being substantial compliance, it may be held that the notices issued are valid and proper. In support of the aforesaid submissions, he relied upon the decisions of the Allahabad High Court in the case of Nand Kishore Sita Ram v. C.I.T (1968) 67 I.T.R 349 (All.), decision of the Apex Court in the case of First Additional Income Tax Officer, Kozhikode v. Mrs. Suseela Sadanandan, 57 I.T.R 167 (SC), decision of this Court in the case of Shewaram D. Bhatia v. C.I.T, 82 I.T.R 638 (Bom.), decision of the Patna High Court in the case Manilal Raghavji Kothari v. C.I.T, 156 I.T.R 561 (Pat.) and the decision of Mansa Ram and sons v. C.I.T, 192 I.T.R 171 (All.).

9. As regards the merits of the case, Mr. Desai submitted that for the assessment years in question, the assessee had claimed depreciation on leased vehicles at higher rate of 40% as against the allowable depreciation at the rate of 20% which resulted in allowing excess depreciation in the sum of Rs. 10,89,84,585/-. He submitted that the action of the assessee in claiming higher depreciation though not eligible amounts to failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. On account of the failure on the part of the assessee to disclose fully and truly all material facts, income chargeable to tax has escaped assessment within the meaning of section 147 of the i.t act for which notices have been rightly issued by the assessing officer. Accordingly, it was submitted that there is no infirmity in the notices issued under section 148 of the i.t act and there is no merit in the Writ Petitions filed to challenge the impugned notices.

10. We have heard Counsel on both sides. Basically, two issues arise in these two petitions. Firstly, whether the notices both dated 17-10-2002 issued under section 148 of the i.t act to Anagram Finance Ltd. a company which had ceased to exist with effect from 1st April, 1998 are valid in law. Secondly, assuming that the notices issued in the name of Anagram Finance Limited are valid, in the absence of any material on record to show that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, whether the reopening of the assessments beyond the period of 4 years from the end of the relevant assessment years are valid?

11. Let us take the second issue for consideration first. From the reasons recorded for reopening the assessment, it is seen that the assessing officer arrived at the conclusion that there is failure on the part of the assessee to disclose fully and truly all material facts solely on the ground that the assessee had claimed in its return of income depreciation at 40% on leased vehicles instead of depreciation at 20%. On perusal of the assessment orders passed under section 143(3) of the Income Tax Act, it is seen that the assessing officer had taken note of the fact that the assessee is a finance Company and the fact that the assessee had claimed depreciation at different rates for different vehicles, including depreciation on leased vehicles at 40%. The assessing officer after scrutinizing the documents furnished by the assessee and on investigation found that the depreciation claimed on items at 40% was proper and found that the depreciation on items claimed at 100% was not proper. Thus, the grant of depreciation at 40% on leased vehicles is a conscious decision taken by the assessing officer at the time of final assessment. Therefore, on the same set of facts if another assessing officer arrives at the conclusion that under the Income Tax Act the depreciation on leased vehicles is allowable at 20% and not at 40% then it is only a change of opinion and it has nothing to do with the disclosure of material facts on the part of the assessee. Assuming that the depreciation allowable on leased vehicles was 20% and there was excess relief granted, even then, it cannot be a case of failure on the part of the assessee to disclose fully and truly material facts. In such circumstances, if the proceedings were initiated within 4 years from the end of the relevant assessment years, then, the case would have been altogether different. In the present case, admittedly, notices for reopening of the assessments under section 148 of the i.t act have been issued beyond the period of 4 years from the end of the relevant assessment years.

12. Under section 147 of the i.t act, concluded assessments can be reopened beyond a period of 4 years from the end of the relevant assessment years only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. Having furnished all material facts even if an assessee erroneously claims higher depreciation, it will not be a case of failure to disclose fully and truly all materials facts. At what rate the depreciation is to be claimed is a matter of legal inference to be drawn from the material facts. If the legal inference drawn from the materials facts is erroneous it cannot be said that there is failure on the part of the assessee to disclose material facts. In the present case, on the material facts disclosed, the assessee had claimed depreciation at 40% and the same was allowed by the assessing officer. It is not the case of the revenue that the facts disclosed by the assessee were incorrect or that there were any other facts which were material for the assessment which have not been disclosed by the assessee. Under the circumstances, if there is no failure to disclose material facts, then, even if there is excess relief granted, the assessments cannot be reopened beyond the period of 4 years from the end of the relevant assessment years. This Court in the case of IPCA Laboratories Ltd. (supra) and in the case of Bhor Industries (supra) has held that notice for reopening of the assessment cannot be issued after a period of 4 years unless the escapement of income is on account of failure on the part of the assessee to disclose fully and truly all material facts. It has been further held that the explanation to section 147 of the i.t act has to be read with section 148 of the i.t act in its entirety. In the light of the aforesaid decisions, in the present case, there being no failure on the part of the assessee to disclose fully and truly all material facts, the impugned notices issued beyond the period of 4 years from the end of the relevant assessment years are liable to be held to have been issued in contravention of the provision of the Income Tax Act.

13. On behalf of the Revenue, reliance was placed on a recent decision of this Court in the case of Kotak Mahindra Finance Ltd. v. BCIT, 2003 (4) Mh. L.J 806 : 265 I.T.R 114 (Bom.). In that case, it has been held that a Finance Company leasing vehicles to a customer does not constitute user for business of running them on hire and therefore, not entitled to higher rate of depreciation. The ratio laid down therein is not relevant herein because the issue raised in that case was altogether different. The issue raised and considered in that case was whether a finance company leasing vehicles to its customers constitute the business of running the vehicles on hire, where as, in the present case, the issue involved is whether there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, the ratio laid down in the aforesaid decision does not support the contention of the revenue in the present case.

14. In the light of our decision on the second issue it is not necessary for us to deal with the first issue namely, whether the notices issued in the name of a non existent company are valid, or not.

15. In this view of the matter, we quash and set aside the impugned notices both dated 17th October, 2002. Rule is made absolute in terms of prayer clause (a) in both the petitions with no order as to costs.

Order accordingly.