Case Law Details

Case Name : Assistant Commissioner of Income-tax (OSD) Vs Parixit Industries (P.) Ltd. (Supreme Court of India)
Appeal Number : CC.NO. 15455 OF 2012
Date of Judgement/Order : 14/09/2012
Related Assessment Year :
Courts : Supreme Court of India (913)

SUPREME COURT OF INDIA

Assistant Commissioner of Income-tax (OSD)

versus

Parixit Industries (P.) Ltd.

CC.NO. 15455 OF 2012

Date of Pronouncement- September 14, 2012

ORDER

Heard learned counsel for the petitioner.

Delay condoned.

The special leave petition is dismissed.

———————-

High Court in respect of the above is as follows :-

HIGH COURT OF GUJARAT

Parixit Industries (P.) Ltd.

versus

Assistant Commissioner of Income-tax (OSD) Circle-5

SPECIAL CIVIL APPLICATION NO. 17722 OF 2011

MARCH 12, 2012

JUDGMENT

Bhaskar Bhattacharya, Actg. CJ.  

By this writ-application under Article 226 of the Constitution of India, an assessee under the Income Tax Act, 1961 [“the Act”] has prayed for a direction upon the income tax authority not to proceed further in pursuance of the notice issued under Section 147 of the Act, being Exhibit-I. It has also prayed for quashing the order passed by the respondent rejecting the objection of the writ-petitioner, being Exhibit-M to this application.

2. The facts relevant for the purpose of disposal of this writ-application may be summed up thus:

2.1 For the Assessment Year 2006-07, the writ-petitioner submitted a return with computation of income showing gross total income of Rs. 1,64,00,177/- and claimed deduction of Rs. 1,06,28,939/-under Section 80-IA of the Act. The return was also accompanied by the requisite audit report under Section 80-IA [7] in form No. 10CCB. The return was also accompanied by the annual report of the petitioner company for the said year.

2.2 Assessing Officer of the petitioner sent a notice under Section 143[2] of the Act to the petitioner along with detailed questionnaire and those were replied to by the petitioner by its letter dated March 5, 2008.

2.3 One of the queries was regarding deduction under Section 80-IA of the Act. The writ-petitioner in that reply supplied over again report in Form 10CCB and reproduced the provision of Section 80-IA [4] indicating the applicability of the benefit to the nature of the enterprises. The writ-petitioner also pointed out that the company had entered into an agreement with a Government of Gujarat Company by the name of Gujarat Green Revolution Company Ltd. and also with a Government of Andhra Pradesh Company by the name of Andhra Pradesh Micro Irrigation Project for supply and installation of Micro Irrigation System.

2.4 The Assessing Officer passed scrutiny assessment order dated March 25, 2008 and in the said order, the Assessing Officer specifically referred to the above questionnaire and the above letter dated March 5, 2008. It may not be out of place to mention here that in the questionnaire, the Assessing Officer had raised 14 queries as would appear from the reply given by the writ-petitioner dated March 5, 2008.

2.5 The Assessing Officer, on the basis of the aforesaid answers, made three additions/disallowances by way of Provident Fund/Employees State Insurance payment/disallowance under Section 40[a][ia] and the depreciation on vehicles.

2.6 The Assessing Officer, thereafter, issued a notice dated March 9, 2010 under Section 148 of the Act in respect of allowing of bad debts in Section 143[3] assessment and provided the reasons recorded by his order dated March 9, 2010.

2.7 Thereafter, the Assessing Officer again issued a notice dated March 4 2011 under Section 148 of the Act. The petitioner, by letter dated April 7, 2011 acknowledged the notice and requested that the return under Section 139 of the Act dated December 30, 2006 should be treated to be the one in response to the above notice and further requested to supply the reasons recorded by the Assessing Officer for reopening of the assessment.

2.8 The Assessing Officer supplied the reasons dated March 4, 2011 under a covering letter dated June 7, 2011. The reasons assigned by the Assessing Officer are quoted below:

“It is seen that during the year assessee company claimed deduction u/s. 80IA[4] on the ground that the assessee is an enterprises carrying out business of developing infrastructure facilities fulfill all the conditions laid down in sub clause [a][b][c] of Section 80IA[4][i] of the I.T. Act and also claimed that it has developed irrigation project.

It has come to my notice that the assessee is engaged in manufacturing of irrigation projects i.e. Drip irrigation, Sprinkler irrigation, Micro sprinkler, Gravity fed family drip system etc. and the same irrigation products have been supplied to various Companies and in some cases the assessee has worked as contractor.

As discussed above, as the assessee is a contractor or supplier of irrigation products and it cannot be called a developer of any new infrastructural facility. Therefore it cannot be said that the assessee has entered into agreement for developing a new infrastructure facility.

In view of the above facts, assessee has not fulfilled the condition of Section 80IA [4] of the I.T. Act and has wrongly claimed deduction u/s. 80IA [4] of the I.T.Act, 1961.

In view of the facts discussed above, I have reason to believe that income of Rs. 106,28,939/- being the amount of inadmissible deduction wrongly claimed by the assessee u/s. 80IA[4] chargeable to tax has escaped assessment for A.Y. 2006-07 and accordingly it is the fit case for reopening the assessment u/s. 147 for AY 2006-07.”

2.9 The writ-petitioner, on September 1, 2011 filed objections pointing out that the notice impugned for reopening was based on mere change of opinion, because the benefit under Section 80-IA was allowed after the relevant points underwent the process of inquiry and assessment during the proceedings under Section 143[3] of the Act.

2.10 The Assessing Officer, however, rejected the objections by his order dated September 18, 2011 thereby alleging that it was not a case of change of opinion.

3. Being dissatisfied, the writ-petitioner has come up with the present writ-application.

4. Mr. J.P. Shah, learned counsel appearing with Mr. Manish J. Shah, on behalf of the petitioner strenuously contended before us that the change of opinion cannot be the basis of notice under Section 148 of the Act within four years. According to Mr.Shah, in the course of regular assessment under Section 143 of the Act, the Assessing Officer raised a specific query regarding the relief under Section 80-IA of the Act claimed by the petitioner and the petitioner gave elaborate reply dated March 5, 2008. Mr. Shah points out that the Assessing Officer being satisfied framed a favourable opinion and did not make the addition/disallowance of Section 80-IA relief claimed by the writ-petitioner.

5. According to Mr. Shah, therefore, there was no justification of issuing notice under Section 148 of the Act simply on the basis of change of opinion which is not even borne out by the record.

6. In support of such contention, Mr. Shah relies upon the decision of the Supreme Court in the case of Calcutta Discount Co. Ltd., v. ITO, [1961] 41 ITR 191 (SC). Mr. Shah, therefore, prays for setting aside the notice issued under Section 148 of the Act and the reasons recorded by the Assessing Officer, rejecting the objections filed by the writ-petitioner.

7. Mr. Manish R. Bhatt, the learned Sr. Advocate, appearing with Mrs. Mauna M. Bhatt, on behalf of the Revenue, has, on the other hand, opposed the aforesaid contentions raised by Mr. Shah and has contended that all that is necessary for the purpose of invoking Section 148 of the Act within the period of limitation is that something escaped at the time of regular assessment. According to Mr. Bhatt, it appears that while granting relief under Section 80-IA of the Act in the regular assessment, the Assessing Officer overlooked certain materials including the provision contained in Explanation added to sub-section (13) to Section 80-IA of the Act, which was substituted in the year 2009 with retrospective operation from April 1, 2000. Mr. Bhatt also relies upon Explanation 3 to Section 147 of the Act in support of his contention that the above point, although not taken in the reason assigned in support of invoking the provisions contained in section 147, can be availed of by him in this proceedings. Mr. Bhatt, therefore, prays for dismissal of the present writ-application.

8. Therefore, the only question that arises for determination in this writ-application is whether the Assessing Officer was justified in issuing notice under Section 148 of the Act in the facts of the present case.

9. In order to appreciate the aforesaid question, it will be profitable to refer to the provisions contained in Section 147 of the Act, which is quoted below.

Income escaping assessment.

“147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned [hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year]:

Provided that where an assessment under sub-section [3] of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless 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:

Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.

Explanation 1.– Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.

Explanation 2.– For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:-

(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax;

(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;

(c) where an assessment has been made, but–

(i) income chargeable to tax has been under assessed; or

(ii) such income has been assessed at too low a rate; or

(iii) such income has been made the subject of excessive relief under this Act; or

(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.

Explanation 3.– For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section [2] of section 148.”

10. In the case before us, the assessee having challenged the notice of reassessment in a proceeding under Article 226 of the Constitution, before proceeding further, we propose to deal with the scope of interference in such a matter.

11. The Supreme Court in the case of CIT v. A. Raman & Co. [1968] 67 ITR 11 had the occasion to deal with such a question. We may appropriately refer to the following observations made by a three-judge-bench in the above matter by relying upon the majority view taken in an earlier decision of that court taken by a bench of five judges:

“4. It was held by this Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, [1961] 41 ITR 191 = (AIR 1961 SC 372) that the High Court in appropriate cases has power to issue an order prohibiting the Income-tax Officer from proceeding to reassess the income when the conditions precedent do not exist. At p. 207, K. C. Das Gupta, J., delivering the majority judgment of the Court observed:

“It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled will issue appropriate orders or directions to prevent such consequences.

The High Court may, therefore, issue a high prerogative writ prohibiting the Income-tax Officer from proceeding with reassessment when it appears that the Income-tax Officer had no jurisdiction to commence proceeding.

5. The condition which invests the Income-tax Officer with jurisdiction has two branches: (i) that the Income-tax Officer has reason to believe that income chargeable to tax has escaped assessment; and (ii) that it is in consequence of information which he has in his possession and that he has reason so to believe. Since the learned Judges of the High Court have concentrated their attention upon the second branch of the condition and have reached their conclusion in favour of the assessees on that branch, it would be appropriate to deal with the correctness of that approach. The expression “information” in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. If as a result of information in his possession the Income-tax Officer has reason to believe that income chargeable to tax had escaped assessment, the Income-tax Officer has jurisdiction to assess or reassess income under Section 147 (1) (b) of the Income-tax Act, 1961, Information in his possession that income chargeable to tax has escaped assessment furnishes a starting point for assessing or re-assessing income. If he has that information, the Income-tax Officer may commence proceedings for assessment or reassessment. To commence the proceeding for reassessment it is not necessary that on the materials which came to the notice of the Income-tax Officer, the previous order of assessment was vitiated by some error of fact or law.

6. The High Court exercising jurisdiction under Article 226 of the Constitution has power to set aside a notice issued under Section 147 of the Income-tax Act, 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may, in exercise of its powers, ascertain whether the Income-tax Officer had in his possession any information: the Court may also determine whether from that information the Income-tax Officer may have reason to believe that income chargeable to tax had escaped assessment. But the jurisdiction of the Court extends no further. Whether on the information in his possession he should commence a proceeding for assessment or reassessment, must be decided by the Income-tax Officer and not by the High Court. The Income-tax Officer alone is entrusted with the power to administer the Act; if he has information from which it may be said prima facie, that he had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re-appraisal of the evidence.

7. The High Court in this case was apparently of the view that the information in consequence of which proceedings for reassessment were intended to be started, could have been gathered by the Income-tax Officer in charge of the assessment in the previous years from the disclosures made by the two Hindu undivided families. But that, in our judgment, is wholly irrelevant. Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must, it is true, have come into possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected.” [Emphasis supplied].

12. At this stage, we propose to refer to two more decisions of the Supreme Court, one, in the case of Gemini Leather Stores v. ITO [1975] 100 ITR 1 and the other, in the case of ITO v. Nawab Mir Barkat Ali Khan Bahadur, [1974] 97 ITR 239 which would be relevant for the purpose of this case.

13. In the case of Gemini Leather Stores (supra), while making a best judgment assessment, the Income-tax Officer had discovered certain transactions evidenced by the drafts, which the assessee had not disclosed. In spite of this discovery and the knowledge of all the material facts, the Income-tax Officer did not make necessary enquiries and draw proper inferences as to whether the amounts invested in the purchase of the drafts could be treated as part of the total income of the assessee during the relevant year. In such a situation, it was held that it was plainly a case of oversight and the Income-tax Officer could not take recourse to Section 147 (a) to remedy the error resulting from his own oversight and that therefore the notice under Section 148 should be quashed.

14. In the case of Nawab Mir Barkat Ali Khan Bahadur, Hyderabad (supra ), the Supreme Court even went to the extent that non-production of the documents at the time of the original assessments cannot be regarded as non-disclosure of any material facts necessary for the assessment of the respondent for the relevant assessment years, where such documents conform to the documents already filed by the assessee in material particulars.

15. The following observations are in this connection relevant and are quoted below:

“Non-production of the documents executed in 1957 at the time of the original assessments cannot therefore be regarded as non-disclosure of any material fact necessary for the assessment of the respondent for the relevant assessment years. The High Court was right in holding that the Income-tax Officer had no valid reason to believe that the respondent had omitted or failed to disclose fully and truly all material facts and consequently had no jurisdiction to reopen the assessments for the four years in question. Having second thoughts on the same material does not warrant the initiation of a proceeding under Section 147 of the Income-tax Act 1961.” [Emphasis supplied].

16. At this stage, we may rather aptly refer to a latest three-judge-bench decision of the Supreme Court in the case of CIT v. Kelvinator of India Ltd. [2010] 187 Taxman 312 where the said court after taking into consideration the effect of Direct Tax Laws (Amendment) Act, 1987 on section 147 made the following observations while dismissing the appeals preferred by the Revenue:

“5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words “reason to believe” failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen.

6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place.

7. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4-1989, the assessing officer has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words “reason to believe” but also inserted the word “opinion” in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words “reason to believe”, Parliament reintroduced the said expression and deleted the word “opinion” on the ground that it would vest arbitrary powers in the assessing officer.

8. We quote hereinbelow the relevant portion of Circular No. 549 dated 31-10-1989, which reads as follows:

“7.2. Amendment made by the Amending Act, 1989, to reintroduce the expression ‘reason to believe’ in Section 147.—A number of representations were received against the omission of the words ‘reason to believe’ from Section 147 and their substitution by the ‘opinion’ of the Assessing Officer. It was pointed out that the meaning of the expression, ‘reason to believe’ had been explained in a number of court rulings in the past and was well settled and its omission from Section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended Section 147 to reintroduce the expression ‘has reason to believe’ in the place of the words ‘for reasons to be recorded by him in writing, is of the opinion’. Other provisions of the new Section 147, however, remain the same.” [Emphasis supplied]

9. For the aforestated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs.” [Emphasis supplied].

17. Bearing in mind the aforesaid principles, we now propose to consider the case before us.

18. After hearing the learned counsel for the parties and after going through the materials on record, we find that the only reason for issuing notice under Section 148 is reflected in the second and the third paragraph of the written reason sent to the petitioner, which we have already quoted above. According to the said reason, it had come to the notice of the concerned officer that the assessee was engaged in manufacturing of irrigation projects i.e. Drip irrigation, Sprinkler irrigation, Micro sprinkler, Gravity fed family drip system etc. and the same irrigation products have been supplied to various Companies and in some cases the assessee has worked as contractor.

19. The Officer concerned was, on the above fact, of the opinion that the assessee is a contractor or supplier of irrigation products and it cannot be called a developer of any new infrastructural facility. Therefore, it cannot be said that the assessee has entered into agreement for developing a new infrastructure facility.

20. In view of the above fact, the concerned officer opined that the assessee has not fulfilled the condition of Section 80IA [4] of the I.T. Act and has wrongly claimed deduction u/s. 80IA [4] of the I.T.Act, 1961. Consequently, in view of the facts mentioned above, he had reason to believe that income of Rs. 106,28,939/- being the amount of inadmissible deduction wrongly claimed by the assessee u/s. 80IA[4] chargeable to tax has escaped assessment for A.Y. 2006-07 and accordingly it is the fit case for reopening the assessment u/s. 147 for AY 2006-07.

21. From the above reason disclosed by the officer concerned it appears that it is not the case of the Revenue that the assessee had suppressed any material at the time of regular assessment and that any new document has come from which the above opinion was formed. It would appear from the documents supplied by the assessee at the time of original assessment that the fact that the assessee was engaged in manufacturing of irrigation projects (sic. products) i.e. Drip irrigation, Sprinkler irrigation, Micro sprinkler, Gravity fed family drip system etc. and that the same irrigation products have been supplied to various Companies and in some cases the assessee has worked as contractor could have been arrived at. In spite of existence of those materials on record, the Assessing Officer gave the relief under Section 80 IA of the Act. Now the concerned officer has changed his views from the selfsame materials on record. Thus, the Assessing Officer at the time of original assessment from the materials on record could arrive at a conclusion, which now he has reached.

22. The reason disclosed, therefore, does not come within the purview of Section 147 of the Act, as it is a case of second thought on the same materials.

23. Mr. Bhatt at this stage tried to convince us that at the time of original assessment, the Assessing Officer could not apply the provision contained in Explanation added to sub-section (13) of Section 80-IA of the Act, which was substituted in the year 2009 with effect from April 1, 2000. Mr. Bhatt submits that the Explanation 3 to Section 147 of the Act authorizes him to take such point before us notwithstanding the fact that such point was not taken by the Assessing Officer in the reason assigned in support of the notice.

24. We find that the Explanation to sub-section (13) of Section 80IA of the Act in vogue at the time of original assessment was inserted by the Finance Act, 2007 with effect from April 1, 2000 and at that time, the same was as follows:

“Explanation- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply to a person who executes a work contract entered into with the undertaking or enterprise, as the case may be.”

Subsequently, by way of further amendment of Finance Act, 2009 with effect from April 1, 2000 the above Explanation was substituted by the following one:

“Explanation- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in the sub-section (4) which is in the nature of a works contract awarded by any person(including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1).

25. It is now a settled law that if an explanation is added to a section of a statute for the removal of doubts, the implication is that the law was the same from the very beginning and the same is further explained by way of addition of the Explanation. Thus, it is not a case of introduction of new provision of law by retrospective operation. We have found that the petitioner had disclosed all the materials regarding its activities and there was no suppression of materials. In spite of such disclosure, the Assessing Officer gave benefit of the provision by considering the then Explanation which was substantially the same and thus, it could not be said that any income escaped assessment in accordance with the then law. We have already pointed out that the Assessing Officer has now given a second thought over the same materials and according to him, as the assessee is a contractor or supplier of irrigation products, it cannot be called a developer of any new infrastructural facility.

26. From the materials placed before him by the petitioner, the Assessing Officer earlier did not arrive at such conclusion and thus, the amended Explanation subsequently added cannot be of any help to him in arriving at the second opinion based on the alleged new law.

27. Moreover, in the reason assigned in support of initiation of reopening proceedings, such reason has not been disclosed.

28. We, thus, find that the condition precedent for issue of notice impugned in this Special Civil Application has not been established from the materials on record and consequently, the notice is liable to be quashed on that ground.

29. We now propose to deal with the decision cited by Mr. Bhatt.

30. In the case of GKN Driveshafts (India) Ltd v. ITO [2003] 259 ITR 19 relied upon by Mr. Bhatt, as the judgment is a short one consisting of seven small paragraphs, we quote the entire judgment for the purpose of ascertaining whether the same is a binding precedent in the facts of the present case. The same is quoted below:

“1. Heard learned counsel for the parties.

2. Leave is granted.

3. By the order under challenge, a Division Bench of the High Court at Delhi dismissed the writ petition filed by the appellant challenging the validity of notices issued under Sections 148 and 143(2) of the Income Tax Act, 1961. The High Court took the view that the appellant could have taken all the objections in its reply to the notices and that, at that stage, the writ petition was premature. Accordingly, the writ petition was dismissed on 31-1-2001. Aggrieved by that order, the appellant is in appeal before us.

4. Mr M.L. Varma, learned Senior Counsel appearing for the appellant, submits that the impugned notices related to seven assessment years; that during the pendency of these appeals, in respect of two assessment years viz. 1995-96 and 1996-97, assessment has been completed against which appeals have been filed. Notices relating to the other five assessment years viz. 1992-93, 1993-94, 1994-95, 1997-98 and 1998-99, are now the subject-matter of these appeals.

5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years.

6. Insofar as the appeals filed against the order of assessment before the Commissioner (Appeals), we direct the Appellate Authority to dispose of the same, expeditiously.

7. With the above observations, the civil appeals are dismissed.”

31. The general observations made in paragraph 5 of the judgment, in our opinion, cannot be construed as an absolute proposition of law on the subject. It appears that the said two-judge-bench did not refer to the earlier five-judge-bench or the three-judge-bench or even the two-judge-bench decisions of the Supreme Court quoted above by us in this judgment. In those judgments, those benches approved the proposition of law that a writ-court in exercise of power conferred under Article 226 of the Constitution of India can quash a notice of reopening of assessment under the circumstances indicated therein. Thus, in a case like the present one, where those conditions precedent have not been complied with, we, in exercise of power conferred under Article 226 of the Constitution, are entitled to quash the notice. The said decision, thus, cannot be said to have exhaustively laid down the law on the point.

32. Thus, in the case before us, in the absence of existence of “any tangible material” to come to the conclusion that there was escapement of income from assessment, the Assessing Officer exceeded his authority to reopen the assessment merely on the basis of a “change of opinion” and accordingly, it is a fit case of quashing the notice.

33. We, accordingly, pass order in terms of prayer A and B of paragraph 11 of the application.

34. There will be, however, no order as to costs.

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