Suresh Kumar Agarwal v. Dy. / Assistant Commissioner Of Income Tax Circle - 2(1), Bilaspur

AFR HIGH COURT OF CHHATTISGARH, BILASPUR Writ Petition (T) No. 135 of 2019 Reserved on 22.11.2019 Delivered on 05.12.2019 Suresh Kumar Agarwal S/o Late Shri Shankar Lal Agrawal, AgedAbout 56 Years, Civil Contractor, Jindal Fuels, Main Road, PostLormi, District Mungeli, Chhattisgarh 495115 ---- Petitioner Versus 1. Dy. / Assistant Commissioner Of Income Tax Circle - 2(1), Bilaspur 2. The Pr. Commissioner Of Income Tax Bilaspur 3. The Chairman, Central Board Of Direct Taxes, North Block, CentralSecretariat, New Delhi - 110001Secretariat, New Delhi - 110001 ---- Respondents For Petitioner For Respondents : : Mr. S. Varudevan along with Mr. Romir S. Goyal and Mr. Shashank Sharma, AdvocatesMs. Naushina Afrin Ali along with Mr. Amit Choudhary, Advocates. Hon'ble Shri Justice P. Sam Koshy Order On Board 1.The challenge in this writ petition is to the order Annexure P-1 dated 09.08.2019 passed by the respondent no.1. Vide the impugned order, the respondent no.1 has decided the objection raised by thepetitioner in respect of reopening of the assessment of income tax forthe assessment year 2012-13 under Section 147 of the Income TaxAct,1961. 2. The facts of the case, in brief, are that the petitioner who is a civil contractor had submitted his assessment of income tax for the year2012-13. During the course of scrutiny of the assessment, theDepartment found certain discrepancies in respect of certainunsecured loans received by the petitioner. The respondentsinitiated a proceeding under Section 147 of the IT Act, 1961 dealingwith income escaping assessment to which the petitioner submittedhis reply. Thereafter, an order of reassessment was passed on22.12.2018 under Section 68 of the IT Act. Against the said orderdated 22.12.2018, the petitioner has already preferred an appealwhich is pending consideration before the CIT(Appeals). Down the line, the respondents further found that there are stillcertain income which has escaped assessment and therefore a freshnotice under Section 147 of IT Act was issued on 29.03.2019. Thepetitioner filed an objection on 29.07.2019 questioning thereassessment process again initiated. The said objection raised bythe petitioner on 29.07.2019 stands decided vide impugned orderdated 09.08.2019 which led to the filing of the present writ petition. According to the petitioner, the subject matter of reassessment is onewhich is not permissible under Section 147 of the IT Act. Thepreconditions attached to Section 147 of IT Act are not revealed inthe notice under Section 147 of IT Act. In other words, according tothe petitioner, the statutory requirement or precondition for invokingthe provisions of Section 147 of IT Act has not been complied withnor is it available for the respondents in the given facts of the case.According to the petitioner, there has been no suppression of facts According to the petitioner, the subject matter of reassessment is onewhich is not permissible under Section 147 of the IT Act. Thepreconditions attached to Section 147 of IT Act are not revealed inthe notice under Section 147 of IT Act. In other words, according tothe petitioner, the statutory requirement or precondition for invokingthe provisions of Section 147 of IT Act has not been complied withnor is it available for the respondents in the given facts of the case.According to the petitioner, there has been no suppression of facts and details by the petitioner while assessment was made and at thesame time, the respondents also had scrutinized the assessment ofthe petitioner's return and had already initiated a proceeding underSection 147 of IT Act in respect of certain unsecured loans receivedby the petitioner which got escaped from the assessment at the firstinstance. According to the petitioner, he had made available all thesefacts and details and the entire book of accounts including the bankstatements were already in possession of the respondents.According to the petitioner, once on scrutiny the respondents did notfind any error so far as the bank statements and book of accountsare concerned, the respondents cannot again subject the petitionerto reassessment proceeding under Section 147 of IT Act. There wasno such material available with the respondents nor was there anynew tangible material which was found by the respondents which hadescaped assessment, on the basis of which a proceeding underSection 147 of IT Act could have been initiated. According to thepetitioner, the scope under Section 147 of IT Act cannot be stretchedto such extent that reassessment becomes permissible under anycircumstances and at any point of time. According to the petitioner,there has to be strong and cogent material available with therespondents for invoking the provisions of Section 147 of IT Act and itshould also be a case where the assessee has suppressed thesematerials from being assessed at the first instance and which wasdetected at a later stage, necessitating a proceeding under Section147 of the Act. 4 5.Counsel for the petitioner, in this regard, relied upon the judgment ofthe Delhi High Court in the case of Revolution Forver Marketing (P)Ltd. Vs. Income-tax Officer, (2019) 104 taxmann.com 61 (Delhi). Hefurther relied another judgment of the Delhi High Court in the case ofCommissioner of Income Tax Central I Vs. Indo Arab Air Services,(2015) 64 taxmann.com 257 (Delhi). The petitioner also relied uponthe judgment of the Supreme Court in the case of Commissioner ofIncome-tax, Delhi Vs. Kelvinator of India Ltd., (2010) 187 Taxman312 (SC). the Delhi High Court in the case of Revolution Forver Marketing (P)Ltd. Vs. Income-tax Officer, (2019) 104 taxmann.com 61 (Delhi). Hefurther relied another judgment of the Delhi High Court in the case ofCommissioner of Income Tax Central I Vs. Indo Arab Air Services,(2015) 64 taxmann.com 257 (Delhi). The petitioner also relied uponthe judgment of the Supreme Court in the case of Commissioner ofIncome-tax, Delhi Vs. Kelvinator of India Ltd., (2010) 187 Taxman312 (SC). 6.Per contra, learned standing counsel for the Department opposingthe petition submits that the petition is pre-mature at this juncture forthis Court to invoke its extra ordinary writ jurisdiction. According tothe respondents, it is a case where the reassessment proceedingnow has been initiated at the behest of the DIT (I & CI) who hadintimated that in the saving bank account maintained by the petitionerwith Punjab National Bank, Khaprikala, Lormi, Bilaspur, there was acash deposit of Rs. 1.53 crore during the said year and which hadescaped assessment that has led the Department for initiating aproceeding under Section 147 of Income Tax Act.the petition submits that the petition is pre-mature at this juncture forthis Court to invoke its extra ordinary writ jurisdiction. According tothe respondents, it is a case where the reassessment proceedingnow has been initiated at the behest of the DIT (I & CI) who hadintimated that in the saving bank account maintained by the petitionerwith Punjab National Bank, Khaprikala, Lormi, Bilaspur, there was acash deposit of Rs. 1.53 crore during the said year and which hadescaped assessment that has led the Department for initiating aproceeding under Section 147 of Income Tax Act. 7.The learned counsel for the Department submitted that there isabsolutely no illegality or perversity in the order passed by therespondent No.1 dated 09.08.2019 as the said order is by itself selfexplanatory and it shows the reasons, which lead to the initiation ofthe proceedings under Section 147 for reassessment. It was furtherthe contention of the respondents that the plain reading of theabsolutely no illegality or perversity in the order passed by therespondent No.1 dated 09.08.2019 as the said order is by itself selfexplanatory and it shows the reasons, which lead to the initiation ofthe proceedings under Section 147 for reassessment. It was furtherthe contention of the respondents that the plain reading of the 8. 9. contents of the impugned order would also reveal that the order hasbeen passed taking into consideration all the statutory provisions asis required before initiating a proceeding under Section 147 andwhich includes the condition precedent for initiating a reassessmentproceedings beyond a period of 4 years. Thus, there is no strongcase made out by the petitioner calling for an interference with theimpugned order. Likewise, it was also the contention of the counsel for the Departmentthat the impugned order would also show that it was not a casewhere the order of reassessment has been initiated without therebeing any basis. According to the respondents in the course ofscrutiny of the books of account of the petitioner, it was revealed thatthere were certain cash transactions made by the petitioner and thatthere was an amount of Rs.1.53 crores deposited in his savingsaccount and which has not been properly explained or accountedwhile submission of the return. That this amount which otherwise isan income of the petitioner has escaped assessment, therefore whenthe respondents have got this new cogent and tangible materialknowing fully well that 4 years have lapsed for initiating thereassessment, therefore the concerned officer forwarded a note-sheet seeking permission from the higher authorities in theDepartment as is required under Section 151 of the Income Tax Act. In the instant case, the order would show that there were sufficientmaterials available with the Department and there were also strongreasons to believe that the same has escaped assessment and it meets the requirement as is required under Section 147, thus the writpetition being devoid of merits should be rejected. In the instant case, the order would show that there were sufficientmaterials available with the Department and there were also strongreasons to believe that the same has escaped assessment and it meets the requirement as is required under Section 147, thus the writpetition being devoid of merits should be rejected. 10.Having heard the contentions put forth on either side and on perusalof record, the core issue in the instant case is whether the rejection ofthe objection filed by the petitioner on the initiation of the proceedingsunder Section 147 was proper, legal and justified or not. For properadjudication of the issue involved in the case it would be relevant atthis juncture to refer to section 147 of the Income Tax Act: “147. If the [Assessing] Officer [has reason to believe] that any incomechargeable to tax has escaped assessment for any assessment year, hemay, subject to the provisions of sections 148 to 153, assess or reassesssuch income and also any other income chargeable to tax which hasescaped assessment and which comes to his notice subsequently in thecourse of the proceedings under this section, or recompute the loss or thedepreciation allowance or any other allowance, as the case may be, for theassessment year concerned (hereafter in this section and in sections 148to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143or this section has been made for the relevant assessment year, no actionshall be taken under this section after the expiry of four years from the endof the relevant assessment year, unless any income chargeable to tax hasescaped assessment for such assessment year by reason of the failure59on the part of the assessee to make a return under section 139 or inresponse to a notice issued under subsection (1) of section 142 or section148 or to disclose fully and truly all material facts59 necessary for hisassessment, for that assessment year: [Provided further that nothing contained in the first proviso shall apply in acase where any income in relation to any asset (including financial interestin any entity) located outside India, chargeable to tax, has escapedassessment for any assessment year.] [Provided further that the Assessing Officer may assess or reassess suchincome, other than the income involving matters which are the subject-matter of any appeal, reference or revision, which is chargeable to tax andhas escaped assessment.] Explanation 1.—Production before the Assessing Officer of account booksor other evidence from which material evidence could with due diligencehave been discovered by the Assessing Officer will not necessarily amountto disclosure within the meaning of the foregoing proviso. Explanation 2.—For the purposes of this section, the following shall alsobe deemed to be cases where income chargeable to tax has escapedassessment, 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 inrespect of which he is assessable under this Act during theprevious year exceeded the maximum amount which is notchargeable to income-tax ; (b) where a return of income has been furnished by the assesseebut no assessment has been made and it is noticed by theAssessing Officer that the assessee has understated the income orhas claimed excessive loss, deduction, allowance or relief in thereturn ; (c) where an assessment has been made, but— (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessiverelief under this Act ; or (iv) excessive loss or depreciation allowance or any otherallowance under this Act has been computed.] (d) where a person is found to have any asset (including financialinterest in any entity) located outside India] (b) where a return of income has been furnished by the assesseebut no assessment has been made and it is noticed by theAssessing Officer that the assessee has understated the income orhas claimed excessive loss, deduction, allowance or relief in thereturn ; (c) where an assessment has been made, but— (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessiverelief under this Act ; or (iv) excessive loss or depreciation allowance or any otherallowance under this Act has been computed.] (d) where a person is found to have any asset (including financialinterest in any entity) located outside India] Explanation 3. - For the purpose of assessment or reassessment underthis section, the Assessing Officer may assess or reassess the income inrespect of any issue, which has escaped assessment, and such issuecomes to his notice subsequently in the course of the proceedings underthis section, notwithstanding that the reasons for such issue have not beenincluded in the reasons recorded under sub-section (2) of section 148.] Explanation 4. For the removal of doubts, it is hereby clarified that theprovisions of this section, as amended by the Finance Act, 2012 shall alsobe applicable for any assessment year beginning on or before the 1[st] dayof April, 2012.] [Issue of notice where income has escaped assessment.” 11.If we read into the aforementioned provisions, it would be clearly reflected that the provisions under Section 147 prescribes certainsituations in which a reassessment is permissible. The proviso tosection 147 provides for the situations and the said proviso alsoprescribes the maximum period during which the reassessmentproceedings could have been initiated. The situations as is envisagedunder the proviso clause to Section 147 are (i) where the incomechargeable to tax has escaped assessment by reason of the failureon the part of the assessee to make a return under Section 139, (ii) where there is a failure on the part of the assessee in response to anotice issued under Sub-section (1) of Section 142 or Section 148,and (iii) where there is a failure to disclose fully and truly all relevantmaterials necessary for the assessment for that assessment year. 12.Now, if we read the provision of Section 147 all that is required forreopening of assessment is that the Assessing Officer should have“reasons to believe” that any income chargeable to tax has escapedassessment and which is noticed by the Department subsequently.reopening of assessment is that the Assessing Officer should have“reasons to believe” that any income chargeable to tax has escapedassessment and which is noticed by the Department subsequently. 13.According to the respondents, when the assessment of the petitionerwas being verified and which was being conducted by the DIT (I &CI), Bhopal office, they found that there has been huge amount ofcash deposit in the savings bank account of the petitioner and thedeposit was to the tune of Rs.1.53 crores and this amount gotescaped and there has not been any proper accounting of thisamount of Rs.1.53 crores, therefore it becomes income chargeableto tax and under the given circumstances at the instance of DIT (I &CI) proceedings under Section 147 was ordered to be initiatedwas being verified and which was being conducted by the DIT (I &CI), Bhopal office, they found that there has been huge amount ofcash deposit in the savings bank account of the petitioner and thedeposit was to the tune of Rs.1.53 crores and this amount gotescaped and there has not been any proper accounting of thisamount of Rs.1.53 crores, therefore it becomes income chargeableto tax and under the given circumstances at the instance of DIT (I &CI) proceedings under Section 147 was ordered to be initiated 14.What is under challenge in the writ petition is the order dated09.08.2019 whereby the objections raised by the petitioner againstreopening of the assessment under Section 147 of the Act has beenrejected. 09.08.2019 whereby the objections raised by the petitioner againstreopening of the assessment under Section 147 of the Act has beenrejected. 15.The only transaction which has led to reopening of the assessmentfor the year, 2012-13 is the subsequent detection of cash deposit ofRs.1.53 Crores being made through the savings bank account of thefor the year, 2012-13 is the subsequent detection of cash deposit ofRs.1.53 Crores being made through the savings bank account of the petitioner, which at the time of initial assessment could not bedetected or taken note of in the course of assessment being madeand when this matter are detected or discovered in the course ofscrutiny, the respondents realizing the fact that time of more than fouryears have lapsed to reopen the assessment already made,therefore, took assistance of provisions of Section 151 of the Actwherein the Assessment Officer has given justifiable reasons seekingpermission to reopen the assessment for the year, 2012-13. 16.All that this court has to see is, whether this transaction of cash in thesavings account of the petitioner is new information or is a tangiblematerial which could be brought within the ambit of income which hasescaped assessment so as to attract the provisions of Section 147 ofthe Act.savings account of the petitioner is new information or is a tangiblematerial which could be brought within the ambit of income which hasescaped assessment so as to attract the provisions of Section 147 ofthe Act. 17.A plain reading of Section 147 of the Act, what stands revealed isthat, the requirement for reopening of assessment is of the AssessingOfficer finding “Any income chargeable to Tax”having escapedassessment. The term any income, in the opinion of this court, wouldalso include the informations provided by the assessee to thedepartment and it could also be an information not submitted by theassessee, or had suppressed it. Nowhere under the provisions ofSection 147, either in the main section nor under the proviso clause,so also neither under the explanations provided under this section, isthere a bar for the department to initiate reassessment if thedocuments/records has already been subjected to scrutiny at thetime of assessment being made. Neither does the said provisionthat, the requirement for reopening of assessment is of the AssessingOfficer finding “Any income chargeable to Tax”having escapedassessment. The term any income, in the opinion of this court, wouldalso include the informations provided by the assessee to thedepartment and it could also be an information not submitted by theassessee, or had suppressed it. Nowhere under the provisions ofSection 147, either in the main section nor under the proviso clause,so also neither under the explanations provided under this section, isthere a bar for the department to initiate reassessment if thedocuments/records has already been subjected to scrutiny at thetime of assessment being made. Neither does the said provision 18. 19. anywhere envisages that once if the books of account has beenscrutinized, the same cannot be scrutinized again for the purpose ofinitiating a proceeding under Section 147 of the Act. The documentshaving been submitted to the Assessing Officer at the first instanceand the Assessing Officer having skipped/missed the said transactionfrom being assessed or having been overlooked, the said transactionwould not bar the department from initiating proceedings underSection 147 of the Act in case if the department finds certaintransaction which have escaped assessment. 18. 19. anywhere envisages that once if the books of account has beenscrutinized, the same cannot be scrutinized again for the purpose ofinitiating a proceeding under Section 147 of the Act. The documentshaving been submitted to the Assessing Officer at the first instanceand the Assessing Officer having skipped/missed the said transactionfrom being assessed or having been overlooked, the said transactionwould not bar the department from initiating proceedings underSection 147 of the Act in case if the department finds certaintransaction which have escaped assessment. The only condition which is required under Section 147 of the Act forreopening assessment is that, the Assessing Officer should havereasons to believe that the income chargeable to tax had escapedassessment. Such belief has to be to the subjective satisfaction ofthe Assessing Officer and the Act does not prescribe a preconditionof the material not having been disclosed in the course ofassessment at the first instance. The overall reading of Section 147 of the Act would show that widepowers have been given upon the Assessing Officer to reach to theconclusion of there being sufficient reasons to believe that incomechargeable to tax had escaped assessment. It could even covercases where assessee has fully disclosed the material facts. Thisview of the court stands fortified from the Division Bench judgment ofPunjab & Haryana High Court in case of Jawand Sons Vs.Commissioner of Income Tax (2010) 195 Taxman 144. The DivisionBench of Delhi High Court in case of Consolidated Photo and Finvest Ltd. Vs. Assistant Commissioner of Income Tax (2006)281 ITR 394, has also held that action under Section 147 of the Actwas permissible even if the Assessing Officer gathered his reasons tobelieve from the same record as had been the subject matter of thecompleted assessment proceedings. Mere production of books ofaccount is not sufficient to infer that there had been full disclosure ofmaterial facts necessary for the purpose of assessment. Once, if inthe opinion of the Assessing Officer, there are reasons to believe ofescapement of income, it would be sufficient for initiating proceedingsunder Section 147 of the Act. 20. It would not be proper for this court, in exercise of writ jurisdictionunder Article 226 of the Constitution of India, to sit over the order ofthe Assessing Officer to examine threadbare or to conduct a rovingenquiry to determine whether the reasons recorded by the AssessingOfficer are rational or has relevant bearing on the formation of thebelief and are not based on extraneous considerations. 21.It is also settled position of law that the High Court under Article 226of the Constitution of India cannot go into the sufficiency or adequacyof the material and substitute its opinion from that of the AssessingOfficer. All that this court can see, verify or scrutinize is as to whetherthe reasons assigned are not vague, indefinite and without any basisetc. 22.The phrase “Reasons to Believe” does not mean that the AssessingOfficer should have ascertained the facts by legal evidence. All that isrequired is that, the Assessing Officer should prima facie have someOfficer should have ascertained the facts by legal evidence. All that isrequired is that, the Assessing Officer should prima facie have some 21.It is also settled position of law that the High Court under Article 226of the Constitution of India cannot go into the sufficiency or adequacyof the material and substitute its opinion from that of the AssessingOfficer. All that this court can see, verify or scrutinize is as to whetherthe reasons assigned are not vague, indefinite and without any basisetc. 22.The phrase “Reasons to Believe” does not mean that the AssessingOfficer should have ascertained the facts by legal evidence. All that isrequired is that, the Assessing Officer should prima facie have someOfficer should have ascertained the facts by legal evidence. All that isrequired is that, the Assessing Officer should prima facie have some material on the basis of which there should be reasons to believe ofcertain incomes chargeable to tax escaping assessment. There neednot be any concrete evidence or proof available for coming to a finalconclusion. It is only an initiation of proceedings of reassessmentwhere the assessee gets a chance to put forth their defence,explanation and justification which would further be scrutinized by theAssessing Officer while reaching to the final conclusion. One shouldnot loose sight of the fact that the final assessment on the conclusionof a proceedings under Section 147 of the Act is also an appealableorder wherein also the assessee has a right to agitate or challengethe order passed by the Assessing Officer on a proceeding underSection 147 of the Act. 23.In case of M/s Phool Chand Bajrang Lal & Anr. Vs. Income TaxOfficer and Another, 1993(4)SCC 77, the Supreme Court inparagraph 6, 26 and 27 held as under: “6. From the plain phraseology of the above Sections of the Act, it appearsthat two conditions precedent which are required to be satisfied before anIncome Tax Officer can acquire jurisdiction to proceed under Clause (a) ofSection 147 read with Sections 148 and 149 of the Act, beyond the periodof four years but within a period of eight years, from the end of the relevantyear, are: (a) that the Income Tax Officer must have reason to believe thatthe income, profits or gains chargeable to tax had either been underassessed or escaped assessment and (b) that the ITO must have reasonto believe that such escapement or under-assessment was occasioned byreason, of omission or failure on the part of the assessee to disclose fullyand truly all material facts necessary for the assessment. Both theseconditions must co-exist in order to confer jurisdiction on the Income TaxOfficer. The Income Tax Officer is obliged, before initiating proceedingsunder Section 148 of the Act to record the reasons for the formation of hisbelief to reopen the assessment. 26. We are not persuaded to accept the argument of Mr. Sharma that thequestion regarding truthfulness or falsehood of the transactions reflected inthe return can only be examined during the original assessmentproceedings and not at any stage subsequent thereto. The argument is toobroad and general in nature and does violence to the plain phraseology ofSections 147(a) and 148 of the Act and is against the settled law by thisCourt. We have to look to the purpose and intent of the provisions. One of the purposes of Section 147, appears to us to be, to ensure that a partycannot get away by wilfully making a false or untrue statement at the timeof original assessment and when that falsity comes to notice, to turnaround and say "you accepted my lie, now your hands are tied and youcan do nothing". It would be travesty of justice to allow the assessee thatlatitude. the purposes of Section 147, appears to us to be, to ensure that a partycannot get away by wilfully making a false or untrue statement at the timeof original assessment and when that falsity comes to notice, to turnaround and say "you accepted my lie, now your hands are tied and youcan do nothing". It would be travesty of justice to allow the assessee thatlatitude. 27. In our opinion, therefore, in the facts of the present case the Income-tax Officer Azamgarh rightly initiated the reassessment proceedings on thebasis of subsequent information, which was specific relevant and reliable,and after recording the reasons for formation of his own belief that in theoriginal assessment proceedings, the assessee had not disclosed thematerial facts truly and fully and therefore income chargeable to tax hadescaped assessment. He, therefore, correctly invoked the provisions ofSections 147(a) and 148 of the Act. The High Court was, thus, perfectlyjustified in dismissing the writ petition. There is no merit in this appealwhich fails and is dismissed but with no order as to costs.” 24.Again in case of Income Tax Officer, Calcutta Vs. M/s Selected Dalurband Coal Co. Pvt. Ltd. 1997(10)SCC 68, in paragraph 3 held as under: “3.It is well settled by various decisions of this Court that the noticeunder Section 148 read with Section 147 can be issued only where theIncome- tax Officer has reason to believe that the income profits or gainschargeable to tax had been under-assessed or escaped assessment andfurther that such escapement or under assessment was occasioned byreason of the failure of the assessee to disclose fully and truly all materialfacts necessary for the assessment of that year. (We are not concernedwith Clause (b) of Section 147 here but only with Clause (a). In otherwords, there must be relevant material before the assessing officer uponwhich he must reasonably and rationally form the requisite opinion (belief).The question, therefore, is whether the letter of the Chief Mining Officeraforesaid does not constitute relevant material upon which the Income-taxOfficer could have formed the requisite belief? It must be remembered thatthe formation of belief by the Income-tax Officer is essentially within hissubjective satisfaction.” 25.The aforesaid principles are still holding good and has been again reiterated by the Supreme Court in case of Assistant Commissionerof Income Tax Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd.2008(14)SCC 208, wherein in paragraph 19,20 and 21 held as under: “19. Section 147 authorises and permits the Assessing Officer to assess orreassess income chargeable to tax if he has reason to believe that incomefor any assessment year has escaped assessment. The word reason in thephrase reason to believe would mean cause or justification. If theAssessing Officer has cause or justification to know or suppose thatincome had escaped assessment, it can be said to have reason to believereassess income chargeable to tax if he has reason to believe that incomefor any assessment year has escaped assessment. The word reason in thephrase reason to believe would mean cause or justification. If theAssessing Officer has cause or justification to know or suppose thatincome had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be readto mean that the Assessing Officer should have finally ascertained the factby legal evidence or conclusion. The function of the Assessing Officer is toadminister the statute with solicitude for the public exchequer with aninbuilt idea of fairness to taxpayers. that an income had escaped assessment. The expression cannot be readto mean that the Assessing Officer should have finally ascertained the factby legal evidence or conclusion. The function of the Assessing Officer is toadminister the statute with solicitude for the public exchequer with aninbuilt idea of fairness to taxpayers. 20. As observed by the Delhi High Court in Central Provinces ManganeseOre Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action undersection 147(a) (as the provision stood at the relevant time) fulfillment of thetwo requisite conditions in that regard is essential. At that stage, the finaloutcome of the proceeding is not relevant. In other words, at the initiationstage, what is required is reason to believe, but not the established fact ofescapement of income. At the stage of issue of notice, the only question iswhether there was relevant material on which a reasonable person couldhave formed a requisite belief. Whether the materials would conclusivelyprove the escapement is not the concern at that stage. This is so becausethe formation of belief by the Assessing Officer is within the realm ofsubjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd.[1996 (217) ITR 597 (SC)]; Raymond Woollen Mills Ltd. v. ITO [ 1999 (236)ITR 34 (SC)]. 21. The scope and effect of section 147 as substituted with effect from April1, 1989, as also sections 148 to 152 are substantially different from theprovisions as they stood prior to such substitution. Under the old provisionsof section 147, separate clauses (a) and (b) laid down the circumstancesunder which income escaping assessment for the past assessment yearscould be assessed or reassessed. To confer jurisdiction under section147(a) two conditions were required to be satisfied firstly the AssessingOfficer must have reason to believe that income profits or gains chargeableto income tax have escaped assessment, and secondly he must also havereason to believe that such escapement has occurred by reason of either(i) omission or failure on the part of the assessee to disclose fully or trulyall material facts necessary for his assessment of that year. Both theseconditions were conditions precedent to be satisfied before the AssessingOfficer could have jurisdiction to issue notice under section 148 read withsection 147(a) But under the substituted section 147 existence of only thefirst condition suffices. In other words if the Assessing Officer for whateverreason has reason to believe that income has escaped assessment itconfers jurisdiction to reopen the assessment. It is however to be notedthat both the conditions must be fulfilled if the case falls within the ambit ofthe proviso to section 147. The case at hand is covered by the mainprovision and not the proviso.” 26.Recently a similar issue came up before this court in WPT No.234 of 2018 and other connected writ petitions of similar nature whereinreferring to various judgments on the field and relying upon theanalogy laid down in the judgments referred in the precedingparagraphs, this court had dismissed the writ petitions. The saidjudgment of Single Bench was subsequently subjected to challengein Writ Appeal also being WA No.336 of 2019 and the Division Benchon 29.07.2019 dismissed the Writ Appeal affirming the order passed by the Single Bench. 27.In view of the legal position as it stands and in the light of thejudgments referred to in the preceding paragraphs, this court also isof the view that there was sufficient material germane to the issuedetected by the Assessing Officer which, in the opinion of theAssessing Officer, was an income chargeable to tax and he hadreasons to believe that it had an escaped assessment, at the firstinstance. Therefore, there is no illegality or perversity on the part ofthe Assessing Officer in reaching to the said conclusion whiledeciding the objections raised by the assessee. 28. by the Single Bench. 27.In view of the legal position as it stands and in the light of thejudgments referred to in the preceding paragraphs, this court also isof the view that there was sufficient material germane to the issuedetected by the Assessing Officer which, in the opinion of theAssessing Officer, was an income chargeable to tax and he hadreasons to believe that it had an escaped assessment, at the firstinstance. Therefore, there is no illegality or perversity on the part ofthe Assessing Officer in reaching to the said conclusion whiledeciding the objections raised by the assessee. 28. It is made clear that this court is not expressing any opinion on themerits of the case which is still to be agitated upon before theAssessing Officer, after which, the right to challenge the said findingis still open for the petitioner. 29.With the aforesaid observations, the present writ petition standsrejected. Sd/-P. Sam KoshyJudge