MUKESH MODI vs. DY. COMMISSIONER OF I.T. JOD., and ANR.

judgment: · [19]

In this verdict, Division Bench of Gujarat High Court, while examining the true purport of third proviso to Section 147 of the Act, which at the relevant point of time was second proviso to Section 147 of the Act, held as under:

“Moreover, insofar as the second ground for reopening of assessment is concerned, it may be noted that the second proviso to s.147 of the Act expressly provides that the AO may assess or reassess such income, other than the income involving matters which are subject-matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Thus by virtue of the second proviso to s.147 of the Act, income involving matters which are subject-matter of any appeal, reference or revision has expressly been taken out of the purview of the said section. In the circumstances, insofar as the income stated to have escaped assessment under the second ground is concerned, the same having been subject-matter of appeal would not fall within the ambit of s.147 of the Act and as such the AO lacks juri iction to reopen the assessment on the said ground.

Lastly, learned counsel for the petitioners has urged with full emphasis that the impugned re-assessment proceedings conducted by the AO are nothing but an eye wash and the approach of the AO is biased and he is acting to the detriment of assessees with pre-determined mind. For authenticating this submission, learned counsel has laid emphasis on letter dated 15.10.2013 whereby a proposal was mooted and conveyed to the assessees that the objections submitted on their behalf shall be decided in the re-assessment order itself. Mr. Khurana would urge that this sort of proposal by the AO speaks volume about the fact that he has acted mechanically and has made an affirmative attempt to shirk from its responsibility to dispose of the objections by a speaking order mandated by Hon’ble Apex Court in G.K.N. Driveshafts (India) Ltd. v. ITO and Ors. [(2003) 259 ITR 19]. Mr. Khurana has also questioned the proactive role of the AO in passing the re-assessment orders with undue haste. Mr. Khurana has [20] submitted that the whole endeavour of AO while passing the re- assessment orders hurriedly was intended to frustrate the cause of the petitioners to seek judicial review of the impugned action under Article 226 of the Constitution.

Per contra, learned Senior Standing Counsel for the Revenue Mr. K.K. Bissa has argued that there is no infirmity much less infirmity in initiation of re-assessment proceedings against the assessees under Section 147/148 of the Act. Mr. Bissa would contend that notices under Section 148 of the Act were issued to assessees on noticing material discrepancies from the available material which was seized and impounded during surveys. Learned counsel further submits that certain anomalies remained unexplained due to non-verification of the materials for which AO had reason to believe that income of the assessees chargeable to tax has escaped assessment.

Learned counsel Mr. Bissa would contend that where prima facie lie hidden or embedded in the record including books of accounts, which are filed along with the return, it may require deep exercise and deep study to uncover same and this kind of disclosure cannot be said to be a true and full disclosure of primary facts. In exercise of power under Section 147 of the Act, the AO can very well invoke such powers for re-opening the assessment to unearth escapement of income chargeable to tax at the behest of the assessee. For this proposition, the learned counsel Mr. Bissa has placed reliance on the Division Bench judgment of this Court in case

[21] Synthetics [272 ITR 642 (Raj.)]. Division Bench in this case has held that sufficiency of reasons for forming the belief for reopening assessment is not for the Court to judge and in the facts and circumstances of that case the Court has upheld the action of the AO. The Division Bench finally held as under:

A reading of the letters dt. 5th Dec., 2003, and 12th Jan., 2004, reflect that the escapement of income according to the assessing authority is attributable to wrong claim preferred by the assessee and its failure to disclose the [22] material facts truly and fully. Thus, the reason recorded by the assessing authority has nexus with the formation of belief by the assessing authority for taking action under Section 147 of the IT Act. Therefore, Section 149(1)(b), r/w Section 147 has been invoked by the assessing authority for reopening the assessment. It is well settled that the sufficiency of reasons for forming the belief is not for the Court to judge. The final order which may be passed by the assessing authority under Section 147, if it goes against the respondent, is appealable under Section 246 of the IT Act. The respondent cannot be allowed to short-circuit the procedures prescribed by law.

Learned counsel for the Revenue has meticulously urged that power of judicial review in such matters is confined to see whether there was prima facie some material on the basis of which department could reopen the case and sufficiency or correctness of material is not a thing to be considered at this stage. In support of this argument, Mr. Bissa has placed reliance on a decision of Hon’ble Supreme Court in case of Raymond Woolen Mills Ltd. Vs. Income Tax Officer [1999] 236 ITR 34 (SC) and also referred to Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra).

In Raymond Woollen Mill’s case (supra), the Hon’ble Apex Court without examining the case on merit has held as under:

“In this case, we do not have to give a final decision

[23] as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs.”

In Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra), Hon’ble Apex Court has thoroughly examined the powers of AO under Section 147 and finally held as under:

Learned counsel for the Revenue would urge that the legislature has enacted the provisions under Section 147 of the Act with laudable objects authorizing the AO to reopen the assessment when income chargeable to tax has escaped assessment and therefore for exercising such powers to enrich the revenue no motive can be attributed to AO. Repelling the contentions put- forward on behalf of the petitioners that the AO has acted malafide in a biased manner, Mr. Bissa submits that there is no semblance of proof to this effect and as such this contention merits outright rejection.

Placing heavy reliance on the assessment orders passed as a consequence of reopening of assessment, learned counsel for the respondent Revenue has urged that against these re-assessment orders alternative statutory remedy of appeal is available to the assessees; the writ petitions cannot be entertained ignoring the statutory dispensation. Learned counsel for the Revenue submits that remedy of appeal under Section 246 and [25] 246A of the Act is very much available to the petitioner assessees and as such writs are not maintainable. Mr. Bissa has submitted that extraordinary juri iction is not liable to be exercised when statutory remedy is available and this practice is being followed consistently by the Court and there is no plausible reason available in these petitions to deviate from this practice. In support of his contentions Mr. Bissa has placed reliance on the judgment of Hon’ble Apex Court in case of Commissioner of Income Tax & Ors. Vs. Chhabil Dass Agarwal [2013]357 ITR 357(SC) and Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra).

In Chhabil Dass Agarwal’s case (supra), Hon’ble Apex Court has thoroughly analyzed the concept of alternative remedy and the self-imposed restrictions for the High Court to exercise juri iction under Article 226. The Court has held in Para 15 & 16 as under:

Again while examining the exceptions deviate from the general perception of not entertaining a writ petition in the event of availability of alternative remedy, Hon’ble Apex Court has held as under:

Learned counsel has further tried to authenticate his submissions in this behalf by placing reliance on the procedure to be adopted by the noticee on receipt of notice under Section 148 of the Act and for that proposition laid stress on Para 15 of the verdict of [27] Division Bench in Banswara Synthetics (supra), which reads as under:

Mr. Bissa, learned counsel for the Revenue has also placed reliance in this behalf on yet another Division Bench decision of this Court in case of Rajan Products Vs. Union of India & Anr. (2001) 247 ITR 101 (Raj). In this verdict, although the Division Bench has not examined the matter thoroughly vis-à-vis the issue of availability of alternative remedy on receipt of notice under Section 148 of the Act but has suggested the course of action to be adopted by the assessee on receipt of notice. The Division Bench has held as under:

“It is not the case of the appellant herein that no sanction has been obtained as contemplated under s.151 of the Act. The ITO has reason to believe that there is escaped assessment and we have reason to believe that he could exercise his juri iction under s.147 of the Act. We are unable to accept the arguments advanced by learned counsel for the appellant on ss. 147 and 148 of the Act. If such contention is accepted, then reopening of the assessment will be impossible and the income which has escaped assessment cannot be taxed in any eventuality. In regard to the request made by the assessee asking for reasons for issuance of notice under s. 147, we are of the opinion that the appellant has no legal right to ask for reasons and the same in our opinion need not be communicated. The notice was issued under s.148 of the Act and, therefore, the appellant ought to have filed the reply immediately. In our opinion, the appellant has wrongly invoked the juri iction of this Court. As already noticed, the writ petition is directed

[28] against the notice under s. 147 of the IT Act. This apart, the appellant has an alternative remedy of filing appropriate appeal before the appropriate authority provided under the IT Act, 1961. In our view, there is no cause of action which has arisen for the appellant-petitioner for filing a writ petition and further appeal.

Since the writ petition has been filed against the notice of reassessment, we have no other option except to dismiss the appeal as not maintainable. However, the dismissal of the writ appeal will not stand in the way of the appellant’s raising of legal contention by way of reply to the notice under s.147 of the Act along with the return if the return has not already been filed. On receipt of reply to the show-cause notice issued under s. 147, the ITO shall decide the objections filed legally and factually and then pass final orders in accordance with law after affording an opportunity of hearing either to the appellants or to their authorised representative within three months from the date of filing objections regarding reassessment proceedings.”

I have heard the learned counsel for the parties and perused the materials available on record.

The pivotal issue, which falls for consideration in all these petitions relates to a taxing statute and therefore for thrashing out the same pragmatic approach is desirable. Legislature in its wi om has conferred powers on the Assessing Officer to reopen the assessment proceedings for ensuring proper vigil and check on unscrupulous assessees who are involved in evasion of tax. The intent of legislature is to vouchsafe the authority of the assessing officer for enriching the coffers of the revenue under special circumstances. Thus, with this solemn object, Section 147 of the Act is couched with a very clear and unambiguous language that Assessing Authority can resort to reopen the assessment if it has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. While inserting the words “has reason to believe”, the legislature has made an affirmative attempt to circumscribe these

[29] powers by making it amply clear that these powers are to be exercised bonafide to farther interest of the revenue and not to transgress these powers in a casual and cavalier manner. Emphasis on the recitals “has reason to believe” pre-supposes that the AO on scrutinizing the available materials for resorting to such powers may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The belief must be held in good faith; it cannot be a mere pretence. The question came up before the Constitution Bench of Hon’ble Apex Court in Calcutta Discount Co. Ltd. Vs. ITO [1961] 41 ITR 191 (SC), wherein the subject matter of scrutiny was Section 34(I)(a) of the Indian Income Tax Act 1922 for re-assessment which is almost peri-materia to Section 147 of the Act. Speaking for the majority, Justice Das Gupta held as follows:

“The position, therefore, is that if there were in fact some reasonable grounds for thinking that there had been any non-disclosure as regards any primary fact, which could have a material bearing on the question of "under- assessment", that would be sufficient to give juri iction to the Income-tax Officer to issue the notices under section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non-disclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special juri iction is that the Income-tax Officer had when he assumed juri iction some prima facie grounds for thinking that there had been some non-disclosure of material facts.” Justice Das Gupta has further held:

“It must, therefore, be held that the Income-tax Officer who issued the notices had not before him any non- disclosure of a material fact and so he could have no material before him for believing that there had been any material non-disclosure by reason of which an under- assessment had taken place.

We are, therefore, bound to hold that the conditions precedent to the exercise of juri iction under section 34 of the Income-tax Act did not exist and the Income-tax Officer had therefore no juri iction to issue the impugned notices under section 34 in respect of the years 1942-43, 1943-44 and 1944-45 after the expiry of four years.

Mr. Sastri argued that the question whether the Income-tax Officer had reason to believe that under- assessment had occurred "by reason of non-disclosure of [30] material facts" should not be investigated by the courts in an application under article 226. Learned counsel seems to suggest that as soon as the Income-tax Officer has reason to believe that there has been under-assessment in any year he has juri iction to start proceedings under section 34 by issuing a notice provided 8 years have not elapsed from the end of the year in question, but whether the notices should have been issued within a period of 4 years or not is only a question of limitation which could and should properly be raised in the assessment proceedings. It is wholly incorrect however to suppose that this is a question of limitation only not touching the question of juri iction. The scheme of the law clearly is that where the Income-tax Officer has reason to believe that an underassessment has resulted from non- disclosure be shall have juri iction to start proceedings for reassessment within a period of 8 years; and where he has reason to believe that an under-assessment has resulted from other causes he shall have juri iction to start proceedings for reassessment within 4 years. Both the conditions, (i) the Income-tax Officer having reason to believe that there has been under-assessment and (ii) his having reason to believe that such under-assessment has resulted from non-disclosure of material facts, must co-exist before the Income-tax Officer has juri iction to start proceedings after the expiry of 4 years. The argument that the court ought not to investigate the existence of one of these conditions, viz., that the Income-tax Officer has reason to believe that under-assessment has resulted from nondisclosure of material facts, cannot therefore be accepted.” Per majority, the Apex Court has also overruled the objection of the Revenue on the availability of alternative statutory remedy by holding as under: “We are informed that assessment orders were in fact made on March 25, 1952, by the Income-tax Officer in the proceedings started on the basis of these impugned notices. This was done with the permission of the learned judge before whom the petition under article 226 was pending, on the distinct understanding that these orders would be without prejudice to the contentions of the parties on the several questions raised in the petition and without prejudice to the orders that may ultimately be passed by the court. The fact that the assessment orders have already been made does not therefore affect the company's right to obtain relief under article 226. In view, however, of the fact that the assessment orders have already been made we think it proper that in addition to an order directing the Income-tax Officer not to take any action on the basis of the impugned notices a further order quashing the assessment made be also issued.”

The connotation of the words “reason to believe” appearing in Section 34(I)(a) of the Act of 1922 for reopening of the assessment once again came up before Hon’ble Apex Court in [31] Commissioner of Income Tax, Calcutta [1971] 82ITR 147 (SC), and the Court held as under:

In yet another judgment on which the learned counsel

[32] for the petitioners has placed reliance of Gujarat High Court in Agrawal JV’s case, has reiterated the same principles.

The Division Bench of this Court in Biggabas Maheshwari Seva Samiti’s case (supra), while upholding the judgment of ITAT has reiterated the same principle and held as under in Para 11 & 12. 11. Coming to question No. 1, a look at the judgment of the Tribunal shows that the learned Tribunal has proceeded on two judgments of Hon'ble the Supreme Court, being in ITO and Ors. v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), and Ganga Saran & Sons (P) Ltd. v. ITO and Ors. [1981] 130 ITR1(SC). In Lakhmani Mewaldas's case (supra), it has been held, that the reasons, which led to the formation of the belief, contemplated by Section 147(a), must have a material belief on the question of escapement of income of the assessee from assessment and does not mean a purely subjective satisfaction on the part of the ITO. Where livelink between the material before the ITO, and the belief he was to form regarding escapement of income, is missing, such material was stated to be not sufficient for forming belief, and same view was taken in Ganga Saran's case (supra). Then, applying these judgments, it has been found by the learned Tribunal that one of the conditions necessary for issuance of notice under Section 148, being under statement of income of the assessee, is not fulfilled. It has been held, that in order to bring an item within the purview of Section 147, it is of utmost importance, that the AO should have reason to believe, based on relevant and cogent material, that such income has escaped assessment. It has been found, that there was no material direct or indirect, available with the AO, which could show that the receipt of donations, amounting to Rs. 30,16,598, was without any specific direction of corpus fund. The assessee has shown the receipts, as having been received in the corpus fund, coupled with the report of the auditor. The AO had not inquired into the nature of the receipts, before issuing notice under Section 148, and in earlier years also, the amount was held to be received in the corpus fund.

On this proposition, attempt can be made to test the [33] scope of powers under Section 147 of the Act and true intent of the legislature for inserting words “reason to believe” by considering precedents on which the learned counsel for the Revenue has relied. The Division Bench of this Court in Banswara Synthetics case (supra) postulated certain guidelines for assessee on receipt of notice under Section 148 of the Act quoted hereinabove.

Other judgment, on which the learned counsel for the Revenue has placed reliance, is a judgment of Hon’ble Apex Court in Raymond Woolen’s case (supra) wherein the Hon’ble Apex Court has held that while examining notice under Section 148 for reopening of assessment, the sufficiency or correctness of the material is not a thing to be considered at this stage.

In Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra) on which the learned counsel for the Revenue has placed heavy reliance, Hon’ble Apex Court has very specifically dealt with scope and effect of Section 147 as also Sections 148 to 152 (amended w.e.f. April 1, 1989) and has postulated two conditions for conferment of juri iction on AO to reopen the assessment under Section 147 of the Act. Para 17 of the verdict quoted supra elaborately deals with this aspect of the matter.

Upon a close scrutiny of the legal position, which has emerged out for construing the term “reason to believe”, the decks are clear for its interpretation. The expression “reason to believe” means the existence of rational and intelligible nexus between the reasons and the belief, so that on such reasons no one properly

[34] instructed on facts and the law could reasonably entertain the belief.

Now I propose to have a glance at the reasons which are forthcoming for issuance of notice under Section 147/148 of the Act by the AO and the order whereby objections raised by the petitioner assessee were dealt with and rejected.

If the recitals contained in the notice under Section 148 of the Act are examined on the touchstone of the expression “reason to believe”, I am afraid the same is falling short of requisites prescribed by the legislature and the law laid down by various authoritative pronouncements referred to supra. Well it is true that legislature has conferred power on the AO to unearth evasion of tax by an assessee and with this solemn object these powers have been conferred on it, but for invoking such extraordinary powers, it is essential for the AO to examine the material objectively with due application of mind for forming an opinion that certain income of the assessee has escaped assessment despite due diligence. In the instant case, the assessment orders were passed by the AO during the proceedings under Section 153A of the Act after analyzing the seized/impounded material during search and survey after issuing consolidated questionnaire to all concerned and in case of some of the assessees making addition of the income under their heads while closing proceedings in some of the cases. Therefore, when the material which was available with the AO at the relevant point of time while passing the assessment orders under Section 143(3)/144 read with [35] Section 153A of the Act, there remains no doubt that the said material was examined and duly verified by the AO to assess the income of the individual assessee. The reasons which are spelt out in the notice, in my considered opinion, is nothing but an attempt to clear the suspicion of the AO by simply changing its opinion, which per-se cannot satisfy the test of expression “reason to believe”. Of course, evasion of tax is menace to society but at the same time an assessee who is contributing to the exchequer in the form of tax cannot be allowed to suffer on mere pretence that it has evaded payment of tax. A rowing and fishing enquiry in the hands of AO on mere suspicion or change of opinion cannot satisfy expression “reason to believe” exposing the assessee for reopening of assessment. My view is fully fortified from the judgment of Hon’ble Apex Court in Calcutta Discount Co. Ltd. and Shivnath Singh’s case (supra) besides the legal precedents on which learned counsel for the petitioner has placed reliance. The decision of Hon’ble Apex Court in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra), on which the learned counsel for the Revenue has placed reliance, has also reiterated the same principles that for conferring juri iction under Section 147(a) of the Act twin conditions are required to be satisfied; firstly, the Assessing Officer must have reason to believe that income, profits or gains chargeable to income-tax had escaped assessment, and secondly he must also have reason to believe that such escapement had occurred by reason of either (i) omission or failure on the part of assessee to file a return under Section 139 for any assessment year with the assessing officer, or (ii) to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be [36] satisfied before assessing officer could have juri iction to issue notice under Section 148 read with Section 147 of the Act. Applying these twin tests further makes it crystal clear that notice for reopening the assessment is not in consonance and in conformity with which under Section 147 of the Act is couched and consequently making the notice vulnerable.

Now switching on to the reasons which were recorded by the AO, while rejecting the objections submitted by the assessees pursuant to notice under Section 147/148 of the Act, in my considered opinion, the reasons are not plausible and convincing. In fact, the order, whereby the objections were rejected by AO, is not a self-contained speaking order. Upon perusal of the order, it is amply clear that the same contains conclusions and is bereft of reasons. In G.K.N. Driveshafts (India) Ltd. (supra), while dilating on the course of action for the noticee on receipt of notice under Section 148 of the Act, the Hon’ble Apex Court held as under: “When a notice under s.148 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 AO is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the AO is bound to dispose of the same by passing a speaking order.”

My this view is fully fortified from a decision of Hon’ble Apex Court in case of Union of India Vs. Mohan Lal Capoor & Ors. [(1973) 2 SCC 836]. In this verdict, Hon’ble Apex Court, has defined the true meaning of reasons as under: “Reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject matter

[37] for a decision whether it is purely administrative or quasi- judicial. They should reveal a rational nexus between the facts considered and the conclusions reached. Only in this way can opinions or decisions recorded be shown to be manifestly just and reasonable.”

Thus, applying the ratio decidendi of the decision of Hon’ble Apex Court in G.K.N. Driveshafts (India) Ltd. (supra), and the true purport of reasons spelt out in Mohanlal Capoor’s case (supra), the impugned order rejecting objections of the assessees is based on mere ipse dixit of the AO. This sort of situation has really furnished a cause of grievance to the petitioner-assessees, thereby seeking shelter of great humanizing principles, i.e. principles of natural justice. It is trite that any quasi judicial or administrative authority is required to pass a reasoned order when it visits the recipient with civil consequences and it is one of the facets of the principles of audi-alteram-partem.

The issue relating to the embargo for reopening of the assessment as envisaged under third proviso to Section 147 of the Act vociferously canvassed by the petitioners has not been examined for the simple reason that the Court felt persuaded on other counts to annul the re-assessment proceedings. Therefore, this question is left open.

The contention of the learned counsel for the petitioners that AO has acted with undue haste in a biased and malafide manner appears to be quite alluring but in want of cogent and convincing material for its substantiation the same is not tenable. True it is that the AO has proceeded against the assessees

[38] with utmost promptitude for reopening the assessment proceedings but solely on that basis no inference can be drawn to castigate the AO for biased or malafide disposition vis-à-vis assessees.

Lastly, adverting to the objection of the Revenue about availability of alternative remedy under Section 246 and 246A of the Act, suffice it to state that its availability to a suitor is not an absolute bar to the invocation of the writ juri iction of the High Court under Article 226 of the Constitution and that without exhausting such alternative remedy a writ petition would not be maintainable. Constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the suitor. Injustice, whenever and wherever it takes place, has to be struck down as an ante-thema to the rule of law and the provisions of the Constitution.

The legal precedents on which learned counsel for the Revenue has placed reliance in this behalf are required to be examined in the backdrop of the facts of the instant case. In Chhabil Dass Agarwal’s case (supra), Hon’ble Apex Court has opined with clarity and precision that it is a rule of self-imposed limitation. It is essentially a rule of policy, convenience and discretion rather than rule of law. Similarly, in Rajesh Jhaveri Stock Brokers Pvt. Ltd. (supra), Hon’ble Apex Court has not dilated on this aspect and instead has issued a word of caution to the AO by observing that “the function of the assessing officer is to administer the statute with solicitude for the public exchequer with an in-built idea of fairness to tax-payers”. So far as the decisions rendered by Division Bench of this Court in Banswara Synthetics Limited and [39] Rajan Products, it is not mandated that writ petition cannot be entertained in the event of availability of alternative remedy. The Division Bench in both these cases, while taking note of the peculiar facts and circumstances of the cases, has relegated the assessee to alternative remedy.

In order to appreciate the concept of alternative remedy in the background of the facts of the instant case, more particularly the findings recorded supra, that notices issued to assessees under Section 147/148 of the Act are falling short of requisites prescribed under the statute and the reasons for re- opening of assessment is for “verifying” or “verification” of the existing material. The action of the AO is therefore per-se founded on mere change of opinion and the same cannot satisfy the legislative intent that it has reason to believe that any income chargeable to tax has escaped assessment. Hon’ble Apex Court, in Calcutta Discount Co. Ltd.(supra), per majority, has overruled the objection of availability of alternative remedy and while quashing the impugned notice has also quashed the assessment order. In case of Mariamma Roy Vs. Indian Bank & Ors. [(2009) 16 SCC 187], the Hon’ble Apex Court while entertaining a writ petition against an order has overruled the objection of availability of alternative remedy on the ground that the order has been passed in violation of principles of natural justice. In Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai & Ors. [(1998) 8 SCC 1], while examining the issue relating to existence of alternative statutory remedies for maintainability of a writ petition, Hon’ble Apex Court held as under:

[40]

Hon’ble Apex Court in Harbanslal Sahania & Anr. Vs. Indian Oil Corporation Ltd. & Ors. [(2003) 2 SCC 107] has [2007 (207) E.L.T. 168 (SC)], Hon’ble Apex Court while examining the provisions of the Bombay Provincial Municipal Corporation Act 1949, has held that a writ can be maintained against a show cause notice when it is issued with premeditation.

The Division Bench of Allahabad High Court, in case of Moriroku UT India Pvt. Ltd. Vs. State of U.P. [2009 (245) E.L.T. 27 (All.)], overruled the objection of maintainability of a writ

[41] petition against show cause notice as well as availability of alternative remedy under certain circumstances. Speaking for the Bench, Justice B.S. Chauhan has held as under: “Therefore, it is evident that where the notice itself makes it abundantly clear that the authority has already made up his mind and is likely to pass an order in a particular manner, submission of reply or hearing would be an empty formality. Thus, party be not asked to avail alternative remedy.”

Thus, in totality, in the peculiar facts and circumstances of the case, the objection of the respondent Revenue against maintainability of a writ petition on the anvil of availability of alternative statutory remedy cannot be sustained and the same is hereby overruled.

While examining the matter in its entirety and on the basis of findings and conclusions recorded supra, in my considered opinion, notices issued to the assessees by the AO under Section 147/148 of the Act are not satisfying the pre-requisites for the same. There is no whisper in the notice, or iota of proof that while issuing the same the AO had reason to believe that any income chargeable to tax has escaped assessment for the assessment year. Thus, the notice has been issued by the AO simply for his own verification and to clear his doubts and suspicions to re-examine the material which were already available on record at the time of passing of the earlier assessment orders. The legislature under Section 147 has not clothed AO with such juri iction therefore the action cannot be upheld in the background of the facts of instant case. One more redeeming fact which has direct nexus with the subsequent re-assessment proceedings and ramification of the same has culminated into re-assessment orders is the impugned

[42] order whereby the AO has rejected the objections submitted by the assessees pursuant to notice under Section 147/148 of the Act. The order passed by the AO in this behalf is not a speaking order which cannot be sustained. In view of legal infirmity in the notice under Section 147/148 of the Act and laconic order of AO while rejecting the objections of the assessees the consequential assessment orders are also liable to be annulled.

The upshot of above discussion is that all these writ petitions are hereby allowed, impugned notice under Section 147/148 of the Act issued to the petitioner-assessees and the order rejecting their objections in this behalf are quashed and set aside. The consequential re-assessment orders vis-à-vis all the petitioner- assessees are also hereby annulled. Costs are made easy. (P.K. LOHRA),J. arora/