JUDGMENT
Aloke Chakrabarti, J.
1. This writ petition was filed challenging the notices dated July 18, 1994, under Section 148 of the Income-tax Act, 1961, for the assessment years 1984-85, 1987-88 and 1989-90 and the proceedings relating thereto.
2. Mr. J. P. Khaitan, learned counsel for the petitioner, challenges the said notices on the ground that the requirements under Section 147 have not been satisfied and therefore, such notices issued after the expiry of four years from the end of the relevant assessment year in each case, are time barred as in the present case for each of the years there was assessment under Sub-section (3) of Section 143 of the Income-tax Act.
3. It is contended that the impugned notices were issued for reopening the assessment in view of the explanation of the law in the case of CIT v. N. C. Budharaja and Co. , holding that the civil contractor engaged in various activities such as construction of dams, canals, bridges, buildings, roads and other similar constructions and also laying of pressure piling, digging of borewells, etc., does not manufacture or produce an article or thing and, therefore, no investment allowance is allowable in such cases. Learned counsel, therefore, has contended that this is not a ground provided under Section 147 which justifies issuance of notice under Section 148. It is strongly contended by learned counsel for the petitioner that two conditions indicated in Section 147 are that some income chargeable to tax has escaped assessment for the concerned assessment year and the same is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Law in this regard has been referred to as in the case of Calcutta Discount Co. Ltd. v. ITO , which has since been affirmed in the case of Coca-Cola Export Corporation v. ITO . The reasons on which the said notices were issued have been referred to as appearing from the annexure to the affidavit-in-opposition filed by the respondents. Law further has been referred to as decided in the case of CIT v. Bipin Vadilal and Vareli Weaves Pvt. Ltd. v. Deputy CIT ; Jiyajeerao Cotton Mills Ltd. v. ITO ; Gemini Leather Stores v. /TO and Geo Miller and Co. Ltd. v. Deputy CIT and W. P. No. 2492 of 1994-Simplex Concrete Piles (India) Pvt. Ltd. v. Deputy CIT , decided on January 28, 2002.
4. Mr. Saha, learned counsel for the respondents, contended that in view of the explanation of the law in the said judgment of N. C. Budharaja and Co.’s case , two similar writ petitions have been decided one in the case of Geo Miller and Co. Ltd. and another in the case of Simplex Concrete Piles (India) Pvt. Ltd. v. Deputy CIT decided on January 28, 2002, in the unreported judgment (since ) and, therefore, on the same reasons issuance of notice in the present case also should be permitted. In respect of the scope of Section 147 law was referred to as decided in the case of Sri Krishna Pvt. Ltd. v. ITO .
5. Considering the aforesaid contentions, I find that for issuance of notice under Section 148 requirements are available from Section 147 of the Act and the relevant provisions thereof are set out hereinbelow :
“147. Income escaping assessment.–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.
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 underassessed ; 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.”
6. The proviso to the said section shows that where an assessment under Sub-section (3) of Section 143 has been made for the relevant assessment year, no action shall be taken under the said 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 disclose fully and truly all material facts necessary for assessment. Therefore, when in the present case there was an assessment under Section 143(3) and admittedly four years have passed after the end of the relevant assessment year, when the impugned notices were issued, two requirements were to be satisfied, i.e., escapement of some income chargeable to tax and failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment.
7. But, in the present case, the reasons disclosed with the affidavit-in-oppo-sition admittedly only show escapement of assessment and that too according to the explanation of the law by the apex court subsequent to the assessment. There is no material that the second requirement of failure on the part of the petitioner to disclose fully and truly any material fact, has even been alleged. Learned counsel for the respondents relied on the law as decided by the apex court in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 for showing that this court, at this stage of issuance of notice, is not to assess the correctness or sufficiency of materials. But this contention cannot be accepted as at this stage not the correctness or sufficiency of the materials but the very existence of the allegation is being considered and that is within the power of the court when the notice is challenged.
8. In respect of the case of Geo Miller and Co. Ltd. and Simplex Concrete Piles (India) Pvt. Ltd. , the learned single judge of this court decided the writ petitions and learned counsel for
the respondents states that the reasons in those two cases are identical to the reasons disclosed in the present case, viz., the explanation of law by the apex court in the case of N. C. Budharaja and Co. [1993] 204 ITR 412. But on a perusal of the said judgments, it appears that in the case of Geo Miller and Co. Ltd. , no finding has been arrived at that the second requirement as discussed hereinabove is in the alternative. In the case of Sim-plex Concrete Piles (India) Pvt. Ltd. , the same learned judge came to a finding that both the conditions contained in Section 147 for issuance of notice under Section 148 have been satisfied therein. Therefore, it is apparent that the learned judge has accepted that both the said conditions are to be satisfied for issuance of notice under Section 148. But in the present case the respondents have failed to show that the second condition was satisfied at all. Therefore, in such circumstances, I am of the opinion that in the absence of satisfaction of one of the statutory requirements as contained in Section 147, the notices impugned under Section 148 cannot be held to be valid as they were issued after the expiry of four years from the last date of the concerned assessment year and there was an assessment under Section 143(3) in respect of the assessee.
9. Therefore, the notices are barred by time in view of the provision of law as discussed hereinabove. The writ petition is allowed. The impugned notices at annexure “F” to the writ petition are hereby quashed.
10. All parties are to act on a xeroxed signed copy of this judgment on the
usual undertaking.