K.C.AGRAWAL, J. - (1.) THIS is a petition under Article 226 of the Constitution for quashing the notices dated 31st March, 1976 and 6th September, 1976 issued by the Income -tax Officer A Ward, Varanasi and for a writ of mandamus directing the respondents from taking any proceeding in pursuance of the notices mentioned above. These notices had been issued u/s 148 of the Income -tax Act, 1961 (hereinafter referred to as "The Act").
(2.) THE facts of the case lie within a narrow compass. Messrs. Renusagar Power Company Limited, the petitioner is a subsidiary company of Messrs. Hindustan Aluminium Corporation Limited, Renukoot, Mirzapur. The petitioner company is engaged in the business of generation and supply of power. For the assessment year 1972 -73, the corresponding financial year of which is from 1st January, 1971 to 31st December, 1971, the petitioner filed its returns of income. By an order of assessment dated March 22, 1975 the Income -tax Officer assessed the petitioner company and substantially accepted the returns filed by it. On an application made by the petitioner on May 24, 1975, u/s 154 of the Act, the Income -tax Officer rectified the mistake alleged to have crept in the assessment order dated 22nd March, 1975. On March 31, 1976, the Income -tax Officer A Ward, Circle I, Varanasi issued a notice u/s 148 of the Act in respect of the assessment year 1972 -73 and others on the allegations that certain incomes chargeable to income -tax had escaped assessment within the meaning of s. 147 of the Act. The Income -tax Officer proposed to re -assess the income of the aforesaid assessment years. By the said notice the petitioner -Company was required to file return within 30 days from the date of the service of the same. It may be noticed that this notice sent u/s 148 of the Act did not specify whether the same was under cl. (a) or (b) of s. 147 of the Act. In response to the said notice the petitioner sent a reply on April 21, 1976 stating that there was no material in possession of the Income -tax Officer on the basis of which action could be taken against the petitioner -company for reassessment. Through this reply the petitioner -company also called upon the Income -tax Officer to intimate the provision of the Income -tax Act under which the proceedings for re -assessment were intended to be taken. Thereafter, similar notices in respect of the assessment years 1968 -69 and 1971 -72 had been sent by the Income -tax Officer to the petitioner. Instead of submitting a fresh return the petitioner -company preferred the present writ petition challenging the validity of the notice as well as of the proceedings for re -assessment started against the petitioner on the grounds disclosed in the writ petition. The writ petition was admitted on 12 -10 -1976. The High Court although admitted the writ petition on 12 -10 -1976 but directed the petitioner -company through the order passed on the aforesaid date to file return before the Income -tax Officer concerned within the time granted by the notice issued u/s 148 of the Act.
(3.) A counter -affidavit was filed by Shri K. K. Rai, Income -tax Officer A Ward Circle I, Varanasi refuting the allegation made by the petitioner in the writ petition. The counter -affidavit disclosed that by the order dated 22nd March, 1975 the Income -tax Officer, after relying implicitly upon the information given to him by the authorised representative of the petitioner -company, had granted the following concessions : - Business loss Nil Unabsorbed depreciation Rs. 4,87,50,782/ - Development rebate Rs. 2,36,03,035/ - Tax holiday benefit Rs. 39,96,588/ - The counter -affidavit states that as the Income -tax Officer did not doubt the correctness of the adjustments made by the petitioner -company, he allowed the same without questioning the correctness of the facts and figures contained in the statements submitted before him on behalf of the petitioner -company. While disclosing the reasons which led him to believe that the income had escaped assessment due to the failure of the petitioner -company to disclose truly and fully the particulars of the income -chargeable to tax, the Income -tax Officer stated. - "The deponent did have the required reason to believe for reopening the assessment u/s 147 of the Act. Information was received by the deponent vide audit note dated 10th February, 1976 that the petitioners income chargeable to income -tax for the assessment year 1972 -73 had escaped assessment. The deponent scrutinised the information and having reason to believe that the petitioners income chargeable to income -tax for the said assessment year had escaped assessment by reason of the omission and failure on the part of the petitioner to disclose fully and truly the material facts necessary for its assessment for that year; the deponent prepared a record of his reasons and issued a notice u/s 148 of the Act." This averment was further amplified in paragraph 11 of the counter -affidavit. Along with the counter -affidavit, the respondent also had filed as Annexure 8 a copy of the reasons for reopening the case u/s 148 of the Income -tax Act. Besides the facts stated above, the counter -affidavit alleges that the petitioner had not furnished all the requisite details, statements and books of accounts relevant for the purposes of assessment of its income in respect of the assessment year 1973 -74.;