Susanta Chatterjee, J. - (1.) In this particular case, during the relevant previous years for the assessment, years 1962-63, and 1963-64 and 1964-65, the petitioner-company received diverse sums on account of compensation for the acquisition of plots of agricultural lands comprised within the petitioner's tea estate. In the returns filed under the Income-tax Act for the assessment year 1966-66, the petitioner duly disclosed the receipt of such sums and in the course of the assessment proceedings for the said year before respondent No. 1, the Income-tax Officer, F-Ward, Companies District II, Calcutta, the said petitioner by a letter dated October 21, 1967, duly furnished the primary and relevant materials fully and truly in relation to the said land and the said amount and furnished all the relevant materials, information and explanations. During the accounting year ended December 31, 1966, the petitioner received a further sum towards compensation in respect of the said land acquired by the Government of Assam in 1961. The petitioner filed an appeal before the High Court of Assam and Nagaland for proper valuation of such land. The Government of Assam also preferred an appeal against the enhancement of the valuation of the land passed by the District Judge concerned. Both the said appeals are still pending. The petitioner claims to have shown in its balance-sheet as on December 31, 1966, receipt of the said second total amount of compensation of Rs. 7,85,620 and also that the directors of the petitioner-company, in their report for the said accounting year, had duly made a note of reference due to such sum and of the said appeal.
(2.) Stating all the above facts in detail, the writ petitioners have come to this court on the ground that, respondent No. 1, Income-tax Officer, has no reason to believe that any income of the petitioner for the said accounting year 1967-68 escaped assessment. It is further alleged that there is no material whatsoever on the basis of which respondent No. 1 could entertain any belief as required by Section 147 of the Income-tax Act. The alleged belief as stated in the said impugned notice is a mere pretence and does not exist. It is the specific allegation of the petitioner that there was no material on the basis of which respondent No. 2 could be satisfied about the issue of the said purported notice under Section 148 of the said Act. The said purported satisfaction of respondent No. 2 is also a mere pretence and does not exist. Further, the proceedings under Section 147 of the said Act have been initiated solely with a view to reconsider and/or revise the decisions made at the time of the original assessment and the said purported proceedings have not been legitimately done and are with a view to conducting a fishing and roving investigation contrary to law.
(3.) The writ petition and the rule are contested by the income-tax authorities by filing an affidavit-in-opposition. It is stated that the Government of Assam acquired 47 bighas, 17 bighas and 1,885 bighas of land of the assessee-campany in 1961 and the assessee-company received in the calendar years 1961, 1962 and 1963 sums of Rs. 37,043, Rs. 15,201 and Rs. 4,44,474, respectively, as compensation for the acquisition of the lands corresponding to the previous years 1961, 1962 and 1963, in the assessment years 1962-63, 1963-64 and 1964-65. The lands totalling 1,885 bighas were acquired by the Assam Government for its Fertilizer Corporation and Namrup Electrical Division. It was submitted by the assessee that the entire land acquired by the Government was agricultural and, as such, the question of capital gains did not arise. Further, as the assessee is a company dealing in tea having agricultural land, the submissions of the assessee were then accepted. It is also disclosed in the affidavit-in-opposition that after completion of the said original assessment for the said assessment years, the Income-tax Officer started investigation as to whether the company held so much agricultural land in addition to tea gardens and made a reference to the Assam Government and to the Income-tax Officer, Dibrugarh. The Income-tax Officer, "A" Ward, Dibrugarh, caused an extensive enquiry by his Inspector who submitted an extensive report and on the basis thereof, 5/8ths of the total land acquired by the Government from the petitioner was found to be non-agricultural. Accordingly, for the assessment year 1962-63, the assessment was reopened under Section 147(a) of the Income-tax Act, 1961, for assessing the capital gains arising out of the said 5/8ths portion of the total land of 1,885 bighas acquired by the Government as stated hereinbefore. It is also stated that the Fertilizer Corporation of India purchased 307 bighas 2 kathas and 6 chattaks of land for Rs. 2,75,595 from the petitioner-company. Receipt of the said sum was also shown credited in the accounts of the calendar year 1964 (relevant for the assessment year 1965-36). Rs. 2,30,595 out of the said sum represents the cost of land at Rs. 750 per bigha and Rs. 45,000 represents the amount of compensation for bamboos, trees, etc. The assessment for the assessment year in which the said sale deed for the said land was executed was reopened under Section 147(a) of the said Act Thereafter, the assessee-company sold further land to the Fertilizer Corporation of India and it was considered that the assessee-company could not have so much agricultural land. In order to clarify whether all the land was agricultural or not, a reference was made to the Law Officer of the Fertilizer Corporation of India on June 27, 1973, by the Income-tax Officer, A-Ward, Dibrugarh, as regards the nature of the land involved in the sale of 307 bighas 2 kathas and 6 chattaks of land for Rs. 2,75,595. The Law Officer, in his turn, by letter dated July 10, 1973, informed that the above tea garden comprised land of mixed description and a part of the said land was fit for cultivation but the rest was arid land.;