Kalyan Jyoti Sengupta, J.
1. Mr. R. N. Mitra, learned senior counsel appearing for the Revenue, has taken a preliminary point of maintainability of this writ petition saying that there exists alternative remedy. The writ petitioner should have resorted to that first and after having exhausted the same it should have approached this court. I have no hesitation to reject this submission on two grounds. Firstly, if the question of jurisdiction of any statutory authority is raised, the writ court in its discretion, as a rule, entertains such petition. Secondly, the theory of alternative remedy does not operate as an absolute bar. It may be a question of convenience and discretion of the writ court. At the time of admission of this matter this court in exercise of discretion has entertained the matter and passed an interim order. The question of jurisdiction should have been raised at the first available opportunity, namely, at the time of admission. It is not a question of inherent lack of jurisdiction of this court, at the highest it may be a question of improper exercise of jurisdiction. Such a plea in a case of this nature can always be avoided or waived by the respondent. In my view, this plea by necessary implication has been waived by the Revenue. The question of jurisdiction is thus decided in favour of the writ petitioner.
2. Now, coming to the merits of this matter, it appears to me that the petitioner has challenged the impugned notice dated December 12, 1995, purported to have been issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act'). In order to appreciate the issues involved in this matter, the facts of this matter are stated in short as follows :
This matter relates to the return of the assessment order for the period 1990-91. The writ petitioner under the provision of Section 44AB of the aforesaid Act is obliged to furnish audit report and to submit the same along with the returns which, in fact, has been done in this case. Along with the returns the audit report was furnished. The auditors certified under Section 44AB of the said Act that the petitioner is entitled to get deduction of certain portion of the income. After scrutinizing everything and issuing proper notice the Assessing Officer on March 31, 1993, has passed an order and thereby computed the total taxable income at Rs. 2,52,57,010 as against the claim of petitioner No. 1 of Rs. 31,88,207, in the return of petitioner No. 1. The petitioner being aggrieved by the disallowed portion of the aforesaid income preferred an appeal before the Commissioner of Income-tax (Appeals) and such appeal is pending. Petitioner No, 1 placed everything before the Assessing Officer and disclosed whatever it could do at the time of assessment. Thereafter, petitioner No. 1 nearly after two years received a notice under Section 154 of the said Act whereby and whereunder the Assessing Officer wanted to rectify and/or correct the said assessment order. In this rectification exercise the Assessing Officer included the aforesaid portion of the income deduction of which has been allowed.
3. The petitioner replied to the said notice for rectification, and the contention of the petitioner was accepted and whatever deduction was allowed under Section 32AB of the said Act was retained and the same was not withdrawn.
4. After all this was done, on December 12, 1995, the impugned notice under Section 148 of the said Act was served upon the petitioner whereby respondent No. 1 alleged that the income for the assessment year 1990-91 has escaped assessment. In the impugned notice there was no disclosure of any reason for the belief of the officer concerned that any income chargeable to tax has escaped assessment. In the petition it has been alleged that the impugned notice was issued in improper and illegal exercise of jurisdiction on the given facts and circumstances as above.
5. Mr. Pal, learned senior counsel for the petitioner, contends that admittedly the notice was issued beyond four years from the end of the relevant assessment year. Therefore, the conditions mentioned in the proviso to Section 147 of the said Act are to be fulfilled. He submits that one of the primary conditions to be fulfilled before issuance of notice is that there must be satisfaction of the Assessing Officer that there was a failure on the part of the assessee to make return under Section 139 or in response to a notice issued under Sub-section (1) of Section 142 of the said Act. He contends that it will appear from the records, which have been produced before this court, that the Assessing Officer has not reached his satisfaction as to whether there was failure on the part of the assessee to make a return under Section 139 of the said Act. He further points out that there was no material disclosed in the affidavit-in-opposition that the Chief Commissioner or Commissioner was satisfied with the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. Sub-section (2) of Section, 148 of the said Act makes it abundantly clear that unless the reasons are recorded by the Assessing Officer, the assumption of jurisdiction under the aforesaid Section 147 of the said Act will be wholly illegal. In support of his contentions he has relied on a decision of the learned single Bench of this court reported in Union Carbide (India) Ltd, v. ITO : [1973]87ITR529(Cal) and also a decision of the Supreme Court reported in CIT v. Corporation Bank ltd. : [2002]254ITR791(SC) .
6. Therefore, he concludes that the action on the part of the Assessing Officer is without jurisdiction and the same is liable to be set aside and quashed.
7. Mr. Mitra, learned senior counsel appearing on behalf of the Revenue, contends that the petitioner has challenged the notice and at this stage the court will not interfere with the proceedings, particularly when there is a material or reason to proceed with this matter. It will be open for the writ petitioner to prefer an appeal against the order, if passed adversely against him in the reassessment proceedings. In support of his contention he has relied on the decisions of the Supreme Court reported in Ess Ess Kay Engineering Co. P. Ltd. v. CIT : [2001]247ITR818(SC) ; Raymond Woollen Mills Ltd. v. ITO : [1999]236ITR34(SC) and Phool Chand Bajrang Lal v. ITO : [1993]203ITR456(SC) .
8. He further contends that though no document has been annexed to the affidavit in opposition to prove that the Commissioner was satisfied with the reasons recorded by the Assessing Officer that it is a fit case to issue a notice under Section 148 of the said Act but xerox copies of the order-sheets should be allowed to be produced before this court in support of this case.
9. Having heard the contentions of the respective learned counsel and considering the materials including the xerox copies of the records, in this case the issue is whether the Assessing Officer on the given facts and circumstances has exercised jurisdiction lawfully or not. Admittedly, this notice was issued for reopening of assessment after the expiry of four years from the end of the relevant assessment year. The proviso to Section 147 of the said Act has to be applied in this case. It is the settled position of the law that the proviso to a particular section of a statute is a dominant portion. Ordinarily, after the expiry of four years the assessment cannot be reopened under Section 147 of the said Act unless certain conditions mentioned therein are fulfilled. Upon fair reading of the said section, I find that before four years the assessment can be reopened if it is found that any income chargeable to tax has escaped assessment whereas after the expiry of four years the following conditions are to be fulfilled before assumption of jurisdiction.
10. There must be satisfaction by the Assessing Officer that the assessee concerned has failed to make a return under Section 139 of the said Act (which is appropriate in this case) and reaching the satisfaction of the Assessing Officer is an obligatory duty on his part as it will appear from Section 148(2) of the said Act. Therefore, the proviso to Section 147 has to be read along with Sub-section (2) of Section 148 of the said Act. Sub-section (2) of Section 148 is reproduced hereunder :
'The Assessing Officer shall, before issuing any notice under this section record his reasons for doing so.'
11. There is another obligation to be discharged by the Assessing Officer before he issues such notice, as the statute has not conferred on him absolute power to issue notice of this nature. The moment he reaches his own satisfaction, he is to seek ratification of the Chief Commissioner or Commissioner under the proviso to Sub-section (1) of Section 151 of the said Act. Therefore, I appropriately quote Sub-section (1) of Section 151 including the proviso thereto.
'151. (1) In a case where an assessment under Sub-section (3) of Section 143 or Section 147 has been made for the relevant assessment year, no notice shall be issued under Section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid that it is a fit case for the issue of such notice.'
12. In the background of the aforesaid interpretation of the section, now this matter has to be examined factually whether the Assessing Officer has taken such steps for assumption of jurisdiction or not. The record has been produced and in the affidavit, the Assessing Officer has recorded his reasons. Upon a careful perusal of this order I do not find the Assessing Officer has reached his satisfaction that the reason for reopening the assessment, is due to the failure on the part of the assessee to make a return under Section 139 of the said Act.
13. The matter was placed before the Commissioner but the Commissioner has not examined whether the reasons recorded by the Assessing Officer and/or reaching his satisfaction are satisfactory or not. The Commissioner under the proviso to Section 151(1) of the said Act cannot supply his own reasons to reach his satisfaction. He has to satisfy himself whether the reasons recorded by the Assessing Officer are sufficient and fit for issuance of such notice. Even the Commissioner has not recorded anywhere that there was a failure on the part of the assessee/petitioner to assume jurisdiction for reopening under Section 147 of the said Act. I, therefore, hold that the impugned notice has been issued without lawful exercise of jurisdiction.
14. I accept the submission of Mr. Pal that in this case there cannot be any failure on the part of the assessee as along with the returns audit reports were furnished. Audit report is a part of the returns. In a decision of the Supreme Court reported in CIT v. Corporation Bank Ltd. : [2002]254ITR791(SC) it has been observed as follows (page 793) :
'. . . there is no failure on the part of the assessee in furnishing the particulars pertaining to the above noted sum as not recoverable for the relevant accounting year and the statements filed along with the original return disclosed the full details of the aforesaid account. There is, therefore, no failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessment years for the respective years and as such Section 147(a) has no manner of application and is not attracted in the facts of the matter under consideration.'
15. In the case before the Supreme Court factually all material particulars were supplied with the return, enclosing audit report and the aforesaid decision was rendered in the facts and circumstances as stated therein.
16. A learned single judge of this court in a case reported in Union Carbide (India) Ltd. v. ITO : [1973]87ITR529(Cal) , has held on the facts therein that when there is a full disclosure of all facts in the returns there cannot be any case of failure on the part of the assessee.
17. Mr. Mitra's contention that the writ court will not interfere with this notice when there are materials or reasons, is not accepted in view of the fact that the present writ petition is brought on the question of jurisdiction, and when the court finds that assumption of jurisdiction is illegal, therefore, proceedings initiated in illegal exercise of jurisdiction cannot be allowed to be continued or perpetrated. The decisions cited by Mr. Mitra reported in Ess Ess Kay Engineering Co. P. Ltd. v. CIT : [2001]247ITR818(SC) ; Raymond Woollen Mills Ltd. v. ITO : [1999]236ITR34(SC) and Phool Chand Bajrang Lal v. ITO : [1993]203ITR456(SC) do not lay down the law that the writ court will not interfere with the notice under any circumstance. In those cases their Lordships found that there were materials or reasons for which exercise of jurisdiction was warranted lawfully. Therefore, the cases cited before me by Mr. Mitra are factually distinguishable.
18. Accordingly, I allow the writ petition and I set aside and quash the impugned notices.
19. There will be no order as to costs. Interim order already passed stands confirmed.
20. Let a xerox certified copy of this judgment and order be made available to the parties, if applied for the same.