Judgment:
Chettur Sankaran Nair, J.
1. The petitioner seeks to quash exhibits P-12 and P-13 notices issued under Section 148 of the Income-tax Act, 1961, and exhibit P-16 letter by which the first respondent rejected his request fordisclosing the grounds for issuing the notices. There is a further prayer to direct the second respondent to dispose of exhibit P-4, an application under Section 273A of the Act.
2. The petitioner was assessed to income-tax for the assessment years 1982-83, 1983-84 and 1984-85 by exhibits P-1 to P-3 orders, on the basis of revised returns filed by him. Subsequently, penalty and interest were also levied. On appeal, the levy of penalty was set aside by exhibits P-8 to P-10 orders. A petition filed by the assessee under Section 273A of the Act exhibit P-4 is still pending consideration.
3. While.so, the first respondent issued notices under Section 148 (exhibits P-12 and P-13) proposing to reopen the assessment for the year 1984-85 and requiring the petitioner to file returns. The petitioner by exhibit P-14, and his representative by exhibit P-15, told the first respondent that the assessment completed on the basis of revised returns cannot be reopened, as the returns were filed at the instance of the assessing authority and that too on the understanding that the matter would be closed with that. The petitioner stated further that he was not bound to file returns pursuant to the notices, as the first respondent had not disclosed the reasons for reopening the assessment. In reply, the first respondent, by exhibit P-16 informed the petitioner that there was no need to disclose reasons and that the only pre-condition for reopening an assessment was that the assessing authority should record reasons therefor in the order sheet.
4. Counsel for the petitioner submits that the first respondent cannot reopen an assessment without disclosing the reasons which persuaded him to such a course. To support the contention, he relied on the decision in ITO v. Lakhmani Mewal Das : [1976]103ITR437(SC) . The Supreme Court held that (at p. 448) :
'The powers of the Income-tax Officer to reopen an assessment, though wide, are not plenary. The words of the statute are 'reason to believe' and not 'reason to suspect'. The reopening of the assessment after the lapse of many years is a serious matter. ... It is, therefore, essential that before such action is taken the requirements of the law should be satisfied.'
Counsel relied also on the decision in Ganga Saran and Sons Pvt. Ltd. v. ITO : [1981]130ITR1(SC) . The court observed (p. 11) :
'. . . two distinct conditions must be satisfied before the Income-tax Officer can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and, secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issuedby the Income-tax Officer would be without jurisdiction.. . . It must be reasonable or in other words it must be based on reasons which are relevant and material.'
In reply, counsel for the Revenue submitted that the first respondent was not required to state reasons while issuing exhibits P-12 and P-13. Existence of reason to believe that there was escapement of income is all that is needed to invoke the power under Section 148, submits counsel. He relied on the decision in S. Narayanappa v. CIT : [1967]63ITR219(SC) , to derive support for his submission. The court observed (at p. 222) :
'The earlier stage of the proceeding for recording the reasons of the Income-tax Officer and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial. The scheme of Section 34 of the Act is that, if the conditions of the main section are satisfied, a notice has to be issued to the assessee containing all or any of the requirements. . . . There is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee.'
(emphasis * supplied)
To the same effect is the decision in Sowdagar Ahmed Khan v. ITO : [1968]70ITR79(SC) . The Supreme Court found that initiation of proceedings under Section 34(1)(a) (1922 Act) would be valid, if material is available to form 'the prima facie belief that the assessee had omitted to disclose fully and truly all material facts.'
Section 148 requires the Income-tax Officer to record his reason for issuing a notice for reopening an assessment. He is also required to serve a notice on the assessee in the manner contemplated by Section 139(2). Under Section 139(2), the Income-tax Officer must 'issue and serve' a notice on the assessee to furnish a return of income. The section does not envision the need to disclose reasons for the belief, nor can it be read into it as a requirement of natural justice. No adjudication of rights or determination resulting in consequences to the assessee is involved at the stage of issuring the notice. The only requirement in law for initiating proceedings under Section 148 is that there must be reasons to justify the belief that there is escapement be suppression of income. The requirement is only so far and no further, and the requirements of quasi-judicial determination do not govern the proceedings at the stage of issuing a notice. Because no reasons are stated, it does not mean that there are no reasons. In the instant case, the files disclose that there are grounds for reasonable belief to initiate proceedings. Whether the reasons are sufficient to make an assessment or not is a matter to be considered at a later stage after considering the case of the assessee and other relevant factors.
5. In the circumstances, there is no justification for quashing exhibits P-12, 13 or 16, However, the second respondent must consider exhibit P-4 and pass orders thereon within three months from today.
6. Subject to this direction, the writ petition is dismissed.