1. SACHCHIDANAND JHA, J.---The petitioner seeks quashing of the notice, dated March 20, 1992, issued under section 148 of the Income Tax Act, 1961 (for short "the Act"). A copy of the impugned notice has been marked Annexure-3 to the writ petition.
2. The petitioner is a registered firm carrying on wholesale business in cloth. For the accounting year July 9, 1986, to June 27, 1987, relevant to the assessment year 1988-89, it submitted the return of its income showing a total income of Rs.95,670 on July 27, 19$8. Along with the return it filed a statement showing computation of total income, audited trading, profit and loss account, balance-sheet and the tax audit report in the prescribed form as well as details of the loan accounts verified and confirmed by the concerned creditors. The return was accepted by the Deputy Commissioner of Income-tax (Assessment), Special Range Ranchi, respondent No.2, after scrutiny and the assessm ent order was passed on November 17, 1989. On March 31, 1992, however, the impugned notice, dated March 20, 1992, under section 148 of the Act was served on the petitioner alleging that respondent No.2 had reasons to believe that income chargeable to tax had escaped assessm ent within the meaning of section 147 and he proposed to reassess the same and, accordingly, requiring the petitioner to submit the return in the prescribed form within 30 days of the service of notice. The petitioner made an application requesting respondent No.2 to furnish the reasons leading to formation of his opinion within the meaning of section 147 of the Act and, later, also requested him to treat the original return filed on July 27, 1988; as the return (under protest) in compliance with the impugned notice under 148, ultimately, getting no response from the respondent, filed the present write petition in this Court.
3. The case of the petitioner, briefly indicated, is that in order to confer jurisdiction on the Assessing Officer for issuing show cause notice under section 148 of the Act, the following pre-conditions must be satisfied:
(a) there must be escapement of chargeable income- of the relevant assessment year;
(b) the Assessing Officer must have reasons to believe (and not suspect) that such escapement is due to failure of the assessee to file return for that year, or due to his failure to disclose fully or truly all material facts necessary for the assessment .Of that year or;
(c) if there is no such failure, the Assessing Officer has, in consequence of some information in his possession, reasons to believe that there has been escapement of income.
4. According to the petitioner, the return of income-tax for the assessment year 1988-89 having been admittedly filed, all material facts necessary for assessment having been duly disclosed supported by documents, vie., audited accounts, tax audit reports, details of bank accounts duly verified and confirmed by the respective creditors giving their respective income-tax file numbers and the assessm ent having been completed on November 17, 1'989, after due consideration of those materials, there was neither any failure on the part of the assessee nor there was any new information on record within the meaning of section 147 of the Act to justify issuance of the notice.
5. In these premises, the petitioner seeks quashing of the notice as being arbitrary, illegal and without jurisdiction.
6. The respondents have filed a counter-affidavit in which copy of the order of the Assessing Officer, dated March 20, 1992, containing the reasons leading to the belief regarding escaped assessment has been quoted. It would be useful to extract the relevant part of the said order as follows: "The assessm ent for the assessm ent year 1988-89 was completed under section 143(1) without examining the genuineness of the cash credits appearing for the first time in the books of account.
7. To examine he may, subject to the provisions of sections 148 to 153, assess or re-assess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessm ent year concerned (hereafter in sections 148 to 153 referred to as the relevant assessm ent year)."
8. Section 147 as amended: "If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessm ent for any assessm ent 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 assessm ent 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 assessm ent year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessm ent under subsection (3) of section 143 or this section has been made for the relevant assessm ent 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 assessm ent 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 ::sued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessm ent for that assessm ent year. "
9. The distinction between the two sets of the provisions was noticed by the Delhi High Court in Rakesh Aggarwal v. Asstt. CIT (1997) 225 ITR 496 in these words (page 501): "The new section not only merges clauses (a) and (b) of the pre---amended section 147 but also brings about a significant change in the preliminary requirement of certain mandatory conditions before reassessm ent proceedings could be initiated under the old section. Under the old section 147(a), the Assessing Officer could initiate reassessment proceedings if he had reason to believe that income chargeable to tax had escaped assessment by reason of:(a) omission or failure on the part of an assessee to make a return under section 139 for any assessment year, or (b) to disclose fully and truly all material facts necessary for his assessment for that year. As is evident from the amended section, in contradistinction to the original unamended section, requiring fulfillment of twin conditions spelt out in clause (a) of section 147 or in clause (b) of the said sections, as conditions precedent for issuing notice under section 148 of the Income-tax Act, it is not so in the amended section and the only condition for action now is that the Assessing Officer should have reason to believe that income has escaped assessment which belief can be reached in any manner, and is not qualified by the pre-condition of full and true disclosure of material facts by an assessee, as contemplated under the old section 147(a) of the Income-tax Act. An Assessing Officer can now legitimately reopen the assessment in respect of an income which has escaped assessm ent. Undoubtedly, under the new section, power to reopen assessment is much wider and can be exercised even if an assessee had disclosed fully and truly all material facts. "
10. The point for consideration is whether the present case falls within the mischief of the provisions of section 147 as they stood at the relevant time, i.e., prior to April 1, 1989. Mr. K. N. Jain, learned counsel for the petitioner-assessee, has placed reliance on Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR-191 (SC); CIT v. Simon Carves Ltd. (1976) 105 ITR 212 (SC); ITO v. Madrani Engg. Works Ltd. (1979) 118 ITR 1 (SC). Basemta Ram Kedernath v. ITO (1987) 165 ITR 777 (Cal); and Sarogi Credit Corporation v. CIT (1976) 103 ITR 344 (Patna). Mr. Debi Prasad, learned counsel for the respondent, on the other hand, has relied on Phool Chand Bajrang Lal. v. ITO (1993) 203 ITR 456 (SC); IAC v. VIP Industries Ltd. (1991)
11. 191 ITR 661 (SC) and Rakesh Aggarwal v. Asst. CIT (1997) 225 ITR 496 (Delhi).
12. The law on the point is thus well settled that the obligation of the assessee is to disclose all material facts fully and truly; he is, however, not expected to also tell the Assessing Officer that his conclusions are not correct. In fact, he is not supposed to disclose his own conclusion and inferences to the Assessing Officer. It is for the Assessing Officer to draw his inference and conclusion on the basis of such fact. He may for this purpose make such investigation as he considers necessary and also, in this regard, call upon the assessee to place such further evidence or materials as may be considered necessary. After having completed the assessment and accepted the return, as originally filed or with alterations, it is not open to him to take recourse to the provisions of section 148 read with section 147. He can do so only on the basis of any material or piece of information. However, he is not supposed to make a roving or fishing enquiry for this purpose. While it is open to him to collect evidence or new materials by himself through his own agencies--- at that stage he cannot compel the assessee to associate himself with any such roving or fishing enquiry. It is only after he comes to form a. Reasonable belief, distinct from suspiction or doubt, on the basis of some fresh material or evidence that he can issue notice under section 148 and start reassessm ent proceedings. Where two views of matter are possible and the Assessing Officer takes one view, later he or the successor-Assessing Officer cannot start reassessm ent proceedings merely because he seeks to take another view of the same matter and on the same materials.
13. The facts of the present case, in my opinion, bear close resemblance with those of Madnani Engineering Works Ltd. (1979) 118 ITR 1 (SC), Basanta Ram Kedernath (1987) 165 ITR 777 (Cal) and Sarogi Credit Corporation (1976) 103 ITR 344 (Patna). The Petitioner had disclosed the names of the creditors and produced documents in support of its claim of taking loan from them. There is nothing on record to show that the creditors did not stand by the case of the petitioner. In fact, even at the stage of proposed reassessment proceedings, pursuant to notice they appeared and vouchsafed the correctness of the petitioner's case. The finding of the Assessing Officer, to the effect that their "creditworthiness" was doubtful pertains to his "opinion" with respect to the same transaction and on the basis of the very same materials. The petitioner, it can be said in view of the decision in Sarogi Credit Corporation (1976) 103 ITR 344 (Pat.), , had discharged the onus and it was for the Assessing Officer to investigate the correctness or otherwise of the petitioner's case, to accept or reject the same at the time of original assessment. Merely because the Assessing Officer now seems to doubt the "creditworthiness" of the alleged creditors, it cannot be a ground for reassessm ent proceedings. The prima facie opinion as expressed in his order, dated March 20, 1992, is nothing more than suspicion; however, it is well settled the suspicion cannot take the place of belief, howsoever . Strong it may be. "Reason to believe is not the same thing as reason to suspect" (Indian Oil Corporation v. ITO (1986) 159 ITR 956(SC)).
14. The decision cited by Mr. Debi Prasad, learned counsel for the respondents, are clearly distinguishable: In the case of Phool Chand Bajrang Lai (1993) 203_ITR 456 (SC), the assesses claimed to have borrowed a loan of Rs.50,000 from Calcutta Company on May 19, 1962. Entry to that effect was made in the books of account on May 25, 1962. The loan was shown to have been raised in cash returned in cash in 1968. However, the interest thereon had been paid during the assessm ent years 1963-64 to 1968-69 by cheque or bank draft. The appellant produced a confirmatory letter from the company which had allegedly lent money to it. The Income-tax Officer, Azamgarh, completed the assessm ent accepting the genuineness of the loan and allowing deduction of the interest. Thereafter, upon enquiry; he learnt from the Income-tax Officer, Calcutta, that the Managing Director of the company in question had made a confession to him to the effect that the 'company was only a name lender and it had never advanced any loans to any person and this was accepted in the assessment of that company for the assessment years in question.
15. On receipt of the aforesaid letter, the Income-- tax Officer, Azamgarh issued notice for proposed reassessm ent. The Supreme Court held that as the Income-tax Officer came to possess fresh materials which showed prima facie that the claim of the assessee was bogus, he was entitled to start reassessm ent proceedings. It was observed that where the transaction itself, on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction. At the time of the original proceedings could not be said to be a disclosure of "true" and "full" fact. The Assessing Officer in such a case has, therefore, jurisdiction to reopen the concluded assessm ent.
16. The report of the decision in the case of VIP Industries Ltd. (1991) 191 ITR 661 (SC), does not set out the necessary fact nor indicate the reasons. The Supreme Court without disclosing any reasons or grounds set aside the order of the Bombay High Court observing that it appears that facts had subsequently come 2o the notice of the Income-tax Department that the facts disclosed in the return were not true and correct declaration of facts. I have looked into the decision of the Bombay High Court in VIP Industries Ltd. v. IAC (1991) 187 ITR 639, giving rise to the aforesaid case in the Supreme Court, from which it appears that the reassessment proceedings were sought to be initiated under section 147(a) of the Act on the ground that payment of commission allegedly made to the agent was bogus and that the purchases were also partly bogus. The Bombay High Court quashed the notice holding that when the Income-tax Officer concluded the assessment, the necessary materials were before him. As stated above, the Supreme Court without disclosing reasons or grounds by a short order set aside the order of the High Court and remanded the case to the Income-tax Officer for decision in accordance with law. Inasmuch as the order of the Supreme Court does not set out reasons or grounds, it must be held that the order was passed, in the facts and circumstances of the case, for doing complete justice between the parties within the meaning of Article 142 of the Constitution of India and, therefore, cannot be cited as binding precedent.
17. The decision in the case of Rakesh Aggarwal (1997) 225 ITR 496 (Delhi), related to the assessment year 1989-90 and rendered on the basis of the amended provisions and, therefore, can be of no avail to the respondents.