K.S Radhakrishnan, J.:— This Writ Petition has been filed under Art. 226 of the Constitution of India challenging Ext. P12 order dated 18.11.2005 issued by the Assistant Commissioner of Income Tax directing the assessee to ensure compliance with the statutory notification issued under S. 143(2) and 142(1) of the Income Tax Act, 1961 without fail and also for other consequential reliefs.

2. Petitioner is a company owned by the State Government engaged in the business of manufacture of cement and cement paints at Kottayam and is an assessee under the Income Tax Act 1961, on the files of the second respondent. In respect of the assessment year 2000-2001 petitioner filed its original return on 28.11.2000 declaring a total income of Rs. 2,37,56,900/-. A revised return was filed on 05-01-2001 with a revised total income of Rs. 1,91,32,250/- along with the audit report under S. 44AB. The return was processed and accepted by the assessing authority under S. 143(1) of the Act on 31.01.2002 Return of income was not taken up for scrutiny under S. 143(3) of the Act. The date for completing the regular assessment under S. 143(3) was however expired on 31.03.2003

3. Petitioner was later served with a notice Ext. P3 dated 28.03.2005 under S. 148 of the Act by the first respondent informing he has reason to believe that income chargeable to tax for the assessment year 2000-2001 has escaped assessment within the meaning of S. 147 of the Act. Petitioner was therefore informed by the first respondent that he has proposed to reassess the income for the said assessment year and was therefore directed to submit a return in the prescribed form within thirty days from the date of the said notice. In response to the notice petitioner filed its return showing the income as shown in the original return. Petitioner also sent a letter Ext. P5 dated 18.04.2005 requesting the first respondent to intimate the reasons recorded for the purpose of reopening the assessment as per the ruling of the Apex Court in GKN. Driveshafts (India) Ltd. v. Income Tax Officer, (2003) 259 I.T.R 19. Later, after the expiry of six months, petitioner was served with a letter, Ext.P6 dated 17.10.2005 stating as follows:

“The reasons recorded for reopening of the case are as follows:

A.Y 2000-01 Excise duty (16%) has not been included in valuation of closing stock. A.Y 2001-02 Excise duty (16%) has not been included in valuation of closing stock. Further, provision for bad debts has not been added back to total income.”

4. Petitioner was later served with notices Exts. P7 & P8 dated 31.10.2005 under S. 143(2) and 142 of the Act directing the petitioner to appear before the first respondent so as to get further information in connection with the return of income submitted by the petitioner on 18.04.2005, vide Ext. P8 notice issued under the S. 142 for the assessment year 2000-2001. Petitioner was also directed to file fresh return and also to produce the following document.

i) Proof of addition to fixed assets and proof of installation.

ii) It is proposed to add back Rs. 46,13,711/- being provision for shortage of lime shell stock as this is in the nature of a mere provision and was not ascertained in the year end 31.3.2000 Objections, if any, may be filed.

iii) Objections, if any, to the inclusion of excise duty @ 16% in calculation of closing stock.

iv) Break-up of interest paid.

v) Ledger with narration and supporting bills/vouchers regarding repairs to building and repairs to machinery.

Petitioner in the meanwhile filed detailed objection to Ext. P6 vide Ext. P9 reply dated 14.11.2005 requesting to drop proceedings initiated under S. 148 being contrary to the provisions of S. 147 since there was no escapement of income. Petitioner has also pointed out that there is no escapement of income on account of the reason that the excise duty (16%) has not been included in valuation of closing stock. Petitioner also preferred a petition Ext. P11 under S. 144A of the Act before the Additional Commissioner of Income-tax requesting to issue appropriate direction to the subordinate officers to drop the proceedings initiated under S. 148 of the Income Tax Act and also the proceedings initiated vide Exts. P7 and P8. Petitioner has also stated that the notices Exts. P7 and P8 issued under Ss. 143(2) and 142(1) are illegal and contrary to the guidelines issued by this court in Tolins Rubbers v. Assistant Commissioner Of Income-Tax (2004) 270 I.T.R 280. Reference was also made to the decision of the Gujarat High Court in Garden Finance Ltd. v. Assistant Commissioner of Income Tax (2004) 268 I.T.R 48.

5. The petitioner was then served with Ext. P12 order dated 18.11.2005 stating that the assessing authority has complied with the guidelines prescribed in GKN Driveshafts (India) Ltd. v. Income Tax Officer, (2003) 259 I.T.R 19 before issuing notices under Ss. 143(2) and 142(1) of the Act and therefore it is not open to the assessee to question the legality of S. 147 proceedings before the assessing officer, that is, after the issuance of the statutory notices under S. 143(2) and 142(1). Various other objections raised by the petitioner were therefore rejected stating that the reason for reopening the assessment stated in Ext. P3 notice issued under S. 148 is legal. Petitioner was therefore directed to ensure compliance with statutory notices under Ss. 143(2) and 142(1) without fail. Aggrieved by the same this Writ Petition has been preferred.

6. Assessing authority in the meanwhile passed the assessment order Ext. R1(A) dated 2.6.2006, after seeking permission from this court. Reason recorded for reopening the assessment was stated to be non-inclusion of excise duty (16%) in the valuation of closing stock but assessment was completed after issuing notices under Ss. 143(2) and 142(1). It was stated that the loss by shortage of stock of lime-shell was not crystallized in the year under consideration and it would not crystallize till Government of Kerala accords its approval to write off the same. Consequently it was pointed out that stock was thus prematurely written off. It was pointed out that the provision for Rs. 46,13,711/- being shortage of stock of lime shell be debited in the profit and loss account for the financial year 1999-2000 cannot be allowed as a deduction. The contention of the assessee that the assessing officer cannot launch enquiry on grounds not covered in the reassessment notice was rejected placing reliance on the decision of the Apex Court in V. Jaganmohan Rao v. C.I.T (75 ITR 373). Assessment order was therefore passed under S. 143(3) read with S. 144A and 147 of the Act and interest was also estimated under S. 234D from 1.6.2003 Penalty proceedings were also ordered to be initiated under S. 271(1) (c) of the Act.

7. Counsel appearing for the petitioner Sri Joseph Markos submitted that it is settled law that S. 147 of the Act can be invoked only when assessing authority has reason to believe that income chargeable to tax has escaped assessment. Counsel submitted that under the guise of exercising power under S. 147 assessing authority cannot be permitted to make a roving enquiry. Counsel submitted that the petitioner's return was accepted under S. 143(1) (a) and the assessing authority was entitled to complete the regular assessment under S. 143(3) on or before 31.3.2003 and in order to get over the period of limitation, assessing authority has sought to invoke S. 147 to make a detailed enquiry which is reflected in Exts.P7 and P8 notices. Counsel submitted that the assessing authority after having chosen not to complete the regular assessment under S. 143(3) cannot be permitted to make a further enquiry which would amount to virtually reopening for earlier assessment. Counsel submitted that no cogent reasons have been stated for reopening the assessment; nor furnished any details in the notices under S. 143(2). The assessing authority according to the counsel, cannot make a roving enquiry on the basis of notice issued under S. 143(2) and 142 without disclosing any reasons. Counsel submitted that by issuing notice under Ss. 142 and 143(2) as well as S. 148(1) assessing authority cannot call for any details which are totally unconnected with the grounds shown for reopening the assessment under S. 147. Counsel submitted that the details called for under Ss. 143(2) and 142 are totally unconnected with the grounds disclosed to the assessee under S. 148 of the Act. Counsel placed considerable reliance on the decision of the Apex Court in GKN Driveshaft's case, supra (259 ITR 19). Reliance also placed on the decision of the Apex Court in Commissioner of Incometax v. Sun Engineering Works P. Ltd. ((1992) 198 ITR 297). Counsel also placed reliance on the Bench decision of the Punjab and Haryana High Court in Vipan Khanna v. Commissioner of Income Tax (2002 (255) ITR 220). Sri P.K Raveendranatha Menon, Standing Counsel appearing for the Revenue, on the other hand, contended that reasons for reopening the assessment were communicated to the assessee as per letter dated 17.10.2005, consequently requirement of S. 148 has been satisfied. Counsel submitted that under the amended provisions of S. 147 with effect from 1.4.1999, the assessing officer can assess or reassess income which he has reason to believe has escaped assessment and can assess or reassess any income chargeable to tax which has escaped assessment and which comes to the notice subsequently in the course of the proceeding. Counsel submitted that notice under S. 143(2) was issued calling upon the assessee to produce evidence in support of the return when the assessing officer needs to ensure that there is no understatement of income. Notice under S. 142(1) was issued to produce document as the assessing authority may require for the purpose of making the assessment. Counsel submitted that whether assessment was completed under S. 143(1) or under S. 143(3) is of no moment for initiating reassessment under S. 147. Counsel submitted that once the proceeding were validly initiated by issuing notice under S. 148 after recording reasons assessing authority has jurisdiction to assess or reassess any income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings. Counsel placed reliance on the decision of the Madras High Court in Family of V.A.M Sankaralinga Nadar v. C.I.T (1963) 48 ITR 314) pertaining to proceedings initiated under S. 34 of the Indian Income Tax Act 1922. Counsel submitted that the non issuance of the notice under S. 143(2) does not in any way affect the power of the assessing officer to issue notice under S. 148. Counsel submitted that non existence of the original ground which led the officer to believe that income had escaped is not a bar to reassessment of escaped income and does not vitiate such reassessment. Counsel submitted that the statutory requirement of reasonable belief rooted in information in the possession of the officer is a safeguard the assessee from vexatious proceedings and is not a mantle of protection against taxation of income found to have escaped assessment. Counsel submitted that in determining the question of escaped assessment the assessing officer has to satisfy that there were enough materials on the basis of which authority can reopen the case and the correctness or otherwise of the same has to be considered by the court. Counsel also placed reliance on the decisions in Income Tax officer v. Selected Dalurband Coal Co. Pvt. Ltd. (217 ITR 597), and Praful Chunilal Patel v. Asst. C.I.T (236 ITR 832). Counsel submitted that Ext.P12 is a preliminary order and therefore remedy open to the petitioner is not to invoke the extra-ordinary jurisdiction of this court under Art. 226 of the Constitution of India since petitioner has got an alternate remedy under the Act. Counsel submitted, in any view of the matter, since assessment order has been passed petitioner has got a remedy of appeal before the authorities and this Writ Petition is not a proper remedy. Counsel also submitted that provision in S. 147 is a machinery provision.

8. It is trite law that the provisions in a taxing statute have to be construed in accordance with the clear intention of the legislature which is to make the charge levied effective. Validity of Exts. P6, P7, P8 and P12 is to be adjuded in the light of Ss. 147 and 148 read with S. 143 of the Act. At the outset we may point out that we find no infirmity in the Department issuing Ext. P3 under S. 148 or Ext. P6 communication disclosing reasons for reopening the assessment. Ext. P3 is a notice issued under S. 148 of the Act proposing to reassess the income of the petitioner for the assessment year 2000-01. But no reasons were recorded in Ext. P3 notice as required sub-s. (2) of S. 148. Later on a request made by the petitioner, reasons were disclosed by Ext.P6 letter dated 17.10.2005 Still the moot question is whether the assessing authority without following the procedure under sub-section (2) of S. 148 assess or reassess any income chargeable to tax which virtually has no connection with the reason already disclosed in the notice issued under S. 148(2). Admittedly no notice under sub-section (2) of S. 148 was issued in respect of the income which is stated to have escaped for which notice under S. 143(2) and 142 was issued by Exts. P7 and P8. For example, in Ext. P8 it is stated that the assessing authority has proposed to add back Rs. 46,13,711/- being provision for shortage of lime shell stock, which is totally unconnected with the reason stated in the notices issued under S. 148, vide Exts. P5 and P6. Can the assessing authority under the guise of proceeding under S. 147 make scrutiny of assessment under S. 143(3), which proceeding was barred by limitation?. Petitioner specifically states that his return was accepted under S. 143(1)(a) under Ext. P2 intimation. Consequently the assessing authority was entitled to complete the regular assessment under S. 143(3) on or before 31.3.2003 Petitioner further submits that the assessing authority having chosen not to complete the regular assessment under S. 143(3) cannot be permitted to verify all the statements under the guise of assessing escaped income. Petitioner submits that Exts.P7 and P8 requiring him to produce books of accounts and furnishing information on various points are not warranted in a proceeding under S. 147 of the Act.

9. S. 148 deals with issue of notice where income has escaped assessment. It states that before making the assessment, reassessment or recomputation under S. 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Sub-s. (2) of S. 148 states that the assessing officer shall before doing so record his reasons for issuing such notice. Recording of reasons before issuing notice is a mandatory requirement. Assessing officer is also empowered under S. 147 assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under S. 147. Assessing officer gets jurisdiction under S. 148 to assess or reassess the income which has escaped assessment only after sub-s. (2) of S. 148 is complied with. The question is whether sub-s. (2) of S. 148 has to be complied with if any other income chargeable to tax has escaped assessment, or which comes to his knowledge subsequently in the course of the proceedings. In other words, when proceedings are already on in respect of one item in respect of the income for which he had already recorded reasons is it necessary that he should record reasons for assessing or reassessing any of the items which are totally unconnected with the proceedings already initiated. Suppose under two heads, income has escaped assessment and those two heads are interlinked and connected, the proceedings initiated or notice already issued under sub-s. (2) of S. 148 would be sufficient if the escaped income on the second head comes to the knowledge of the officer in the course of the proceedings. But if both the items are unconnected and totally alien then the assessing authority has to follow sub-s. (2) of S. 148 with regard to the escaped income which comes to his knowledge during the course of the proceedings. The expression “subject to the provisions of Ss. 148 to 153” in S. 147 lends support to the above view.

10. When we apply the above principles to the present case, it is evident that the reasons stated were under sub-section (2) of S. 148 only. In Ext. P6 those reasons are unconnected with the reasons stated in Ext. P8. The assessing authority has therefore no jurisdiction to proceed with the items covered by Exts. P7 and P8 due to non compliance of sub-section (2) of S. 148. We may in this connection refer to the decision of the Apex Court in GKN Driveshafts' case, supra (259 ITR 19) wherein the Apex Court has held that when a notice under S. 148 of the Income Tax Act is issued, the proper course of action for the assessee is to file a return and if he so desires, to seek reasons for issuing notices and the assessing authority is bound to furnish reasons within a reasonable time. So far as this case is concerned the assessee was not served with any notice under S. 148; nor the assessing officer recorded reasons as provided under sub-s. (2) of S. 148 for the points highlighted in Exts. P7 and P8.

11. The Punjab and Haryana High Court had occasion to consider an identical issue in Vipin Khanna v. Commissioner of Income Tax (255 ITR 220). That was a case where proceedings under S. 147 were initiated. The question arose as to whether assessing officer was justified in launching an inquiry into the issues which were not connected with the issue of depreciation. The court held that the assessee can claim credit in respect of terms finally concluded in the original assessment and the letter dated 30.7.1998 issued by the assessing officer in so far as it relates to matters unconnected with the issue of depreciation and also the directions issued by the Deputy Commissioner under S. 144A cannot be sustained. We are in agreement with the reasoning given in Vipin Khanna's case, supra (255 ITR 220).

12. The next question to be considered is whether assessing officer by issuing Ext. P7 notice under S. 143(2) of the Income Tax Act as well as Ext. P8 notice under S. 142 of the Income Tax Act has embarked upon a roving enquiry on issues which are unconnected with the issue which forms the basis of proceedings initiated under S. 147 of the Act vide Exts. P5 and P6. It is trite law that general enquiry can be made only by issuing notice under sub-s. (2) of S. 143 within the stipulated period, which in the present case has already expired on 31.03.2003 We have already indicated that it is not the case of the Revenue that during the course of proceedings under S. 147 of the Act it has come across any material relating to the items mentioned in Ext.P8 suggesting escapement of income under any of those heads mentioned therein. Assistant Commissioner of Income Tax cannot make any fishing enquiry in concluded matters unconnected with the issue on the basis of which proceedings under S. 147 was initiated as per Exts.P5 and P6. Further, there is no allegation of escapement or under assessment of income either in the reasons recorded or during the course of proceedings under S. 147 of the Act in the notices issued, Exts. P7 and P8. It is pertinent to note in this connection that the words “such income aid also any other income” in S. 147 of the Act as it stands with effect from 1st April, 1989 will clearly indicate that the escaped income for which reassessment proceedings are initiated should continue to exist so as to clothe the assessing officer with jurisdiction to assess or reassess any other escaped income chargeable to tax and which has come to his notice subsequently in the course of the reassessment proceedings. Return filed by the assessee had already become final and that finality could not be disturbed even in a proceeding under S. 147 of the Act in respect of issues on which there is no material on record suggesting escapement of income. Reference may be made to the decision of the Apex Court in C.I.T v. Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297) where the court held that the jurisdiction of the Income Tax Officer in proceedings under S. 147 of the Act is confined only to such income which has escaped tax or has been under assessed and does not extend to revising, reopening, or reconsidering the whole assessment or permitting the assessee to reagitate the questions which had been decided in the assessment proceedings. Proceedings under Exts. P7 and P8, in our view, are totally unconnected and have no relation whatsoever with the proceeding initiated as per Exts. P5 and P6. In Jaganmohan Rao v. C.I.T (1970) 75 ITR 373) the Apex Court has not laid down the proposition that the reassessment proceedings wipes out the original assessment and re-assessment is not only confined to “escaped assessment” or “under assessment”, but to the entire assessment. As rightly opined by the Punjab and Haryana High Court in Vipin Khanna's case, supra (255 ITR 220) such an approach would be erroneous. We find vide Exts. P7, P8 and P12, that the assessing officer is requiring the petitioner to furnish explanation on issues which are totally unconnected with the issue of non-inclusion of excise duty (16%) in the valuation of closing stock for the assessment years 2000-01, 2001-02 and also for not adding back the bad debts on the basis of which proceedings were initiated under S. 148. There is no allegation on the part of the Revenue of any escapement or under assessment of income with regard to issues raised in Ext.P8 either in the reason disclosed in Ext.P6 or the same came to his knowledge in the course of proceedings under S. 147 of the Act.

13. The assessing authority has followed the provisions of sub-section (2) of S. 148 only in respect of points referred to in Ext. P6. Sub-s. (2) of S. 148 was not followed in respect of the points referred to in Exts. P7 and P8. No fresh enquiry can be initiated in respect of the points mentioned in Exts. P7 and P8, since the date of completing the regular assessment under S. 143(2) had already expired on 31.3.2003

14. We also reject the contention of the Revenue that the Writ Petition is not maintainable. In a case where petitioner can establish that assessing officer has no jurisdiction to proceed under Ext. P7, P8 and Ext. P12, remedy under Art. 226 of the Constitution of India is always available, a position settled by the decisions of the Apex Court in Gursahal Saigal v. C.I.T (48 ITR 1), GKN Driveshaft's case, supra and also the decision of the Gujarat High Court in Garden Finance Limited v. Asst. Commissioner of Income Tax (268 ITR 48). We therefore hold that the Writ Petition is maintainable.

15. In such circumstances, we allow this Writ Petition and quash Ext. P12. Exts. P7 and P8 have no legs to stand and they also stand quashed.