JUDGMENT

S.C. Dharmadhikari, J. - By this petition under Article 226 of the Constitution of India, the petitioners seek a declaration that the notices dated 13-12-1999 issued by the respondents are illegal, null and void and they seek a further relief by exercise of appropriate writs of quashing and setting aside the same.

2. The facts which are not in dispute are that the petitioners are assessees and their income is assessed to income-tax. These are cases of petitioners being individual assessees. Their individual returns for the assessment years 1989-90 to 1997-98 were scrutinized. We are not concerned in this case with the assessment of income when the petitioners carry on business as partners of a partnership firm. This is a case of their individual returns of income being involved.

3. It is further undisputed before us that from 16-10-1996 to 20-10-1996, a search was conducted at the residence of late Anant N. Naik and his family in exercise of the powers conferred by section 132 of the Income-tax Act, 1961. The assets were seized. His statement was recorded during the course of the said investigation on 20-10-1996.

4. Between 16-1-1997 to 30-12-1997, assessment proceedings before the Assessing Officer, Dy. CIT (Asst.) Special Range, Panaji, were held and pursuant thereto, he passed a block assessment order on 31-12-1997 under section 158BC of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').

5. The petitioners' case is that the search and seizure proceedings were as a result of bias on the part of one of the officers and that is how despite the Department not being able to sustain the block assessment orders, it finally resorted to the provisions of section 147 of the Income-tax Act. Be that as it may, further undisputed fact is that by orders dated 7-6-1999 [Ananta N. Naik v. Dy. CIT [2000] 112 Taxman 281 (Pune)(Mag.) ] of the Tribunal, Pune Bench, the block assessment proceedings were quashed. A copy of the said order is at Annex 'C', p. 78 of the petitioner's paper book.

6. After the block assessment orders were quashed by the Tribunal, the petitioners applied to respondent No. 1 to release the assets seized during the course of the search under section 132 of the Act. It is alleged by the petitioners that the Department adopted a hyper-technical approach and informed the petitioners that the assets cannot be released until a copy of the appellate order is received by the Department. Ultimately, the petitioners had to file a representation on 4-10-1999 to the CIT, Panaji, requesting his intervention in the matter.

7. It is alleged that on 20-12-1999, the petitioners received copies of the notices under section 148 of the Income-tax Act. Further, undisputed fact is that the petitioners filed returns and applied for copy of the reasons which came to be recorded while issuing notice under section 148 of the Income-tax Act. The case of the petitioners was that these notices on the face of the same do not disclose any reasons but if there are reasons on record, the same be furnished was the request. Even this request was not acceded and on 18-1-2000, reminders had to be issued by the petitioners to the Department. Finally, on 2-2-2000, the copy of the order sheets indicating the reasons were supplied to the petitioners and, thereafter, the present petition was filed on 22-3-2000.

8. This petition was placed for admission before the Division Bench of this Court on 10-4-2000 and this Court was informed that against the order of the Tribunal, the Department has preferred an appeal under section 260A of the Income-tax Act, 1961, in this Court, which is still pending. Such being the further factual position, this Court directed that the present petition be put up after the disposal of the subject appeal and, in the meantime, no final order shall be passed under section 148 of the Income-tax Act in the proceedings pursuant to the show-cause notice.

9. The matter thereafter came to be placed on 28-3-2000 (sic) and after hearing the parties, this Court admitted the petition and granted an interim order in terms of the earlier order dated 10-4-2000 to be effective till the hearing and final disposal of this writ petition.

10. The further factual position emerging from a perusal of the annexures to the petition is that the notices dated 13-12-1999 (impugned notices) read thus :—

"Whereas I have reason to believe that your income/chargeable to tax for the assessment year 1989-90 has escaped assessment within the meaning of section 147 of the Income-tax Act.

I, therefore, propose to reassess the income for the said assessment year and hereby require allowance under section.....

You deliver to me before the expiry of 31 days from the date of service of this notice, a return in the prescribed form of your income for the said assessment year.

This notice is being issued after obtaining the necessary satisfaction of the Addl. CIT/CIT/Chief CIT, G. R., Panaji."

Identical notices have been issued to all the petitioners/assessees. After the request to furnish reasons was made, each of the petitioners received a letter from the Dy. CIT (Inv.), Panaji, dated 19-1-2000 enclosing with the communication copies of the order-sheets for the relevant assessment years which, according to the Department, constitute reasons for reopening of the assessment. Once again, more or less, identical reasons are on record in respect of the other notices. The reasons read thus :—

"Shri Anand Naracinha Naik

Asst. yr. 1997-98

In this group of cases, a search and seizure operation under section 132 of the Income-tax Act had been carried out from 16-10-1996 to 13-12-1996. During the course of search operations incriminating documents, books of account, FDRs, jewellery, silver wares and cash were found and seized. After verification of these seized materials and after enquiring from the assessee at the time of search, the following are found to be unaccounted in the books of the assessee.

Sl. No. Description

1. Out of total cash of Rs. 2,17,547 found at the residence of the assessee, the unexplained and unaccounted cash was Rs. 1,67,547.
2. Out of the total value of jewellery of Rs. 12,54,360 jewellery to the extent of the value of Rs. 4,25,600 was found to be acquired from undisclosed income of the assessee.
3. Out of total FDRs like share certificates, Indira Vikas Patras, FDRs, units, etc., of Rs. 39,79,014 investments to the extent of Rs. 20,40,614 found to be made from his undisputed income.
4. Cash credits of Rs. 46,000 made in the bank accounts were not explained at the time of search proceedings.
5. Out of the value of silver wares of Rs. 2,17,184 amount to the extent of Rs. 2,35,484 was found to be acquired from undisclosed income of the assessee.
Hence, I have reason to believe that the income chargeable to tax has escaped assessment for the assessment year 1997-98 as per the meaning of section 147. The income is to be taxed equally at 50 per cent in each hand between wife and husband. Issue notice under section 148."

These notices and the reasons supplied are impugned in the present petition.

11. Mr. Nadkarni, learned counsel appearing for the petitioners contended before us that the notices are ex facie bad in law being without jurisdiction. He submits that the prerequisites for exercise of jurisdiction under section 147 are well-settled. Unless the same are satisfied, there is no question of the assessment officer reopening the assessment proceedings. He submits that the mandatory prerequisites are a guarantee against arbitrary exercise of powers by the authorities and the Department. It is a protection to the assessee inasmuch as assessment finalised cannot be reopened save and except in cases covered by section 147 of the Act. He submits that if the impugned notices are tested on the touchstone of the subject provision, it would be apparent that the notices have been issued by the Department to get over the adjudication by the Tribunal and finally by this Court. Mr. Nadkarni pointed out that the Department has lost throughout and even its appeal to this Court under section 260A of the Income-tax Act has been dismissed. In such circumstances and when block assessment orders gained finality, the impugned notices are nothing but an attempt to reopen them. Such attempts are impermissible in law much less by recourse to section 147 of the Income-tax Act. He submits that each of these notices are after the block assessment proceedings were quashed by the Tribunal. Same contentions were urged during the proceedings before the appellate authority. Once the appellate authority is finding no merit in the case of the Department, then, recourse to section 147 was impermissible in the peculiar facts of this case. This is not a case of income escaping assessment. Moreso, when the Department admits that there were proceedings initiated by it, in such circumstances, the prerequisite which is necessary to be satisfied for invoking section 147 having not been fulfilled, the impugned notices are without jurisdiction and must be quashed on this ground alone.

12. Mr. Nadkarni then contended that the proceedings had been initiated mala fide and to harass the assessees. There was one officer in the Department who had been instrumental right throughout in the petitioners being harassed. The search and seizure was also at his instance. This officer, Mr. Kanekar is instrumental in issuance of these notices and thereafter he sat as an approval authority having been promoted. When all the proceedings are at his instance and these are allegations in the proceedings, then, the show-cause notices must be quashed and set aside on this ground as well.

13. Mr. Nadkarni then contended that assuming without admitting that there are some reasons which are set out in the order sheet, they, by no stretch of imagination can be said to be enough to invoke the powers under section 147 of the Income-tax Act. Taking us through the order sheets, Mr. Nadkarni contended that what they set out are facts relating to search and seizure and details of the articles seized. Thereafter, straightaway, the officer says that he has reason to believe that the income is chargeable to tax but has escaped assessment. He submits that merely reproducing the words of the section is not enough. The belief must be reasonable and of concealment of the income or the income escaping assessment by the Department. If there are no acts attributable to the assessees, then, merely because the Department feels that notices under section 148 should be issued is not reason enough. He submits that the income was more (sic) to the Department and the facts are to the knowledge of the Department. The incomes have been assessed, may be block-wise, but the assessment was subject-matter of challenge in proceedings to which the Department was very much a party. In such circumstances, the order sheet does not indicate the necessary belief based upon which the powers were to be invoked. That apart, he submits that by no stretch of imagination, the record sheet can be termed to be a satisfaction contemplated by section 147. For all these reasons, he submits that the writ petition be allowed and the reliefs prayed for be granted.

14. Mr. Nadkarni relied upon the following decisions in support of his contention. Bhor Industries Ltd. v. Asstt. CIT [2003] 183 CTR (Bom.) 248 , Ganga Saran & Sons (P.) Ltd. v. ITO [1981] 130 ITR 1 (German Remedies Ltd.… v. Dy. Commissioner Of Income-Tax…. [2006] 152 Taxman 269 (Bom.) , Ajanta Pharma Ltd. v. Asstt. CIT [2004] 267 ITR 200 (Bom.) and Commissioner Of Income-Tax, U.P v. Rao Thakur Narayan Singh. [1965] 56 ITR 234 (SC) .

15. On the other hand, Mr. Rivonkar, appearing for the revenue contended before us that the writ petition may have been entertained but no relief can be granted in favour of the petitioners. He submits that undisputed factual position is that the petitioners had filed returns and raised objections. The objections would be scrutinized by the Department. If the petitioners can very well satisfy the concerned officer and support their objections by producing relevant materials, then, there is no reason to interfere at this stage. The entire attempt is to scuttle the proceedings, which should not be permitted even at the present stage. The Department has not concluded the matter. The satisfaction is only prima facie and it would be open for the assessees to place before the Department such material to support their objections and due consideration would be given to the same whereafter final orders would be passed. Therefore, there is no reason to interfere at this stage.

16. That apart, he submits that reasons are admittedly furnished and supplied at the request of the assessees. The reasons indicate that the assessees had not disclosed the source of the income and the articles seized including cash could not be satisfactorily explained. Such seizure and search operations can be made foundation for proceedings under section 147 of the Income-tax Act and that is reason enough to hold that the proceedings are based on the income escaping assessment. Had there been no occasion to doubt the source of the income and finding that the income is undisclosed and concealed that the proceedings under section 132 were resorted to and now after the same have been concluded, it is permissible for the Department to resort to section 147, in such circumstances, none of the decisions which have been cited by Shri Nadkarni would apply and the law laid down therein is distinguishable.

17. Mr. Rivonkar tendered written submissions and after inviting our attention to the details of the notices, he contended that on the date of the notices, there was no effective assessment order. The assessment proceedings were block and they were in any event annulled by the Tribunal on 7-6-1999. At the relevant time, the appeal under section 260A of the Act was pending before this Court but there was no stay. Therefore, Department could have proceeded and resorted to section 147 of the Income-tax Act. The petitioners contend that no income escaped assessment is a plea which can very well be raised in the proceedings pursuant to the notices but on that ground, the satisfaction and prima facie opinion of the authority cannot be questioned. The provisions have been rightly invoked and once there were no effective assessment orders, the income not being assessed and completely unaccounted, resort to section 147 of the Income-tax Act, was permissible, more so, the foundation of the same being the material gathered during the search and seizure. Therefore, two independent provisions have been resorted to by two independent authorities. Now, returns have been filed by the petitioners and the assessment will be duly done. Therefore, this Court should not grant any reliefs in favour of the petitioners, much less quash the impugned notices. For all these reasons, the petition be dismissed.

18. Mr. Rivonkar has relied upon the following decisions in support of the above contentions : Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) , GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) , A.L.A Firm v. Commissioner Of Income Tax, Madras [1991] 189 ITR 285 (SC) and ITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC) .

19. For properly appreciating the rival contentions, reference to section 147 of the Act would be necessary. The same reads thus :—

"147. Income escaping assessment.—If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment 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 assessment 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 assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :

Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment 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 assessment 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 issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year.

Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.

Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :—

(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax;
(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;
(c) where an assessment has been made, but—

(i) income chargeable to tax has been under assessed; or
(ii) such income has been assessed at too low a rate; or
(iii) such income has been made the subject of excessive relief under this Act; or
(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed."

A bare perusal of the same would indicate that it is entitled "Income escaping assessment". The Assessing Officer has reason to believe that any income chargeable to tax escapes assessment for assessment year, then, subject to provisions of sections 148 to 153, the Assessing Officer can reassess or assess 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 this section.

20. The proviso of the same has been relied upon by Shri Rivonkar to support some of the notices and he has contended that there is no question of the proviso becoming applicable to some of the notices which are issued within a period of four years. In other words, the failure on the part of the assessees to make the return under section 139 or in response to a notice issued under Explanation [sic-sub-section (1)] of section 142 or 148 or to disclose fully and truly all material facts is something which is germane to these notices which have been issued after four years have lapsed and such requirement cannot be read into the substantive provision namely section 147.

21. Mr. Rivonkar has also relied upon the Explanation 1 to the said proviso.

22. For the present petition, it is not necessary to consider and determine or decide any larger issues or controversy. The factual situation in the present case is undisputed. The search and seizure proceedings culminated in block assessment, which block assessment was subject-matter of challenge at the instance of the petitioners. A perusal of the order of the Tribunal would reveal that the Tribunal was called upon to decide the contentions, which have been raised in para 2 of one of its orders. One of the contentions raised was that the assessment extends to income dis- closed in regular proceedings before the assessment officer. The Tribunal has permitted authorities to make detailed submissions and thereafter in para 12 of the order has gone into the details of the search proceedings. Thereafter, it considered the law on the point and subsequently held that the assessment cannot be sustained and the appeal challenging the search and seizure deserves to be allowed. Reasons are contained in paras 12 to 18 of the order passed by the Tribunal. The search and seizure proceedings were commented upon and it is worthwhile noting that the orders were delivered on 7-6-1999 and subsequently, the Department challenged them under section 260A of the Income-tax Act but even that challenge in this Court has failed.

23. It is also not disputed before us that the block assessment was carried out and the block assessment was the subject-matter of the proceedings. Therefore, the notices which merely state that there is reason to believe that the income chargeable to tax for the relevant assessment year has escaped assessment without anything more, cannot be said to be something which would enable the authorities to invoke section 147 of the Income-tax Act in the peculiar facts of this case. The notices are identical and neither any details of the income chargeable to tax are disclosed in the notice nor it has been set out as to how that can be termed as having escaped assessment within the meaning of section 147. The reasons supplied are recorded in an order sheet for the years in question. The reasons in the order-sheets and the same being supplied only after reminders to the Department. There is much substance in the contentions of Shri Nadkarni that the search having resulted in block assessment and the Department having resorted to section 158BA to section 158BC of the Income-tax Act, it cannot be said that the income escaped assessment. In these proceedings the income was assessed and taxed after it was brought to the notice of the Assessing Officer. Merely because the block assessment was not upheld by the authorities under the Income-tax Act, it cannot be reason enough in this case to invoke section 147 of the same. The income has not escaped assessment in the admitted factual position. We are of the view that even the order sheet does not meet the requirement in law. The same merely sets out that the seized material and inquiries with the assessee at the time of search, reveal that the income as per particulars is unaccounted in the books of the seizure. Therefore, there is reason to believe that the income has escaped assessment. The reasons clearly show that there is no reference to any block assessment or the proceedings pursuant thereto.

24. Mr. Nadkarni's reliance upon a decision of the Division Bench of this Court is, therefore, well founded. The Division Bench was considering, inter alia, the argument that a writ petition under article 226 would not lie to challenge such notices. After referring to the decision in the case of Ajanta Pharma Ltd. ( supra), which was relied upon by Shri Nadkarni, this is what the Division Bench has observed :—

"If one reads the decision of the Apex Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) , as rightly submitted by the learned advocate for the petitioners, it nowhere lays down the law to the effect that the party is totally debarred from approaching this Court under Article 226 of the Constitution of India when the exercise of powers by the authority under section 148 of the said Act ex facie appears to be without jurisdiction. Undoubtedly, whether such an exercise is with or without jurisdiction will have to be revealed from the notice and reasons on the face thereof. At the same time, it is also well-settled and the decision of the Constitution Bench of the Apex Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) is very clear on the point that mere availability of an alternative relief can be no bar for exercise of a writ jurisdiction when the authorities seek to assume jurisdiction which they do not possess or act in a totally arbitrary manner. The decision in GKN Driveshafts (India) Ltd. (supra) certainly reminds the assessee that when a notice under section 148 is issued, the proper course of action is to file a reply with his objections including those in relation to the absence of jurisdiction. However, it does not lay down the law to the effect that when such an objection is in relation to absence of jurisdiction and the same is revealed ex facie or apparent on the face of a notice or reasons in support thereof, the assessee has compulsorily to invite an order from the Assessing Officer in relation to the absence of jurisdiction. It is another case that when certain facts are to be ascertained or various other materials are to be gone through to arrive at a finding about the absence of jurisdiction, in which case, certainly, the assessee will have to approach the Assessing Officer. It is so because, the jurisdiction under Article 226 of the Constitution of India being an extraordinary jurisdiction cannot be allowed to be availed of as a matter of course. In order to decide an issue of jurisdiction, findings of the authority on the factual aspect may be necessary. In that case, certainly primarily the assessee will have to approach the Assessing Officer. That does not mean that the assessee is invariably bound to approach the Assessing Officer in each and every case. There can be the cases, like the one in hand, where he may be entitled to approach the Court directly under Article 226 of the Constitution of India." (p. 206)

25. The Division Bench made the above observations after referring to earlier decisions of this Court and the Supreme Court. In our view, the observations would fully apply to the facts and circumstances of the present case and we do not see any merit in the submission of shri Rivonkar that the reasons or the notices cannot be questioned because the petitioners have filed the returns in pursuance of the notices. The writ petition is already admitted and is listed before us for final hearing and disposal. The writ petition is filed in the year 2000 and, therefore, after its admission, it is too late to urge that the Court is precluded from entertaining the challenge to the notices on the ground of jurisdiction.

26. As far as the submission on the issue of jurisdiction, once again, we are fortified in our conclusion by the law laid down by the Division Bench of this Court in the case of Bhor Industries Ltd. (supra). The Division Bench observed thus :—

"In the case of IPCA Laboratories Ltd. v. Gajanand Meena, Dy. CIT [2001] 170 CTR (Bom) 582/[2001] 251 ITR 416 (Bom) , this Court has taken the view that in view of the proviso to section 147 of the Income-tax Act, no action can be taken for reopening of an assessment after four years unless the Assessing Officer has reason to believe that income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In the present case, we have gone through the reasons submitted in support of the notice under section 148 of the Income-tax Act. In the entire reasons, there is no allegation of income having escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts. In this case, we are concerned with reopening of an assessment after four years. In the case of IPCA Laboratories (supra), one of the points urged on behalf of the Department was that even in cases of reopening after four years if a matter involved grant of excessive relief, the Department could reopen the assessment in view of clause (c) of Explanation 2 to section 147 and in such cases there was no question of the Assessing Officer having reason to believe that income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. This argument of Department was rejected by us in the above judgment in case of IPCA Laboratories (supra). By virtue of the proviso to section 147, no action can be taken for reopening after four years unless the Assessing Officer had reason to believe that income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Explanation 2 to section 147 is required to be read with section 147 in its entirety including the proviso. That, if one reads Explanation 2 to section 147 including the proviso then it is clear that in cases where the Department reopens the assessment within a period of four years, it can do so on the ground of income having escaped assessment. However, in cases of reopening after four years, the Assessing Officer must have reason to believe that income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Explanation 2 cannot be read without reading the proviso to section 147. Explanation 2(c) has to be read with section 147 including the proviso and, if so read, the above dichotomy would be clearly spelt out. In the present case, reopening is sought to be done beyond four years. In the present case, the assessee had filed its annual report before the Assessing Officer indicating spread over of Rs. 10,02,23,735 over a period of 60 months. The Assessing Officer acted on that report by granting deduction to the extent of Rs. 33,40,818 for the year ending 31-3-1996. In the circumstances, there was no failure on the part of the assessee to disclose fully and truly the material facts. In our view, the judgment of this Court in IPCALaboratories' case (supra) squarely applies to the facts of the present case."

Some of the notices in the present case are issued admittedly after 4 (four) years. The Division Bench has observed that no action can be taken for reopening of assessment after four years unless the Assessing Officer has reason to believe that income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The conclusion reached by the Division Bench can very well be reached in this case because the reasons fail to indicate anything on the part of the assessees to disclose fully and truly the material facts. The Division Bench has considered the argument which has been raised by Shri Rivonkar before us about the applicability of the proviso and the Explanation to section 147 as well. Following the law laid down in this decision, we have no hesitation to conclude that the impugned notices and the reasons supplied suffer for want of compliance of conditions stipulated in section 147 of the Act.

27. A later Division Bench decision in German Remedies Ltd.'s case (supra), has referred to all earlier decisions but finally rested its conclusion on the basis that the notices in that question were barred by limitation. That apart, the Division Bench emphasized in para 24 of this decision the necessity of approval to the proceedings and the obligation of the approving authority. A somewhat identical situation occurred in a case Hemraj Munshi Ram v. Union of India [1999] 151 CTR (Pat.) 306 where initiation of proceedings by notice under section 147 was not upheld.

28. Mr. Rivonkar's reliance upon the decision in the case of Raymond Woollen Mills Ltd. (supra) is misplaced. The observation of the Supreme Court therein cannot be read de hors the factual position. In the case of Selected Dalurband Coal Co. (P.) Ltd. (supra), the Supreme Court was considering as to whether the reasons recorded are adequate and sufficient enough to reach the prima facie conclusion. One of the grounds on which the notices were challenged was that the ITO relied upon a letter dated 30-1-1969, addressed by the chief mining officer. Repelling that argument, the observations relied by advocate Shri Rivonkar have been made. Their Lordships emphasized that the material before the Assessing Officer must be relevant and his belief must be rational. However, the subjective satisfaction cannot be assailed on the ground that the reasons are not adequate or sufficient in the opinion of the assessee.

29. Admittedly, that is not the case before us. The adequacy and the sufficiency of the reasons are not challenged by Shri Nadkarni. What he has challenged is that there are no reasons at all. The reasons purportedly assigned do not comply with mandatory prerequisites. Hence, the decision in the case of Selected Dalurband Coal Co. (P.) Ltd. (supra) is distinguishable. In Raymond Woollen Mills Ltd.'s case (supra), the argument was that there was no prima facie material before the Department. Once again, the factual position was noticed and the observations relied upon by Shri Rivonkar have been made.

30. The above decisions, therefore, turn upon their own facts. They are, therefore, distinguishable.

31. In our view, it is the attempt of the Department to somehow or the other reopen the proceedings and more particularly the block assessment which they could not successfully support and sustain right up to this Court. That this is the attempt which is apparent from the notices and, therefore, the reasons which are relied upon fail to indicate any escapement or concealment of income by the assessee or suppression of any material facts by him. Therefore, they do not meet the required satis-faction under section 147 of the Income-tax Act. In fact, this is an instance identical to the one before the Hon'ble Supreme Court in the case of Rao Thakur Narayan Singh (supra).

32. On this ground alone, the petition deserves to be allowed. Any larger issue need not be considered. In the view we have taken on merits, the ambit and scope of the powers of block assessment and resort to section 147 thereafter being impermissible, is a matter which need not be gone into in further details in the light of the admitted factual position. The arguments on mala fides and bias also need not be answered in this case for the same reason.

33. In the result, the writ petition succeeds. Rule is made absolute in terms of prayers in paras 26(A) and (B). In the circumstances, however, there will be no order as to costs.