JUDGMENT

KULDIP SINGH, J.:- The appellantcompany carries on the business of exporting manganese ore to England and United States of America. The Income-tax Officer, Nagpur issued a notice dated Marjh 20, 1970 under S. 148 of the Income-tax Act, 1961 (hereinafter called the Act) stating that he had reasons to believe that the income of the appellant chargeable to tax for the assessment year 1953-54 had escaped assessment within the meaning of S. 147 of the Act. The company was called upon to show cause why it should not be reassessed to income for the said year. The appellant-company challenged the notice by way of writ petition under Art. 226/227 of the Constitution of India before the Nagpur Bench of the RP may High Court. The High Court by its judgement entdated August 5, 1975 dismissed the writ petition with costs. This appeal via special leave petition is against the said judgment of the High Court.

2. The relevant facts are hereinafter. The appellant is a non-resident company having its office in London. It has its office in India at Nagpur. The appellant is assessed to incometax at Nagpur and it has been the practice of the appellant-company to produce before the Income-tax Officer the relevant books which are kept by the local office at Nagpur, the balance sheets, the trade account and the profit/ loss account from their head office in London. It appears that sometime in 1958 the custom authorities came to know that the appellant company had declared very low prices in respect of all the consignments of manganese ore exported by them out of India. It as also found that most of the export was only to three buyers who in turn did not purchase manganese ore from any other company except the appellant. After due enquiries/ investigation the custom authorities found that the appellant was systematically showing lesser value for the manganese ore exported as compared with the prevailing market price for the same grade of manganese ore.

3. The Collector, Customs, Visakhapatnam by an order dated March 2, 1959 held that there was under-invoicing by the appellant to the tune of Rs. 78 lacs. The said order of the Collector was, however, set aside in appeal and the matter was remanded to the Collector for rehearing. In the final order passed by the Collector of Customs dated November 16, 1972, under-invoicing was shown to the tune of about Rs. 44/45 lacs. It is thus obvious that the custom authorities came to the conclusion that the prices mentioned in the relevant contracts between the appellant and the buyers were less than the contemporaneous market prices. The custom authorities, thus, found as a fact that the appellant-company was indulging in under-invoicing.

4. The Income-tax Officer, oncoming to know about the pendency of proceedings before the Collector of Customs, issued a notice dated March 20, 1970 under S. 148 of the Act. In the notice the reasons on the basis of which he entertained the necessary belief as required under S. 147 of the Act, were not given, however, along with the return filed on behalf of the revenue before the High Court, the reasons which led to the issue of notice under S. 148 on the grounds mentioned under S. 147(a) of the Act were disclosed. It is not disputed that the reasons need not be set out in the notice and the same can be produced before the Court.

5. Section 147 of the Act provides for assessment or reassessment in cases where income has escaped assessment. The Revenues right to take action under the section is subject to the conditions laid down therein. The requisite conditions provided under S. 147(a) at the relevant time were as under:

The Income-tax Officer should have reason to believe that income has "escaped assessment" by reason of omission or failure on the part of the assessee.

(i) to make return of his income under the relevant provisions of the Act; or

(ii) to disclose fully and truly all material facts necessary for his assessment for the year.

6. Section 147(b) of the Act on the ot