The main legal point established in the judgment is that the reasons were recorded before issuance of the impugned notices, and the material in the hands of the Assessing Officer was prima facie sufficient for him to form a belief that income had escaped assessment for the respective assessment years. The court also found that the information revealed to the Assessing Officer during the assessment proceedings for A.Y. 2010 – 2011 was the 'information' as contemplated by Section 147 of the Act, and it had a direct nexus and/or live link with the tax liability for A.Y. 2006 – 2007 and A.Y. 2008 – 2009.

P.R. Bora, J.

1. Rule. Rule is made returnable forthwith with the consent of the learned counsel for the parties.

2. Validity of a notice under Section 148 of the Income Tax Act, 1961 served on the petitioner company, whereby reassessment has been ordered is challenged by it in these two writ petitions. Notice in Writ Petition No.2005/2013 relates to reassessment for A.Y. 2006 – 2007 whereas notice in Writ Petition No. 6606/2013 pertains to the reassessment for A.Y. 2008 – 2009. Since grounds of challenge in both the writ petitions are same, they are being decided by this common Judgment.

3. Petitioner is a private limited company duly registered under the provisions of the Companies Act, 1956. It is a regular assessee under the Income Tax Act, 1961 (for short “the Act”). The petitioner company is the authorized dealer for spare parts of Kirloskar Pumps and does exclusive supply to mines of Western Coalfields Limited and South Eastern Coalfields Limited.

4. Petitioner company had filed income tax return for the assessment year 2010 – 2011 under Section 139(D) of the Act showing taxable income Rs.80,54,340/- for the said year. The said return was processed under Section 143(1) of the Act and subsequently it was also subjected to scrutiny under Section 143(3) vide order dated 20/3/2013 passed by the Assessing Officer. In the scrutiny so carried out, the Assessing Officer disallowed the expenditure of Order Procurement Charges (OPC), being commission paid to agents, amounting to Rs.1,62,92,870/. As averred in the petition the said expenditure was disallowed by the Assessing Officer holding that no services were rendered by the agents and no such services were ever required in the course of business of the petitioner company. The said Assessing Officer thereafter issued notice dated 28/3/2013 under Section 148 of the Act calling upon the petitioner to deliver the return in prescribed form for the A.Y. 2006 – 2007. Similar notice of the even date was also issued for A.Y. 2008 – 2009. The petitioner company gave reply to the said notices and also requested the respondents to clarify for what reasons the notices under Section 148 of the Act were issued to the petitioner. Respondent no.2 along with covering letter dated 08/08/2013 communicated to the petitioner reasons for reopening the assessment under Section 147 and issuance of notices under Section 148 of the Act. The reasons so communicated by the respondent no.2, reveal that according to the Assessing Officer the Order Procurement Charges to the tune of Rs.1,12,60,843/- for A.Y.2006 – 2007 and Rs.1,19,59,063/- for A.Y. 2008-2009 cannot be accepted as business expenditure and to that extent the income had escaped assessment.

5. Being aggrieved by the notices so issued under Section 148 of the Act and being dissatisfied with the reasons stated for issuance of such notices, the petitioner has filed the present writ petitions.

6. On 11/12/2013 this Court issued notice in both the matters. On 15th January, 2014 further order was passed by this Court directing the parties to maintain status-quo as on the said date. The record further shows that on 28th February, 2014 the Court had directed the respondents 1 and 2 to place necessary documents along with reasons and order sheet on record for proper consideration of the matter. The record further shows that on 12th March, 2014 when the matters came up for haring, it was observed by this Court that the reasons supplied to the petitioner on 8/8/2013 do not carry any date and also do not show the signature of Assessing Officer who recorded the said reasons. It was also observed that the copy of the reasons placed on record was carrying date on it in handwriting. In such circumstances, the respondents were permitted to file additional affidavit giving the necessary clarifications. The respondents have accordingly filed the additional affidavit. The petitioners have also filed reply affidavit to the clarification so issued.

7. The p