JUDGMENT :

N.J. Jamadar, J.

1. Rule. Rule made returnable forthwith. With the consent of learned counsel for the parties, heard finally.

2. This petition, under Article 226 of the Constitution of India, assails the notice dated 26th March 2013 under section 148 of the Income Tax Act, 1961 (‘the Act, 1961’) proposing to reopen the assessment for the assessment year 2006-07, and the order, dated 19th August 2013 disposing the objections of the petitioner to the said notice of reopening.

3. The background facts leading to this petition can be stated, in brief, as under :

(a) The petitioner is registered as a banking company with the Reserve Bank of India (‘RBI’) and is engaged in the business of banking. The petitioner has numerous branches across India. The petitioner, being a scheduled bank and having branches in rural areas, is entitled to deduction under section 36(1) (viia) of the Act, 1961 for bad and doubtful debts equivalent to 7½ % of the total income and 10% of the aggregate average advances made by the rural branches of the petitioner.

(b) The petitioner is also entitled to deduction under section 36(1)(vii) of bad debts which is written off as irrecoverable in the accounts of the petitioner for the previous year. However, in computing the deduction under section 36(1)(vii), the bad debts which are written off as irrecoverable are required to be reduced to the extent of the provision of bad and doubtful debt which was allowed to the petitioner under clause (viia), in earlier assessment year.

(c) In the light of the aforesaid tax regime, on 27th November 2006, the petitioner fled return of income declaring a total income of Rs.10,69,47,48,495/-, inter-alia, after claiming deduction under section 36(1)(viia) of Rs.96,87,97,764/- being 7½ % of the total income and 10% of the average rural advances. The petitioner also claimed deduction of bad debts under section 36(1)(vii) of the Act aggregating to Rs.418.60 Crores. The said amount of Rs.418.60 Crores was arrived at after reducing the provision allowed under section 36(1)(viia) of the Act in the earlier assessment years which had not been adjusted by then.

(d) During the course of the assessment, the Assessing Officer (‘AO’) issued a notice on 12th September 2007 and sought clarification/ information. The petitioner gave a detailed point- wise reply, on 16th November 2007. Thereupon, the AO passed an assessment order on 19th December 2008 under section 143(3) of the Act, 1961 determining the total taxable income of Rs.138,080 Lakhs.

(e) On 18th February 2011, the jurisdictional Assessing Officer issued a notice under section 148 of the Act, 1961 proposing to reopen the assessment. The Assessing Officer was of the view that there was failure to take into account the enhanced deduction under section 36(1)(viia) while allowing the deduction towards bad debts in assessment year 2006-07, and, thus, he had reason to believe that income of Rs.25,73,25,815/- had escaped assessment for assessment year 2006-07. Eventually, an assessment order was passed on 9th November 2011 under section 143(3) read with section 147 of the Act, 1961 revising the total income at Rs.1,22,632 Lakhs.

(f) For assessment year 2010-11, pursuant to the decision of the Supreme Court in Catholic Syrian Bank Ltd. Vs. CIT, 343 ITR 270 the petitioner, as advised, withdrew the claim for deduction under section 36(1)(viia) and instead claimed higher deduction under section 36(1)(vii) of the Act, 1961. In respect of the said assessment year 2010-11, a notice was issued to the petitioner on 28th December 2012 seeking explanation and justification, so as to assist the AO to decide whether notices under section 148 were required to be issued for the last six assessment years.

(g) By communication dated 17th January 2013, the petitioner requested the AO to ignore the said letter dated 13th August 2012 for the assessment year 2010-11 as it had been advised that it was entitled to claim deduction under section 36(1)(viia), the cla