The Assessing Officer must have tangible material to form the belief that income has escaped assessment, and the reasons for the belief must have a rational nexus to the formation of such belief. The power to grant approval for re-opening the assessment should not be exercised casually and in a routine manner.

( 1 ) RULE D. B.

( 2 ) SINCE a very short point is involved, with the consent of counsel for the parties we take up the matter for final disposal.

( 3 ) CHALLENGE in this writ petition under article 226 of the Constitution of India is to the notice, dated 30 April 2002, issued under Section 148 of the Income-tax Act, 1961 (for short the Act) by the income-tax Officer, respondent No. 3 herein, seeking to re-open the assessment of the petitioner company for the assessment year 1996-97.

( 4 ) THE petitioner company is engaged in the business of manufacturing of electrical goods. It filed its return of income for the assessment year 1996-97 on 30 November 1996, declaring an income of rs. 9,26,867/ -. The return of income was accompanied by the statement of assessable income, various other documents and annexures, including the statutory tax audit report and the list of loans taken during the relevant previous year. One of the loans, for re. 7,40,000/-, raised by the petitioner was from a concern M/s. Visa Fincap Limited, New Delhi. According to the petitioner, the loan was taken on two different dates through account payee cheques; the sum of rs. 33,860/- was paid/credited as interest on the said amount during the relevant period; tax was deducted at source on the said amount which was paid to the credit of the Central Government; and the loan was repaid in april 1997 by account payee cheque.

( 5 ) IT seems that since notice under Section 143 (2) of the Act was not received by the petitioner within 12 months from the date of filing of the return, it was taken that the return had been accepted. On 5 may 2002, the petitioner received the impugned notice under Section 148 of the Act. Pursuant thereto, the petitioner filed its return declaring the same income which had been declared in the original return filed under section 139 (1) of the Act. Vide letter dated 18 june 2002, the petitioner requested the Assessing officer to supply a copy of the reasons recorded for reopening the assessment, which was done. Since the entire controversy revolves around the reasons for re-opening the assessment, for the sake of ready reference, these are reproduced hereunder:

"an intimation has been received from the assessing Officer having jurisdiction over m/s. Visa Fincap Ltd A-1, Laxmi Kunj, sector 13, Rohini, Delhi. It has been stated that M/s. Visa Fincap Ltd has given loan of Rs. 7,40,000 to M/s. United Electric company (Delhi) (P) Ltd. Shri Vijay Kumar jain, the Director of M/s. Visa Fincap Ltd has admitted in his statement recorded on oath u/s 131 of the I. T. Act by the Assessing officer. Ward 17 (4) New Delhi that the loan transaction with the assessee coy i. e. M/s. United Electric Co. (Delhi) is not genuine. Shri Vijay Kumar Jain also admitted that the assessee Co. M/s. United electric Co. (Delhi) had siven cash to m/s. Visa Fincap Ltd and the same amount was deposited into the bank by it and thereafter a cheque of equal amount was issued to the assesee coy M/s. United Electric Co (Delhi) (p) Ltd and entry of loans were recorded in the account books. Similarly before liquidating the loans, the assessee company issued cheque in the name of M/s. Visa Fincap ltd, which was deposited into the bank and thereafter the cash of equal amount was withdrawn from the bank and was given to the assessee company. I have reason to believe that income chargeable to tax of Rs. 7,40,000/- has escaped assessment within the meaning of section 147 explanation 2 (b) of I. T. Act. Submitted to Addl. CIT, Range 18 with request to accord approval for issue of notice u/s 148 read with section 151 (2) of i. T. Act. (Underlined for emphasis) sd/- (Sugan Chand Mittal) ito, Ward 18 (1) New Delhi yes, I am satisfied that it is a fit case for issue of notice u/s 148 of the I. T. Act. sd/- (N. K. Sharma) addl. Commissioner of Income-tax, range 18, New Delhi"

( 6 ) SINCE the purported belief of the Assessing officer was based on the statement of one Mr. V. K. Jain,