The main legal point established in the judgment is the requirement for tangible material to support the belief of income escapement from assessment, as emphasized by the Supreme Court in CIT, Delhi Vs. Kelvinator of India Ltd (2010) 2 SCC 723.

1. Jagson International Limited prays for issuance of a writ of certiorari and quashing of the notice dated 20.2.1997 issued under Section 148 of the Income Tax Act, 1961 (Act, for short). The said notice pertains to the assessment year 1989-90.

2. At the outset, we record that we are not required to resort to the procedure prescribed by the Supreme Court in DCIT v. G.K.N Driveshafts India Limited; (2003) 259 ITR 19 (SC) because in the present case the Assessing Officer has passed the re-assessment order, impugning which the petitioner has succeeded before the tribunal and the addition made in the re-assessment order has been deleted on merits. The revenue has filed ITA No.753/2011 against the said decision of the tribunal.

3. The question and issue raised in the present writ petition pertains to whether or not jurisdictional pre-conditions mentioned in Section 147 of the Act are satisfied in the present case.

4. The reasons to believe recorded by the Assessing Officer on 20.2.1997 read as under:

“The assessee company was engaged in the business of offshore drilling. By framing a original assessment for assessment year 1989-90, the assessee has been allowed deduction u/s 80I amounting to Rs.29,32,203/-The assessee has claimed deduction u/s 80-I on the ground that it is an industrial undertaking engaged in the business of manufacturing or producing articles or things. However, while finalizing the assessment for subsequent years and on perusing the record for assessment year 1989-90, it is observed that the assessee is not producing any article of thing but is engaged by the ONGC for locating the deposits of oil and on locating the deposits, the information is passed to ONGC which then proceeds with extraction of oil. It is also seen from the records that the assessee has entered into Bare Boat agreement with foreign profit and gains derived from a ship as it has not fulfilled all the conditions laid out in section 80I (3). In view of the above facts, I have reason to believe that an income of Rs.29,32,203/- chargeable to tax has escaped assessment within the meaning of section 147 of IT Act, 1961 for which notice u/s 148 is required to be issued.

Issue notice u/s 148 of IT Act, to the assessee.”

(emphasis supplied)

5. Learned counsel agree that two conditions are required to be satisfied, if we are to uphold the re-assessment proceedings. Firstly, it is not a case of change of opinion and secondly, there was failure on the part of the petitioner-assessee to disclose full and true material facts at the time of original assessment under Section 143(3) of the Act. The second condition has to be examined with the Explanation.

6. In order to decide the said aspects, necessary facts may be noticed.

7. On 29.12.1989, the petitioner had filed a return declaring an income of Rs.1,17,28,813/-. In this return, the petitioner had not claimed deduction under Section 80-I of the Act. This return was processed and an intimation under Section 143(1)(a) as issued on 28.2.1990. On 20.8.1990, the petitioner filed a revised return and for the first time claimed deduction under Section 80-I of the Act of Rs.29,32,203/-. On 9.1.1991, the assessing officer framed the assessment order under Section 143(3) of the Act. He allowed the deduction claimed under Section 80-I of the Act of 29,32,203/-.

8. On or about 12.9.1994, the assessing officer recorded reasons for reopening of the assessment on the ground that deduction under Section 80-I of the Act was not allowable. Notice under Section 147/148 of the Act was issued but by order dated 31.1.1997, these proceedings were dropped. We need not examine the aforesaid reasons because the reasons to believe were again recorded on 20.2.1997 and, thereafter, notice for re-assessment was issued. There is a difference between the reasons recorded on 12.9.1994 and the reasons recorded on 20.2.1997. We are concerned with the reasons recorded on 20.2.1997.

9. Having considered the factual matrix i