Hrishikesh Roy, J.

1. Heard Mr. G.K. Joshi, learned senior counsel appearing for the petitioners. The respondents are represented by Mr. U. Bhuyan, learned senior counsel. The petitioner filed his return for the assessment year 1999-2000, where he claimed Transport Subsidy (Rs. 18,58,842/-) received from the Government as capital receipt. An intimation under Section 143(1) of the Income Tax Act 1961 (hereinafter referred as the IT Act) was sent on 5.12.2000 to the assessee, in respect of the return filed by them on 29.12.1999.

2. Subsequently the Assistant Commissioner of Income Tax, Tinsukia issued notice on 31.5.2002 (Annexure-III) intimating that he has "reason to believe" that the income of the assessee has escaped assessment within the meaning of Section 147 of the IT Act and accordingly re-assessment was proposed for the assessment year 1999-2000.

3. In their reply made on 16.1.2004, the assessee stated that they had credited the Transport Subsidy for the relevant year to the capital receipt account, on the basis of the decision of this Court in the case of Commissioner of Income-Tax Vs. Assam Asbestos Ltd. (hereinafter referred to as the "Assam Asbestos-I"), reported in