The court emphasized that the reasons for invoking Section 147 of the Income Tax Act must be relevant, rational, and have a logical link to the belief that income has escaped assessment. The deduction of cess on green leaves should be allowed from the composite income, not just from the agricultural income component.

Amitava Roy J.

1. This batch of petitions register a challenge to the notices issued under Section 148 of the Income Tax Act, 1961 (hereafter referred to as the Act), purportedly initiating a proceeding/action under Section 147 thereof on the ground that the income of the assessees/writ petitioners as computed therein had escaped assessment for the different assessment years mentioned therein. The notices though are differently dated and relatable to varying assessment years, a substantial homogeneity in the contextual background being evident and common questions of law having been raised, the petitions deserve to be disposed of by this common judgment and order.

2. I have heard Mr. R.P. Agarwalla, senior advocate assisted by Mr. R.L. Jain, advocate, for the petitioners in W.P. (C) No. 1163, 1258, 1259, 1260 & 6630 of 2003 and Mr. G.K. Joshi, senior advocate assisted by Mr. R.K. Joshi and Ms. U. Chakrabarty, advocates for the petitioners in W.P. (C) No. 4102, 4103 & 4111 of 2003. Mr. U. Bhuyan, learned standing counsel, Income Tax Department represented the Revenue.

3. The pleaded facts in W.P. (C) No. 1163 of 2003 would be adequately illustrative of the factual premises. The petitioner-company is engaged in the business of cultivation, manufacture and sale of tea and is regularly assessed under the Act. It submitted its return for the assessment year 1995-96 on 29.11.1995, and paid all the taxes due as per the return. It submitted along with its return, all relevant documents such as computation of income, audited statements of accounts, tax audit report, etc. The jurisdictional Assessing Officer on completion of the assessment for the year in question determined the total taxable income at Rs. 3,45,05,704, which was subsequently revised. The petitioner/ assessee duly paid all taxes as assessed. It was thereafter that the impugned notice dated 27.3.2002, by the Assistant Commissioner of Income Tax (Circle 2), Dibrugarh, was issued notifying the petitioner that the said authority had reason to believe that its income chargeable to tax for the assessment year in question had escaped assessment within the meaning of Section 147 of the Act requiring reassessment of its income for the said assessment year. In reply thereto the petitioner while requesting the authority to treat its original return to be the one submitted in compliance with the notice sought for a copy of the reasons required to be recorded under Section 148(2) of the Act for issuance of such reassessment notice. By communication dated 17.4.2002, respondent No. 3 furnished the reasons in reply whereto the petitioner submitted a representation detailing its stand in response to the notice with a request to drop the reassessment proceedings. As the Revenue persisted with the proceedings in spite of the objection raised, the instant petition was filed seeking to invoke the writ jurisdiction of this court.

4. The present bunch of petitions has two petitioners, Assam Company Ltd. and M/s. Bajaloni Group Ltd. They are similarly situated inasmuch as though the dates of the impugned notices and the assessment years are different, there is a community of grievances inasmuch as they are one in contending on identical grounds that the impugned action of the respondents in invoking Sections 147 and 148 of the Act in the prevailing facts and circumstances is per se illegal and without any authority of law. The individual facts of all the petitions have, therefore, been avoided in the interest of brevity.

5. In the counter filed in W.P. (C) No. 1163, 1258, 1259 and 1260 of 2003, the Revenue's plea in essence is that in claiming deduction of the amount of cess paid on green leaves for determining the composite income under Rule 8 of the Income Tax Rules, 1962 (hereafter referred to as the Rules), it was not mentioned in the returns that the cess was the tax paid under the Assam Taxation (On Specified Land) Act, 1990 (hereafter referred to as the 1990 Act), and thereby the asse