The power to reopen an assessment under s. 147 of the Income Tax Act, 1961 after the expiry of four years from the end of the relevant assessment year is subject to the precondition that there has been a failure on the part of the assessee to make a return under s. 139 or in response to a notice issued under s. 142 or s. 148 or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year.

R. JAYASIMHA BABU, J.

The petitioner is aggrieved by the issuance of the notice by the respondent under s. 148 of the IT Act. That notice was issued on 18th December, 1996, and it is in respect of the asst. yr. 1989-90. The notice was issued more than six years after the end of the relevant assessment year.

2. The petitioner contend that the precondition for the issue of such notice not having been satisfied, the proceedings sought to be initiated by the insurance of that notice is wholly without jurisdiction. The petitioner has, therefore, sought a writ of prohibition to prohibit the respondent from taking any proceedings pursuant to that notice.

3. The petitioner is a company carrying on business in the manufacture and sale of industrial V-belts, automotive fan belts and oil seals, conveyor belting and installation of material handling systems. The petitioner filed its return of income for the asst. yr. 1989-90 relevant to the accounting year ended 31st March, 1989, on 11th September, 1989. Revised returns were filed on 27th April, 1990, and 10th May, 1990 and in the last of the returns income of Rs. 20, 64, 850 was admitted.

4. The petitioner's case was selected for a detailed scrutiny of accounts for that assessment year and notice was issued to the petitioner under s. 143(2) of the Act. All the informations in details required by the AO was furnished by the assessee and thereafter regular assessment was completed under s. 143(3) of the Act on 25th March, 1992, determining a total income of Rs. 1, 61, 85, 637 as against the sum of Rs. 20, 64, 850 admitted by the petitioner in its revised return.

5. More than six years after the end of that asst. yr. 1989-90, the petitioner was served with a notice under s. 148 of the Act requiring the petitioner to deliver a return of income in the prescribed form within 30 days on the ground that the AO has reason to believe that the income of the petitioner chargeable to tax has escaped assessment within the meaning of s. 147 of the Act. Petitioner has filed a return in respect to that notice on 20th January, 1997, admitting his income of Rs. 81, 09, 230. When the case was posted to 17th November, 1997, the petitioner, according to the averment in the affidavit of the general manager, came to know the reasons on the basis of which the notice under s. 148 of the Act was issued. Petitioner has averred that the notice came to be issued after the audit had taken an objection to the assessment made on the ground that there had been underassessment and that in the opinion of the audit the acceptance for the AO of the accounting procedure adopted by the petitioner in its accounts regarding its Central excise duty and the MODVAT scheme had resulted in short levy of tax. The audit, according to the petitioner had also taken an objection regarding the manner in which interest had been levied under s. 234A of the Act and further that excess deduction had been allowed under s. 32AB of the Act.

6. The petitioner has averred that it had fully and completely disclosed, at the time of assessment, all the material facts necessary for the assessment and had also filed the returns required and, therefore, the precondition required for the issue of notice under the proviso to s. 147 of the Act were not fulfilled in this case.

7. In the counter-affidavit filed by the Dy. CIT, the reasons recorded by the respondent for reopening the assessment have been set out in paragraph six which reads thus,

"In this case, the assessment for the year (asst. yr. 1989-90) was completed on a total income of Rs. 1, 61, 85, 637 as against the returned income of Rs. 26, 64, 850 (as per 3rd revised return & 115J profit) and subsequently revised on 14th August, 1992, to consider some of the assessee's claim. The revised total income as per that order was Rs. 68, 58, 100. Deduction under s. 80HHC of Rs. 5, 62, 574 was allowed in the revision order. Again the assessment was revised on 16th September, 1992 to give effect to the