The court emphasized that for the AO to assume jurisdiction under Section 147 in cases where assessment has been made under Section 143(3) of the Act and action under Section 147 is sought to be taken after the expiry of four years from the end of the relevant assessment year, it is necessary that the AO must have reason to believe that income chargeable to tax has escaped assessment and that such escapement occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment.

N.K.Sud, J.

1. Challenge in this writ petition is to the validity of notice under Section 148 of the IT Act, 1961 b3 (for short the Act), by which proceedings under Section 147 of the Act have been initiated to reassess the income which is alleged to have escaped assessment.

2. Before adverting to the dispute, the relevant facts may first be noticed.Petitioner is an advocate and is practising as a legal advisor to various multinational corporations, assisting his clients on negotiations with regard to joint ventures, technology transfer agreements and other related legal/technical matters. His main source of income, therefore, is legal/professional fees received from his foreign clients. He filed his return of income for the asst. yr. 1995-96 on 16th Oct., 1995 declaring an income of Rs. 10,36,147. The return was accompanied by the statutory audit report and the audited statements of account. In the P&L a/c statement, professional income had been declared at Rs. 3,53,08,960. While computing the taxable income, deduction under Section 80-O of the Act was claimed at Rs. 1,76,54,480 i.e., at the rate of 50 per cent of the total professional income of Rs. 3,53,08,960. The return was processed under Section 143(1)(a) of the Act and the necessary intimation dt. 18th July, 1996 issued to the assessee. Thereafter, the case was selected for scrutiny and requisite notices under Sections 143(2) and 142(1) of the Act, dt. 2nd Aug., 1996, were issued. A questionnaire dt. 2nd Aug., 1996 was also issued requiring the assessee to furnish various details. The assessment was ultimately completed under Section 143(3) of the Act vide order dt. 30th March, 1997 at a total income of Rs: 16,12,230. The difference in the returned income and the assessed income represented various disallowances made by the AO. However, deduction under Section 80-O of the Act was allowed as claimed at Rs. 1,76,54,480. On 22nd March, 2002, the AO issued the impugned notice under Section 148 of he Act observing that income chargeable to tax for the asst. yr. 1995-96 had escaped assessment within the meaning of Section 147 of the Act. The assessee was, therefore, required to furnish a return of income within 30 days from the service of that notice. The assessee claims that this notice was never served on him. However, he became aware of the initiation of the proceedings under Section 147 of the Act when notice under Section 142 of the Act, dt. 7th Jan., 2003 was affixed at the business premises of M/s Singhania Trading Company. The assessee vide his letter dt. 16th Jan., 2003 denied the receipt of any notice under Section 148 of the Act. However, without prejudice to this objection, he submitted that the. Return already filed by him under Section 139(1) of the Act be treated to have been filed in pursuant to the said notice. He also prayed that he may be supplied with a copy of the reasons recorded for initiation of the proceedings under Section 147 of the Act so that he may file his objections against the same. On receipt of a copy of the reasons recorded, the assessee filed his objections vide letter dt. 24th Jan., 2003. It was contended that in the absence of any allegation of failure on his part to disclose fully and truly all material facts necessary for the assessment, no action under Section 147 of the Act could be taken after the expiry of four years from the end of the assessment year in view of the proviso to Section 147 of the Act. It was also contended that the only ground on which the proceedings under Section 147 of the Act had been initiated was that deduction under Section 80-O of the Act was admissible at the rate of 50 per cent of the net receipts and not the gross receipts, as claimed by the assessee. The case of the assessee was that the claim for deduction had duly been examined while making the assessment under Section 143(3) of the Act. Thus, the reassessment proceedings were being initiated merely on a change of opinion on the same facts, w