A. P. RAVANI, R. BALIA, J. ( 1 ) ). These petitions concern challenge to the notice issued under Section 147 of the Income-Tax Act 1961 on 1st December 1992 in respect of the assessment years 1984 1985 and 1986-87. Each petition is in respect of separate assessment year. As the question raised in these petitions is the same the same are being decided by this common order. ( 2 ) ). Brief facts giving rise to these petitions may be noticed. The petitioner had originally claimed deduction from their total taxable income for the aforesaid assessment years under Section 43 of the Income-tax Act by way of investment allowances in respect of the machinery purchased by it. The machinery was purchased under deferred payment scheme by securing loan from IDBI. As per the law interpreted by the Supreme Court and various High Courts of the land while arriving at the actual cost of the newly acquired machinery for the purpose of claiming investment allowance deductions the entire interest which was payable to IDBI in respect of the machinery purchased by the petitioner under deferred payment scheme of the IDBI over a spread-over period was included in the cost of acquisition of the machinery and on such valuation the investment allowance was claimed. However during pendency of the assessment of the aforesaid three assessment years Section 43 (1) of the Income-tax Act was amended retrospectively which defined actual cost of acquisition of an asset for the purpose of calculating claim of deduction as investment allowance. As a result of the said amendment the interest amount included in the cost of assets acquired in respect of which investment allowance was claimed was excluded from it and cost of acquisition and claim for investment allowance was accordingly reduced. However as per the earlier decisions namely in the case of Calcutta Co. Ltd. v. Commissioner of Income Tax 37 ITR 1 Commissioner of Income Tax v. Burhwal Sugar Mills Co. However as per the earlier decisions namely in the case of Calcutta Co. Ltd. v. Commissioner of Income Tax 37 ITR 1 Commissioner of Income Tax v. Burhwal Sugar Mills Co. Ltd. B2 ITR 784 (Allahabad High Court); and Commissioner of Income Tax v. Tensils Steel Ltd. 104 ITR 581 (Gujarat High Court) referred to in the assessment order dated 5th February 1987 passed by the Income-tax Officer as the entire interest payable to the IDBI under its deferred payment scheme though spread over a period was taken to be accrued on the date of acquisition of the assets and was held to be includable in the capital expenditure for acquiring assets the assessee claimed deduction of such interest amount as revenue expenditure as having accrued in the year of the acquisition of the assets. The said claim of the assessee was allowed by the assessing authority after referring to the assessees contention and agreeing with him. ( 3 ) ). Thereafter Income-tax Officer issued separate notices dated 1-12-1992 under Section 147 of the Income-tax Act 1961 for all the aforesaid assessment years stating that he has a reason to believe that income of the assessee for the assessment year has escaped assessment within the meaning of Section 147 of the Act and he proposed to reassess the income for the aforesaid assessment years. The notices issued to the assessee also recorded that the notice is being issued after obtaining necessary sanction of the Commissioner of Income Tax. ( 4 ) ). The assessee challenges the issuance of the aforesaid notices dated 1st December 1992 inter alia on the ground that condition precedent which is necessary for acquiring jurisdiction to initiate proceedings under Section 147 did not exist in the present case and therefore the issuance of notice is wholly without jurisdiction. It is the case of the petitioner assessee that the petitioner had disclosed all primary facts necessary for the assessment of the income chargeable to tax for the years 1984-85 1985 and 1986-87 and the assessing authority after application of his mind has accepted the aforesaid claim of deduction in respect of the liability of interest on accrual basis as the assessee was following the mercantile system of account. There being no failure or omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment no action under Section 147 could be taken after the expiry of four years from the end of the relevant assessment year. That notices in respect of the assessment years have been issued after expiry of four years from the end of the relevant assessment year. That notices in respect of the assessment years have been issued after expiry of four years from the end of the relevant assessment years and therefore otherwise also no action under Section 147 could have been initiated. It was also alleged by the petitioner that it is a case of mere change of opinion and the respondent had no reason to hold any belief that any income has escaped the assessment in respect of the relevant assessment years referred to above on account of any failure on the part of assessee to disclose fully and truly any fact. ( 5 ) ). In response to Rules the respondents have filed return. Alongwith the return the respondents have also placed on record the reasons recorded by him for reopening the assessments under Section 147 as required under Section 148 (2) of the Act. The contention of the respondents in this regard is that interest which was payable to IDBI over a spread-over period did not accrue in one year only but according to law liability was periodical and therefore the claim of the assessee for the entire liability of interest on the loan to IDBI was wrongly allowed in the relevant assessment year as one time accrual of liability and therefore it was a case of escapement of income. ( 6 ) ). We have considered rival contentions raised before us and perused the record placed before us. Keeping in view the provisions of Section 147 and the settled principle of law regarding acquisition of jurisdiction by assessing authority for reopening the assessment year under Section 147 we are satisfied that the petitions merit acceptance. ( 7 ) ). Section 147 of Income Tax Act 1961 as it exists after the Amendment at the time of issuance of impugned notices reads as under: "income escaping assessment 147. ( 7 ) ). Section 147 of Income Tax Act 1961 as it exists after the Amendment at the time of issuance of impugned notices reads as under: "income escaping assessment 147. If the (Assessing) Officer (has reason to believe) that any income chargeable to tax has escaped assessment for any assessment year he may subject to the provisions of Sections 148 to 151 assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this Section or recompute the loss or depreciation allowance or any other allowance as the case may be for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to the relevant assessment year) provided that where an assessment under sub-Section (3) of Section 143 or this section has been made for the relevant assessment year no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 142 or 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Section 148 reads as under " (Issue of notice where income has escaped assessment 148 (1) Before making the assessment reassessment or recomputation under Section 147 the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period not being less than thirty days as may be specified in the notice a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall so far as may be apply accordingly as if such return were a return required to be furnished under Section 139 ). (2) The Assessing Officer shall before issuing any notice under this section record his reasons for doing so. ( 8 ) ). (2) The Assessing Officer shall before issuing any notice under this section record his reasons for doing so. ( 8 ) ). From the perusal of the aforesaid provisions it is abundantly clear that it is the belief of the Income-tax Officer about the escapement of incomes chargeable to assessment which must be apparent from the reasons recorded in writing that confers jurisdiction on the I. T. O. to take action under Section 147. Perusing section 147 it speaks in no uncertain terms that no action under Section 147 shall be taken for the relevant assessment year after expiry of four years from the end of the relevant assessment year in case where assessment has taken place under Section 143 of the Act except on the ground that income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of assessee to make a return under Section 139 or in response to a notice under Section 142 (1) or Section 148 or to disclose fully and truly all material facts necessary for the assessment for that assessment year. It may be noticed that the proviso to existing Section 147 is para materia with Section 147 (a) as it existed immediately before the amendment of 1961 Act or Section 34 (1) (a) of the Indian Income-tax Act 1922 Such belief must appear from the reasons recorded in writing by the concerned I. T. O. and such reasons must have nexus with formation of required belief necessary for taking action under Section 147. ( 9 ) ). The law in this connection has been succinctly stated by Their Lordships of the Supreme Court in the case of Calcutta Discount Co. Ltd. v. I. T. O. Companies District I Calcutta and Anr. ( 9 ) ). The law in this connection has been succinctly stated by Their Lordships of the Supreme Court in the case of Calcutta Discount Co. Ltd. v. I. T. O. Companies District I Calcutta and Anr. reported in (1961) 41 ITR 191 Their Lordships were dealing with the case arising under Income Tax Act of 1922 Section 34 of which read as under: "34 if (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under Section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year income profits or gains chargeable to income-tax have escaped assessment for that year or have been underassessed or assessed at too low rate or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed or (b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee the Income-tax Officer has in consequence of information in his possession reason to believe that income profits or gains chargeable to income-tax have escaped assessment for any year or have been under-assessed or assessed at too low a rate have been made the subject of excessive relief under this Act or that excessive loss or depreciation allowance has been computed. he may in case falling under Clause (a) at any time within eight years and in cases falling under Clause (b) at any time within four years of the end of the year serve on the assessee notice containing all or any of the requirements which may be included in a notice under sub-Section (2) of Section 22 and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that sub-section provided that- (i) the Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reason recorded that it is a fit case for the issue of such notice; (ii)the tax shall be chargeable at the rate at which it would have been charged had the income profits or gains not escaped assessment or full assessment as the case may be; and (iii) where the assessment made or to he made is an assessment made or to be made on a person deemed to be the agent of a non-resident person under Section 43 this sub-section shall have effect as if for the periods of eight years and four years a period of one year was substituted Explanation: Production before the Income-tax Officer or account books or other evidence from which material facts could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section ( 10 ) ). After laying down the test to confer jurisdiction under this Act to issue notice in respect of the assessment beyond the period of four years from the end of the relevant year the court concluded that two conditions have to be satisfied before the Income-tax Officer acquires jurisdiction to take action under it. After laying down the test to confer jurisdiction under this Act to issue notice in respect of the assessment beyond the period of four years from the end of the relevant year the court concluded that two conditions have to be satisfied before the Income-tax Officer acquires jurisdiction to take action under it. The first thing is that the Income-tax Officer must have reason to believe that incomes profits or gains chargeable incomes has underassessed and that he must have also reason to believe that such underassessment has occurred by reason of either omission or failure on the part of the assessee to make return of his income of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedents to be satisfied before Income-tax Officer could have jurisdiction to issue notice for assessment or reassessment beyond the period of four years. The further question which Their Lordships considered was that what is the ambit and scope of the assessees duty to disclose truly and fully all material facts necessary for assessment while forming belief about omission or failure on the part of the assessee of such failure. While dealing with this question Their Lordships observed as under:"the words used are omission or failure to disclose fully and truly all material facts necessary for his assessment for that year. It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment"to what extent this duty extends? The Court explained:"does the duty however extend beyond the full and truthful disclosure of all primary facts ? In our opinion the answer to this question must be in the negative. Once all the primary facts are before the assessing authority he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences whether of facts or law should be drawn. "the same principle has been reiterated by the Apex Court in a recent case under Section 147 of the 1961 Act in Phool Chand Bajrant Lal and Anr. v. Income Tax Officer and Anr. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences whether of facts or law should be drawn. "the same principle has been reiterated by the Apex Court in a recent case under Section 147 of the 1961 Act in Phool Chand Bajrant Lal and Anr. v. Income Tax Officer and Anr. (1993) 203 ITR 456 There also Their Lordships on considering provisions of Section 147 (1) (a) held as under:"from a combined review of the judgment of this Court it follows that an Income-tax Officer requires jurisdiction to reopen an assessment under Section 147 (a) read with Section 148 of the Income-tax Act 1961 only if on the basis of specific reliable and relevant information coming to his possession subsequently he has reasons which he must record to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings any part of his income profits or gains chargeable to income-tax has escaped assessment. "before us there is no dispute that unless a case falls within the purview of omission and failure of assessee on any account envisaged under proviso to Section 147 the notices issued in all the cases are beyond the period of limitation prescribed for taking such action. In this regard the reasons recorded by the assessing authority need he noticed. Assessing authority has recorded his reasons for initiating proceedings under Section 147 in the following terms. " On going through the case records it is noticed that deduction of interest amounting to Rs. 4 94 60 which represented interest on the cost of machinery acquired on deferred payment scheme and relating to the period beyond the relevant account year was wrongly allowed at the time of assessment. The assessee was liable to get only that portion interest which accrued and fell due for payment during the relevant accounting year as deduction against the income of particular year and not the total amount of interest which would fall due for the entire period of the agreement In this case what had accrued on conclusion of agreement with the IDBI was only a potential to the accrual of interest as and when the relevant instalment would fall due. Since no such instalment was payable during the year there was no liability to pay interest From the bare perusal of the aforesaid reasons it is apparent that there is not a whisper about satisfaction of the assessing authority regarding any omission or failure on the part of the assessee to disclose fully and truly any material fact much less material fact necessary for the assessment for the relevant assessment year. The reasons recorded by the assessing authority do not go beyond his satisfaction that during the course of the assessment proceedings the deduction of interest as discussed above was wrongly allowed at the time of assessment because the assessee was liable to get only that portion of interest which accrued and fell due for payment during the relevant accounting year and not total amount of interest which would be payable for the entire period of the agreement He has recorded his satisfaction amount the escapement of assessment on account of deduction wrongly having been allowed But there is no satisfaction nor even conclusion by the assessing authority that such wrong allowance of interest as deduction from the income chargeable to tax has arisen on account of any failure or omission on the part of the assessee to disclose any primary or material facts which were necessary or the assessment Perhaps on the facts of the present case such satisfaction could not have been arrived at inasmuch as the original assessment order itself disclose that all facts necessary for arriving at a decision about liability of interest in the particular accounting year before the assessing authority and he after due application of mind to all these facts fully alive to the fact that the claim for entire interest payable on the loan has been made as revenue expenditure after reducing the same from the cost of acquisition of the assets acquired during that year for the purpose of calculating investment allowance and that too was made after amendment of Section 43. Therefore neither there is any satisfaction recorded by the assessing authority about omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the relevant assessment years nor in the facts and circumstances which are not disputed before us can be said to be any such omission or failure on the part of the assessee in disclosing all material primary facts necessary for the assessment for the relevant assessment years. ( 11 ) ). The aforesaid analysis of the facts and the principles governing the exercise of jurisdiction under Section 147 leads to an irresistible conclusion that in the present case condition precedent for acquiring jurisdiction by the concerned assessing authority for issuing notice under Section 147 after the expiry of four years from the end of the relevant assessment years did not exist as the Income Tax Officer had also not held any belief that such escapement has arisen on account of any failure or omission on she part of assessee as envisaged under Section 147 and therefore he did not acquire any jurisdiction to issue notices under challenge. ( 12 ) ). As a result the petitions succeed and the same art allowed. Notices dated 1-2-1992 Annexure D in all the three petitions for the relevant assessment years 1984-85 1985 and 1986-87 are 45 quashed. In the facts and circumstances there will be no order as to costs. .