In this application under Article 226 of the Constitution, the petitioner has prayed for a writ of Certiorari for quashing the notice dated 30.10,1998/2.11.1998 under section 148 of the Income Tax Act, 1961 (for short the Act) and the notice dated 3/4.12.1998 under section 142 of the Act for the Assessment year 1991-92 issued by the Joint Commissioner of Income Tax (Assessment), Special Range Guwahati (for short the Assessing Officer). The petitioner has also prayed for a writ of Mandamus commanding the respondents to act according to law and/or to cancel and/or rescind and/or withdraw the impugned notices and for a writ of Prohibition prohibiting the respondents from giving any effect to the impugned notices. 2. The relevant facts as stated in the writ petition are that Namdang Tea Company (India) Ltd (for short the company) owned two tea Estates, namely Namdang Tea Estate and Bogapani Tea Estate in the State of Assam. The company carried on the business of growing green tea leaves in the said two tea estates and of manufacturing black tea out of the said green tea leaves grown by it as well as purchased from others and selling the same in India and abroad. Under a scheme of arrangement the aforesaid tea business of the company was h transferred to Mcleod Russel (India) Ltd who now stands merged with Eveready Industries (India) Ltd, the writ petitioner with effect from 1.4.1996. 3. For the assessment year 1991-92, Namdang Tea Company (India) Ltd filed its return on 30.12.1991 showing an income of Rs.41,82,030 and along with the said return filed profit and loss account and balance sheet audited as per the provision of the Companies Act, 1946 and audit report under section 80 HHC of the Act and other relevant documents and papers. The company then received notices dated 24.1.1992 under section 142 (1) and 143 (2) of the Act. The company also received a letter dated 28.7.1993 requiring the company to furnish details/ documents/informations covering a list of 30 requisitions. The company furnished the information/details/documents in course of hearing before the Assessing Officer by letters dated 13.8.1993,16.8.1993 and 22.9.1993. The company filed informations/details/documents as required by the Assessing Officer by letter dated 5.11.1993. The company also received a letter dated 28.7.1993 requiring the company to furnish details/ documents/informations covering a list of 30 requisitions. The company furnished the information/details/documents in course of hearing before the Assessing Officer by letters dated 13.8.1993,16.8.1993 and 22.9.1993. The company filed informations/details/documents as required by the Assessing Officer by letter dated 5.11.1993. By letter dated 22.12.1993, the Assessing Officer required the company to furnish certain further information and documents and in course of hearing the company furnished informations/details/documents by two letters dated 28.1.1994 and 2 .3.1994. Again by a letter dated 12.3.1994, the company filed further information/details/documents in course of hearing. By another notice dated 22.3.1994, the Assessing Officer required the company to furnish further informations and documents which the company filed on 28.3.1994 in course of hearing. The Assessing Officer then made the assessment under section 143 (3) of the Act on 30th March, 1994 and computed the total income of the company at Rs. 1,16,55,470 as against the return income of Rs.41,82,030. Aggrieved by the said assessment order, the company preferred an appeal before the Commissioner of Income Tax (Appeals), Guwahati and by order dated 27.11.1995, the said appellate authority partially allowed the said appeal. Aggrieved by the said appellate order of the Commissioner of Income Tax (Appeals), the department filed an appeal before the Income Tax Appellate Tribunal, Guwahati Bench and the company also filed a cross-objection before the said Tribunal. 4. On 2.11.1998, however, the petitioner received the impugned notice dated 30.10. J998/2.11.1998 from the Assessing Officer under section 148. of the Act alleging that income of the company for the assessment year 1991 -92 had escaped assessment within the meaning of section 147 of the Act and that he propose to assess/reassess income of the said company and required the company to file a return within 30 days of the date of service of the said notice. of the Act alleging that income of the company for the assessment year 1991 -92 had escaped assessment within the meaning of section 147 of the Act and that he propose to assess/reassess income of the said company and required the company to file a return within 30 days of the date of service of the said notice. The petitioner in his letter dated 26.11.1998 to the Assessing Officer contended, inter alia, that no income of the company for the assessment year 1991-92 had escaped assessment and such escapement, if any, was not by reason of any omission and/or failure on the part of the company either to file any return or disclose fully and/or truly all primary and material facts necessary for assessment of the said company and, therefore, the conditions precedent for invoking the power under section 147 read with section 148 of the Act was not fulfilled and the Assessing Officer had no jurisdiction to issue the impugned notice. Without prejudice to the said contention, however, the petitioner filed a return under protest. Thereafter on 8.12.1998, the petitioner received the impugned notice dated 3.12.1998/4.12.1998 from the Assessing Officer under section 142 of the Act requiring the petitioner to furnish return under section 142 (1) of the Act by 21.12.1998 and also to produce or cause to be produced before him on 21.12.1 998, the books of account, etc relevant to the Assessment year 1991-92. 5. The petitioner then moved the present application under Article 226 of the Constitution for appropriate relief and on 18.12.1998, this Court while issuing Notice of Motion to the respondents passed an interim order staying further proceedings pursuant to the impugned notices. 6. In response to the Notice of Motion, the respondent Nos 1,2 and 3 have filed affidavit-in-opposition on 8.10.1999. The said affidavit-in-opposition has been sworn by Shri JC Pegu, Joint Commissioner of Income Tax, Special Range II, Guwahati who is the Assessing Officer. 6. In response to the Notice of Motion, the respondent Nos 1,2 and 3 have filed affidavit-in-opposition on 8.10.1999. The said affidavit-in-opposition has been sworn by Shri JC Pegu, Joint Commissioner of Income Tax, Special Range II, Guwahati who is the Assessing Officer. In paragraph 2 of the said affidavit-in-opposition, the Assessing Officer has stated that it is a fact that detailed inquiries were made into the entire matter including the present issues involved at the time of assessment and after being satisfied, the assessment was made and that the material on the basis of which the impugned notices under section 148 were also examined at the time of assessment The present re-assessment proceeding, however, have been initiated on the basis of an enquiry conducted by an outside authority and on the basis of that enquiry only the present notices have been issued. It is further stated in the said paragraph 2 of the affidavit-in-opposition that the Assessing Officer has not made any independent enquiry and on the. basis of subsequent informations received he has reason to believe that income has escaped assessment due to failure and/or omission on the part of the assessee to disclose material part necessary for the purpose of assessment. In paragraph 3 of the said affidavit-in-opposition, the Assessing Officer has further stated that in his order sheet he has duly and clearly recorded the reasons which led to his belief that income returnable to tax to the tune of Rs.27,25,606 had escaped assessment within the meaning of section 147 of the Act during the assessment year 1991-92 for the failure on the part of the assessee to disclose fully or truly all material facts necessary for asse­ssment at the time of assessment proceeding under section 143 (3) of the Act. 7. An additional affidavit-in-opposition has been filed on 29.11.1999 by Shri JC Pegu, the Assessing Officer and in paragraphs 4 and 5 of the said additional affidavit-in-opposition, he has disclosed his reasons for initiating action under section 147 read with section 148 of the Act and for issuing the impugned notices. The said paragraphs 4 and 5 of the said additional affidavit-in-opposition are extracted herein below : “4. The said paragraphs 4 and 5 of the said additional affidavit-in-opposition are extracted herein below : “4. That your deponent most respectfully begs to state that the Inquiry Officer on perusal of the DO letter dated 11.6.1998 of the Commissioner of Income Tax (CIT), West Bengal II, Calcutta communicated to the Commissioner of the Income Tax, Guwahati vide his letter F. No.CON.CIT-97-98/134 dated 30.6.1998 found that a survey was conducted by Investigation Wing, Calcutta at the instance of DC Range 7 towards the end of March, 1997 at the business premises of following companies: (i) M/s Gladiolai Estate (P) Ltd (ii) M/s Rbhini Estate (P) Ltd (iii) M/s Gagan Properties (P) Ltd (iv) M/s Smriti Properties (P) Ltd.” It was found that huge payments were made to above parties by Williamson Magor Group of Companies for rendering services like cow dung supply, labour quarter repairing, fencing etc. It was also found that these four above stated companies did not render the kind of service for which it was receiving payment. They claimed that they were getting the services rendered through other parties. A simultaneous survey also carried out at the premises of following three parties who were supposed to have been rendered services on behalf of the above mentioned four parties: “(i)BS Consultants (P) Ltd. (ii) Manoj Commercial Services (P) Ltd. (iii) Ajanta Commercial & Mercantiles (P) Ltd. During the survey a common Director of the above mentioned three companies, namely Shri BS Kathria admitted on oath that no service was rendered by the aforesaid three companies in the nature of supply of cow dung, repairing of labour quarters, fencing etc as claimed by the companies, namely (i) M/s Gladiolai Estate (P) Ltd, (ii) M/s Rohini Estate (P) Ltd, (iii) M/s Gagan Properties (P) Ltd, (iv) M/s Smriti Properties (P) Ltd. Actually these transactions were merely accommodation entries and the amount paid through cheques were ultimately returned in cash after routing it through four or five bank accounts. Out of the above transactions, the assessee M/s Namdang Tea Company (India) Ltd made the following payments to the under mentioned parties during the financial year 1990-91 relevant to the assessment year 1991-92. (i) M/s Rohini Properties (P) Ltd Rs. 13,96,000 (ii) M/s Gladiolai Estate (P) Ltd Rs. 13,29,600, Total Rs. 27,25,600. 5. Out of the above transactions, the assessee M/s Namdang Tea Company (India) Ltd made the following payments to the under mentioned parties during the financial year 1990-91 relevant to the assessment year 1991-92. (i) M/s Rohini Properties (P) Ltd Rs. 13,96,000 (ii) M/s Gladiolai Estate (P) Ltd Rs. 13,29,600, Total Rs. 27,25,600. 5. That the deponent most respectfully begs to state that in view of the above transactions and on scrutiny of the reasons the Assessing Officer had reason to believe that income chargeable to tax to the tune of Rs.27,25,600 has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961 during the assessment year 1991-92 for the failure on the part of the assessee to disclose fully and truly all materials facts necessary for assessment at the time of assessment proceedings under section 143 (3).” 8. Dr. Pal, learned counsel for the petitioner, submitted that the Assessing Officer has jurisdiction to initiate proceeding under section 147 of the Act and issue notice under section 148 of the Act after expiry of 4 years from the relevant assessment year for which the assessment has been made under sub-section (3) of section 143, only if two conditions are satisfied - (1) he has reason to believe that any income chargeable to tax has escaped assessment for the assessment year in question, (2) such escapement of income chargeable to tax from assessment is by reason of failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment in the year in question. This position of law would be clear from a bare reading of section 147 and the proviso thereto. This position of law would be clear from a bare reading of section 147 and the proviso thereto. He explained that similar provisions existed in section 34 of the Income Tax Act, 1922 and in Calcutta Discount Company vs. Income Tax Officer, (1961) 41 ITR 191, the Supreme Court held that to counter jurisdiction under section 34 of the Income Tax Act, 1922 to issue notice in respect of assessment beyond the period of four years, but within a period of eight years from the end of the relevant assessment year, two conditions had to be satisfied the first was that the Income Tax Officer must have reason to believe that income, profits or gains chargeable to income tax had been under assessed; the second was that he must have reason to believe that such under assessment had occurred by reason of either omission or failure on the part of a the assessee to make a return of his income or omission or failure on the part of an assessee to disclose fully or truly all materials facts necessary for his assessment for that year. Dr. Pal submitted that in a recent decision of the Supreme Court in the case of Coca Cola Export Corporation vs. Income Tax Officer (1998) 231 ITR 200, the Supreme Court, while interpreting section 147 of the Act, has held that the law with regard to the jurisdiction of the Assessing Officer under section 147 of the Act was well settled on the subject starting from Calcutta Discount Company vs. Income Tax Officer (supra) and, therefore, the law laid down in Calcutta Discount Company still holds good. 9. Dr. Pal submitted that the facts stated in the present writ petition show that the company had filed return for the assessment year 1991-92 and had from time to time disclosed fully and truly all material facts as required by the Assessing Officer at the time of assessment and that these facts had not been disputed by the Assessing Officer in paragraphs 2 and 2A of the affidavit-in-opposition filed on behalf of the respondent Nos 1,2 and 3. Hence the second condition of assumption of jurisdiction by the Assessing Officer under section 147 of the Act that escape­ment of income chargeable to tax was due to failure on the part of the assessee to disclose fully and truly all material facts did not exist in the present case. 10. Dr. Pal submitted that the first condition required that the Assessing Officer must have reason to believe that any income chargeable to tax had escaped assessment for the relevant assessment year. In Income Tax Officer vs. Lakhamani Mewal Das, (1976) 103 ITR 437, the Supreme Court explained that the ground or reason which led to the formation of such belief of the Assessing Officer must have a material bearing on the question of escapement of income of the assessee from assessment. He submitted that in the aforesaid decision, the Supreme Court further held that 'reason to. believe' does not mean a purely subjective satisfaction on the part of the Income Tax Officer and the reason must be held in good faith and it cannot be merely a presence and it is open to the Court to examine whether the reasons for formation of the belief have a rational connection with or relevant bearing on the formation of his belief. He submitted that it has been held by the Supreme Court in Income Tax Officer vs. Madnani Engineering Works Ltd, (1979) 118 ITR 1, that the existence of reason for the belief of the Income Tax Officer was a justiciable issue and it was for the Court to be satisfied whether in fact the Income Tax Officer has reason to believe that income has escaped assessment. He pointed out that in Ganga Saran & Sons (P) Ltd vs. Income tax Officer & others, (1981) 130 ITR 1, the Supreme Court further held that the belief entertained by the Income Tax Officer must not be arbitrary or irrational and it must be reasonable, or in other words, it must be based on reasons which are relevant and material. He submitted that in the aforesaid decision in Ganga Saran & Sons (P) Ltd vs. Income Tax Officer (supra), the Supreme Court further held that if there was no rational and intelligible nexus between the reasons and the belief, so that, on such reasons no one properly instructed on facts and law could reasonably entertained the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income the assessee had escaped assessment. 11. Dr. Pal submitted that paragraphs 4 and 5 or the additional affidavit-in-opposition show the Assessing Officer has initiated action under section 147 read with section 148 of the Act because it appeared that payment of Rs.27,25,600 made by the company for services rendered by M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd were not genuine. This was done on the basis of survey in connection with some other cases in West Bengal during which a common Director of three parties through whom the aforesaid two parties rendered service to the company had admitted on oath that no services were rendered by the said two parties and that the transactions were merely accommodation entries and the amounts paid through cheques were ultimately returned in cash after routing it through 4 or 5 bank accounts. Dr. Pal submitted that the survey at best may indicate some bogus transactions by M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd but until and unless there was definite material to indicate that no services were actually rendered by M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd the company in the present case during the financial year 1990-91 and that the payments were ultimately returned, no belief could be reasonably entertained that the income to the tune of Rs.27,25,600 of the company had escaped assessment. Dr. Dr. Pal submitted that in Chhugamal Rajpal vs. SP Chaliha, (1971) 79 ITR 603 the Income Tax Officer issued a notice under section 148 of the Act to the assessee on receiving information that the alleged creditors of the assessee were name lenders and the transactions were bogus, but the Supreme Court found that the Income Tax Officer had not even come to prima facie conclusion that the transaction between the assessee and the alleged creditors were not genuine and held that the Income Tax Officer did not have reason to believe that due to omission or commission on the part of the assessee to make a return under section 139 or to disclose fully or truly all material facts that income of the assessee had escaped assessment for the assessment year in question. He vehemently argued that in the present case also no prima facie conclusion has been arrived at by the Income Tax Officer that the transactions between the company and M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd were genuine. 12. Dr. Pal finally submitted that it would appear from paragraphs 4 and 5 of the additional affidavit-in-opposition filed on behalf of the respondent Nos 1, 2 and 3 that the impugned notices have been issued to the petitioner pursuant to a communication of the Commissioner of Income Tax without any application of mind by the Assessing Officer. He vehemently argued that under sections 147 and 148 of the Act, the Assessing Officer has to apply his own independent mind and record reasons before issuing notice to the assessee and the Commissioner of Income Tax was required to accord sanction under the proviso to section 151 of the Act on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notices. But the Assessing Officer cannot at the instance of the Commissioner issue notices under section 148 of the Act mechanically and without application of his own independent mind to the question as to whether there was reason to believe that any income chargeable to income tax has escaped assessment for the assessment year 1991-92 due to failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for that assessment year. According to Dr. According to Dr. Pal, therefore, the impugned notices issued by the Assessing Officer in the present case were without jurisdiction and were liable to be quashed. 13. Mr. KP Sarma, learned counsel appearing for the department, on the other hand, submitted that the impugned notices have been issued to the petitioner on the basis of information sent with the letter dated 30.6.1998 of the Commissioner of Income Tax, Guwahati referred to in paragraph 4 of the additional affidavit-in-opposition. He submitted that along with the said letter dated 30.6.1998, the Commissioner of Income Tax, Guwahati, a DO letter dated 11.6.1998 of the Commissioner of Income Tax, West Bengal II, Calcutta, was enclosed in which the results of a survey conducted by the Investigation Wing, Calcutta, have been communicated. He explained that this information was not available with the Assessing Officer when he made the original assessment in the year 1994 on the basis of materials disclosed by the assessee. He cited the decision of the Supreme Court in Kalyanji Mavji & Co vs. Commissioner of Income Tax, West Bengal II, (1978) 102 ITR 287, in which the Supreme Court while interpreting j section 34 of the Income Tax Act, 1922, held that the Income Tax Officer would have jurisdiction to reopen the original assessment even on the basis of information derived from an external source of any kind, including discovery of new and important matters or on knowledge of fresh facts which were not present at the time of original assessment. Mr. Sarma further submitted that although the information was received from the DO letter dated 11.6.1998 of the Commissioner e of Income Tax, West Bengal II, Calcutta, the Assessing Officer after applying his own mind to the said information entertained .the belief that income of the company chargeable to tax had escaped assessment for the assessment year 1991-92 and issued the impugned notices to the petitioner under section 148 of the Act. Mr. Sarma argued that it will be clear from the averments made in the affidavit-in-opposition and the additional affidavit-in-opposition that all the conditions for assuming jurisdiction under section 147 of the Act and for issuing the impugned notice under section 148 of the Act were satisfied in the present case. Mr. Sarma argued that it will be clear from the averments made in the affidavit-in-opposition and the additional affidavit-in-opposition that all the conditions for assuming jurisdiction under section 147 of the Act and for issuing the impugned notice under section 148 of the Act were satisfied in the present case. He contended that it is only in course of such reassessment proceedings that the Assessing Officer would record a clear finding as to whether or not the income of the company chargeable to tax has escaped assessment and the purport of the impugned notices to the petitioner is to give an opportunity to show that there is no such escapement of income chargeable to tax from assessment. 14. Mr. Sarma, relied on the observations of the Supreme Court in Income Tax Officer vs. Lakhamani Mewal Das (supra) to the effect that the production of the books of account and other documents before the Income Tax Officer will not necessarily amount to disclosure of material facts as contemplated by law and that it was the duty of the assessee to make full and true disclosure of primary facts at the time of assessment. He further submitted that in the said case, the Supreme Court further clarified that once there existed reasonable grounds that the Income Tax Officer to form the belief that income of the assessee had escaped assessment, that would be sufficient to clothe him jurisdiction to issue notice and whether the grounds for issue of such notices are adequate or not is not a matter for the Court to investigate. He also relied on the decision of the Supreme Court in S. Narayanappa vs. Commissioner of Income Tax, Bangalore, (1967) 63 ITR 219, wherein the Supreme Court held that the legal position is that if there are in fact some reasonable grounds for the Income Tax Officer to believe that there had been any non-disclosure as regards any fact which could have a material bearing on the question of under assessment, that would be sufficient to give jurisdiction to the Income Tax Officer to issue notice under section 34 of the Income Tax Act, 1922 and whether these grounds are adequate or not is not a matter for the Court to investigate. He also cited the decision of this Court in Bhadarmai Hazarimal vs. Income Tax Officer, A Ward, Jorhat, (1975) 100 ITR 159, wherein a Division Bench of this Court held that if material facts or primary facts necessary for assessment as disclosed by the assessee at the time of assessment are subsequently on investigation found to be false or non-existent, it cannot be said that the assessee disclosed fully and truly all material facts necessary for the assessment. Mr. Sarma submitted ^ that it will t>e clear from the information revealed in the DO letter dated 11:6.1998 of the Commissioner of Income Tax, West Bengal II, Calcutta, and which has been stated in paragraph 4 of the additional affidavit-in-opposition that M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd were actually not rendering any service like cow dung supply, labour quarters repairing, fencing etc and that payments made to the said two companies were actually accommodation entries e and the amount paid through cheques were ultimately returned in cash after routing it through 4 or 5 bank accounts. Thus, the transactions with the said two parties by the company in the present case needed fresh examination by the Assessing Officer in the reassessment proceeding under section 147 of the Act. In a similar kind of racket of fictitious loans, Mr. Sarma submitted that the Patna High Court in Commissioner of Income Tax vs. Bihar Cotton Mills Ltd, (1986) 160 FTR 275, has held that the initiation of proceedings under section 147 of the Act by the Income Tax Officer was justified. 15. Sections 147 and 148 of the Act have undergone substantial amendments by the Direct .Tax Laws (Amendments) Act, 1987 and Direct Tax Laws (Amendments) Act, 1989, with effect from 1,4.1989. After the said amendments, sections 147 and 148 read as follows : “147. Income escaping assessment. 15. Sections 147 and 148 of the Act have undergone substantial amendments by the Direct .Tax Laws (Amendments) Act, 1987 and Direct Tax Laws (Amendments) Act, 1989, with effect from 1,4.1989. After the said amendments, sections 147 and 148 read as follows : “147. Income escaping assessment. 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 153, 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 the 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 as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 of 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 a assessment years, 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 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1: Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2: For the purpose of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely; (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax. (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has under stated the income or has claimed excessive loss deduction, allowance or relief in the return. (c) where an assessment has been made, but (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject to excessive relief under this Act, or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. - 148. Issue of notice where income has escaped assessment - (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 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." (emphasis supplied). A bare reading of section 147 would show that in all cases where the Assessing Officer intends to take action under section 147 of the Act, he must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. From the language of section 147, it is clear that the power of Assessing Officer under section 147 is to be exercised subject to provisions of section 148 of the Act. Under sub-section (1) of section 148, the Assessing Officer is required to serve on 'the assessee a notice before making assessment, reassessment or recomputation under section 147 of the Act. Sub-section (2) of section 148, however, provides that before issuing any notice under sub-section (1) of section 148, the Assessing Officer has to record his reasons for doing so. Under sub-section (1) of section 148, the Assessing Officer is required to serve on 'the assessee a notice before making assessment, reassessment or recomputation under section 147 of the Act. Sub-section (2) of section 148, however, provides that before issuing any notice under sub-section (1) of section 148, the Assessing Officer has to record his reasons for doing so. The reasons to be recorded by the Assessing Officer under sub-section (2) of section 148 must relate to his belief under section 147 that any income chargeable to tax has escaped assessment for any assessment year. Thus, the reasons for the belief of the Assessing Officer that any income chargeable to tax has escaped assessment for any assessment year must exist and must be recorded before any notice under section 148 (1) is issued to the assessee and before making any assessment, reassessment or recomputation under section 147. The first question for decision in this writ petition, therefore, is whether before issuing the impugned notice dated 30.10.1998/2.11.1998 under section 148, the Assessing Officer had reason to believe that any income of the Company chargeable to tax has escaped assessment for the Assessment Year 1991-92. 16. The reasons which have been recorded under section 148 (2) by the Assessing Officer before issuing the impugned notice under section 148(1) have been disclosed in paragraphs 4 and 5 of the additional affidavit-in-opposition filed on behalf of respondent Nos 1, 2 and 3 quoted above. From the said reasons in paragraphs 4 and 5 of the additional affidavit-in-opposition quoted above, it appears that the company had made payments amounting to Rs.27,25,600 during the financial year 1990-91 relevant to assessment year 1991-92 to M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd for rendering some services, but in a survey conducted by the Investigation Wing, Calcutta, it was revealed that Williamson Magor Group of Companies had made huge payments to M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd for rendering services like cow dung supply, labour quarters repairing, fencing, etc and the said two companies claimed that they were getting services rendered through other parties. But a common Director of three of these other parties had admitted on oath that no services were rendered for supply of cow dung, labour quarters repairing, fencing etc as claimed by M/s Gladiolai Estate (P) Ltd and M/s Rohini Properties (P) Ltd and that payments made to M/s Gladiolai Estate (P) Ltd and M/s Rohini Properties (P) Ltd were mere accommodation entries and the amounts paid through cheques were ultimately returned in cash after routing it through 4 or 5 bank accounts. From the reasons disclosed by the Assessing Officer in the additional affidavit-in-opposition in paragraphs 4 and 5 for issuing the impugned notices, it appears that there is no definite or specific material or information whatsoever to show that no services were actually rendered by the aforesaid two parties to M/s Namdang Tea Company (I) Ltd and that the payments of Rs. 27,25,600 were merely accommodation entries and that the said payments were ultimately returned in cash to M/s Namdang Tea Company (P) Ltd after routing them through several bank accounts. Moreover, in the reasons disclosed in the said paragraphs 4 and 5 of the additional affidavit-in-opposition, the Assessing Officer has not come to a prima facie conclusion that the said payments totalling to Rs.27,25,600 to M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd were fictitious and not genuine and were not made towards the business expenses of the assessee-company. In the absence of such prima facie conclusion by the Assessing Officer the Court cannot hold that he had the reason to believe that income of the company to the tune of Rs.27,25,600 had escaped assessment a for the assessment year 1991-92. 17. In Chhugamal Rajpal vs. SP Chaliha (supra), the assessee had produced before the Income Tax Officer at the time of assessment for the assessment year 1960-61, a statement showing various creditors from whom the assessee had borrowed Hundis during the accounting year in question and after enquiry the assessee's total income was assessed at Rs.69,886. 17. In Chhugamal Rajpal vs. SP Chaliha (supra), the assessee had produced before the Income Tax Officer at the time of assessment for the assessment year 1960-61, a statement showing various creditors from whom the assessee had borrowed Hundis during the accounting year in question and after enquiry the assessee's total income was assessed at Rs.69,886. Subsequently, on the basis of information received from the Commissioner of Income Tax, Bihar and Orissa, the Income Tax Officer issued a notice under section 148 of the Act to the assessee and the assessee challenged the validity of the said notice on various grounds and the Supreme Court held: “In his report the Income Tax Officer does not set out any reason for coming to the conclusion that this is a fit case to issue notice under section 148. The material that he had before him for issuing notice under section 148 is not mentioned in the report. In his report has vaguely refers to certain communications received by him from the Commissioner of Income Tax, Bihar and Orissa. He does not mention the facts contained in those communications. All that he says is that from those communications, it appears that these persons (alleged creditors) are name-lenders and the transactions are bogus. He does not even come to a prima facie conclusion that the transactions to which he referred are not genuine transactions. He appears to have had only a vague-feeling that they may be bogus transactions. Such a conclusion does not fulfil the requirements of section 151 (2), what that provision requires is that he must give reasons for issuing a notice under section 148. In other words he must have some prima facie grounds before him for taking action under section 148. Further his report mentions : “Hence proper investigation regarding these loans is necessary". In other words his conclusion is that there is a case for investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue notice under section 148. Further his report mentions : “Hence proper investigation regarding these loans is necessary". In other words his conclusion is that there is a case for investigating as to the truth of the alleged transactions. That is not the same thing as saying that there are reasons to issue notice under section 148. Before issuing a notice under section 148, the Income Tax Officer must have either reasons to believe that by reasons of the omission or failure on the part of the assessee to make a return under section 139 for any assessment year to the Income Tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped for that year.” (emphasis supplied). The Income Tax Officer in the aforesaid report under section 147 of the Act had stated that it appeared from the communications received that persons from whom the assessee had taken loans are name-lenders and the transactions were bogus, but the Supreme Court held that as he has not even come to the prima facie conclusion that the transactions to which he referred were not genuine transactions there were no reasons or prima facie grounds before him to issue the notice under section 148 of the Act. 18. The aforesaid decision in the case of Chhugamal Rajpal vs. SP Chaliha (supra) was followed by the Supreme Court in the case of Income Tax Officer vs. Lakhmani Mewal Das (supra). In the said case of Lakhamani Mewal Das, the first ground mentioned in the report of the Income Tax Officer to the Commissioner of Income Tax for initiating action under section 147 related to Mohansingh Kanayalal against whom there was an entry against payment of Rs. 74 and 3 annas as interest in the books of the assessee and the said Mohansingh Kanayalal made a confession that he was doing only name lending. The Supreme Court, however, held that there was nothing to show that the confession of Mohansingh Kanayalal related to a loan to the assessee and not to some one else much less to the loan of Rs.2,500 which was shown to have been advanced by b that person to the assessee. The Supreme Court, however, held that there was nothing to show that the confession of Mohansingh Kanayalal related to a loan to the assessee and not to some one else much less to the loan of Rs.2,500 which was shown to have been advanced by b that person to the assessee. The relevant portion of the said judgment of the Supreme Court is quoted herein below: “We may deal with the first ground mentioned in the report of the Income Tax Officer to the Commissioner of Income Tax. This ground relates to Mohansingh Kanayalal, against whose name there was an entry about the payment of Rs.72, annas 3 as interest in the books of the assessee, having made a confession that he was doing only name ending. There is nothing to show that the above confession related to a loan to the assessee and not to someone else, in such less to the loan of Rs.2,500 which was shown to have been advanced by that person to the assessee-respondent. There is also no indication as to when that confession was made and whether it relates to the period from April 1, 1957 to March 31, 1958, which is the subject matter of the assessment sought to be reopened. The report was made on February 12,1967. In the absence of the date of the alleged confession it would not be unreasonable to assume that the confession was made a few weeks or months before the report. To infer from that confession that it relates to the period from April 1,1957 to March 31,1958, and that it pertains to the loan shown to have been advanced to the assessee, in our opinion, would be rather far-fetched. As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time, we have to bear in mind that it is not any and every material, howsoever vague and indefinite and distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment The fact that the words 'definite information' which were there in section 34 of the Act of 1922, at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to the conclusion that action can now be taken for reopening assessment, even if the information is wholly vague, indefinite, farfetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere presence.” (emphasis supplied). 19. It is thus clear from the aforesaid two decision of the Supreme Court in Chhugamal Rajpal vs. SP Chaliha (supra) and Income Tax Officer vs. Lakhamani Mewal Das (supra) that for initiating action under section 147 and for issuing notice to the assessee under section 148 (1) of the Act, the Assessing Officer must have in his possession specific information or material to show that the particular transactions of the assessee were not genuine or were fictitious and the Assessing Officer must have arrived at a prima facie conclusion on the basis of such specific information or material that the particular transactions were not genuine or were fictitious because in the absence of such specific information and prima facie conclusion, the Assessing Officer could not possibly have a reason to believe that income of the assessee has escaped assessment. But in the instant case, paragraphs 4 and 5 of the additional affidavit-in-opposition do not show such specific information or material and a prima facie conclusion by the Assessing Officer that the payments of Rs.27,25,600 made by M/s Namdang Tea Company (P) Ltd to M/s Rohini Properties (P) Ltd and M/s Gladiolai Estate (P) Ltd were not for services rendered by the said two companies and were not genuine and were fictitious. The Assessing Officer, therefore, in fact had no reason to believe that income of the said company had escaped assessment for the assessment year 1991-92. 20. In Commissioner of Income Tax vs. Bihar Cotton Mills (supra) cited by Mr. Sarma, the Patna High Court had found that the Income Tax Officer came to know on the basis of statements of Gulabchand Jain, Advocate, that he had resorted to a device for helping the assessee by accommodating concealed profits in his books of account in the name of fictitious parties and for those parties certain books of accounts were got prepared and some assessments were also got framed by filing fictitious returns and the Patna High Court held that the Tribunal rightly came to the finding that the proceedings under section 147 of the Act had not been initiated for making a fishing enquiry and the reason to believe that the income had escaped assessment was based on specific information received by the Income Tax Officer regarding the two parties. In the present case, on the other hand, there is no specific information indicated in the reasons disclosed in paragraphs 4 and 5 of the additional affidavit-in-opposition by the Assessing Officer that the particular transaction of Rs. 13,96,000 between M/s Namdang Tea Company (I) Ltd and M/s Rohini Properties (P) Ltd and the particular transaction of Rs. 13,29,000 between M/s Namdang Tea Company / (P) Ltd and M/s Gladiolai Estate (P) Ltd were fictitious and were not genuine. The Assessing Officer, therefore, could not possibly entertain a belief that the income of the said company had escaped assessment warranting initiation of action under section 147 of the Act. 21. 13,29,000 between M/s Namdang Tea Company / (P) Ltd and M/s Gladiolai Estate (P) Ltd were fictitious and were not genuine. The Assessing Officer, therefore, could not possibly entertain a belief that the income of the said company had escaped assessment warranting initiation of action under section 147 of the Act. 21. I am, therefore, of the considered opinion that the Assessing Officer in fact has no reason to believe that any income of the assessee chargeable to tax has escaped assessment for the assessment year 1991-92 and that the initiation of the proceedings under section 147 read with section 148 of the Act was without jurisdiction. In view of this conclusion, it is not necessary to deal with the other contentions raised by Dr. Pal, learned counsel for the petitioner. 22. The impugned notices under sections 148 and 142 for the Assessment year 199192 are accordingly quashed. Considering, however, facts and circumstances of the case, the parties shall bear their own costs.