JUDGMENT 1. - In this writ petition, the petitioner, an assessee under the income Tax Act, 1961 (in short "the Act of 1961" hereinafter), has assailed the reassessment proceedings initiated by the Assessing Officer for the Assessment Year 2000-01, vide impugned notice dated 26.03.07 issued in exercise of the power conferred u/s. 148 of the Act of 1961. 2. The relevant facts in brief are that for the Assessment Year 2000-01, the petitioner-assessee submitted a return claiming loss of Rs. 1,96,930.60 after adjusting the brought forward loss of Assessment Year 1999-2000 to the tune of Rs. 4,11,183/- and claiming a deduction of Rs. 1,00,000/- u/s. 80 P(2)(i) on a net profit of Rs. 3,14,269.40. 3. The petitioner was served with a notice dated 19.02.02 for rectification of the order in terms of Section 154 of the Act of 1961 on the ground that before claiming deduction u/s. 80 P(2)(1), the losses of previous year has to be adjusted whereas, the petitioner has first claimed deduction and thereafter, the loss has been brought forward. 4. The petitioner submitted a reply to the notice that he has rightly claimed the deduction u/s. 80 P(2)(i) of the Act of 1961, therefore, the proceedings may be dropped. After consideration of the reply filed by the petitioner, the Assessing Authority being of the opinion that in view of the carry forward losses of earlier year, it is not a case of levy of tax at all, proceeded to withdraw the notice being infructuous vide order dated 06.03.02. 5. Thereafter, the petitioner was served with a notice dated 26.03.07 u/s. 148 of the Act of 1961 proposing reassessment of the income for Assessment Year 2000-01 and accordingly, the petitioner was directed to file return of income within a period of 30 days from the date of the notice. 6. The notice was responded by the petitioner vide reply dated 27.04.07 wherein, inter alia, it was contended that the reassessment proceedings is barred by limitation and that the rectification proceedings u/s. 154/155 of the Act of 1961 having been initiated and dropped, no reassessment proceedings can be initiated u/s. 148 of the Act of 1961. 7. The petitioner demanded a certified copy for the reasons recorded for initiating the reassessment proceedings and also prayed for supply of the copies of certain other documents. 7. The petitioner demanded a certified copy for the reasons recorded for initiating the reassessment proceedings and also prayed for supply of the copies of certain other documents. However, according to the petitioner, the Assessing Officer without supplying the copy of the reasons recorded before issuing notice u/s. 148 of the Act of 1961 proceeded to issue a notice dated 06.07.07 u/s. 142(1) and 143(2) of the Act of 1961. Hence, this petition. 8. The respondents in their reply to the writ petition has taken the stand that the proceedings u/s. 154 was never dropped, to the contrary. the notice issued was withdrawn by the Assessing officer vide order dated 06.03.02 as in his opinion, the notice was issued infructuously. It is stated that though the original copy of the reasons recorded has not been supplied to the petitioner but the reasons recorded are incorporated in the letter dated 06.07.07 which forms part of the writ petition. It is stated that vide communication dated 17.07.07 the petitioner was informed to note down the reasons recorded by the Assessing Officer at any time from the record of his office. However, the reasons recorded have been placed on record by the respondents alongwith the reply to the writ petition and a copy thereof has also been served upon the petitioner vide communication dated 14.08.07 during the pendency of the writ petition. The reasons said to have been recorded by the Assessing Officer u/s. 147(b) of the Act of 1961 (which stands deleted and substituted by new Section 147 vide Direct Tax Laws (Amendment) Act, 1987 w.e.f. 01.04.89), read as under: "In this case return of income was processed at net loss of Rs. 196913/- after allowing deduction u/s. 80 P of Rs. 1,00,000/- and set off of brought forward losses of AY 99-2000 of Rs. 411183/-. The scrutiny of assessment records reveals that return of income for A.Y. 99-2000 was processed at Nil income instead of loss. So loss carried forwarded by the assessee of Rs. 411183/- was not to be adjusted in A.Y. 2000-01. Keeping in view of above facts this shows that the assessee has escaped assessment for assessment year 2000-01 by Rs. 214,269/- having consequential effect of Rs. 411183/-. 9. So loss carried forwarded by the assessee of Rs. 411183/- was not to be adjusted in A.Y. 2000-01. Keeping in view of above facts this shows that the assessee has escaped assessment for assessment year 2000-01 by Rs. 214,269/- having consequential effect of Rs. 411183/-. 9. It is contended by the learned counsel for the petitioner that once the proceedings undertaken by the respondent authority u/s. 154/155 has been dropped, no reassessment proceedings can be initiated for the same reasons. The learned counsel submitted that the notice issued u/s. 148 of the Act of 1961 without supplying the reasons recorded for initiating the reassessment proceedings is bad in law. That apart, the learned counsel submitted that notice issued u/s. 148 is barred by limitation. Lastly, it is submitted by the learned counsel that the complete details regarding the income, deduction and brought forward losses were given in the return filed and in this view of the matter, the reasons recorded for initiating the reassessment proceedings are non existent and thus, the condition precedent for initiating the reassessment proceedings set out in Section 147 of the Act of 1961 is not satisfied and, therefore, the impugned notices deserve to be quashed and set aside on this count alone. The learned counsel submitted that if the petitioner's entitlement to carry forward the losses and adjustment thereof is not in dispute then, simply because the Assessing Officer has erroneously processed the return of the income of assessee for the A.Y 1999-2000 at Nil, there cannot be presumed escaped assessment for the A.Y. 2000-01. Accordingly, it is submitted by the learned counsel that there exists no material on record for the Assessing Officer to form the requisite belief and the reasons for the belief have no rational nexus or relevant bearing to the formation of such belief, therefore, the Assessing Authority had no jurisdiction to initiate the reassessment proceedings. In support of the contentions as aforesaid, the learned counsel relied upon the decisions of the Hon'ble Supreme Court in the matters of Calcutta Discount to Co. Ltd. v. Income-tax Officer, Companies District 1, Calcutta, (1961) 41 I.T.R. 191 (SC) , S. Narayanappa v. Commissioner of Income Tax, Bangalore, (1966) 62 ITR 219 , M/s. S. Ganga Saran & Sons (Pvt.) Ltd., Calcutta v. Income Tax Officer & Ors., (1981) 3 SCC 143 , Sri Krishna Pvt. Ltd., Etc. Ltd. v. Income-tax Officer, Companies District 1, Calcutta, (1961) 41 I.T.R. 191 (SC) , S. Narayanappa v. Commissioner of Income Tax, Bangalore, (1966) 62 ITR 219 , M/s. S. Ganga Saran & Sons (Pvt.) Ltd., Calcutta v. Income Tax Officer & Ors., (1981) 3 SCC 143 , Sri Krishna Pvt. Ltd., Etc. v. Income Tax Officer, (1996) 221 ITR 538 . 10. Per contra, the learned counsel appearing on behalf of Revenue submitted that the reassessment proceedings have been initiated for the reasons that on scrutiny of the assessment records, it was revealed that the return of the income for the Assessment Year 1999-2000 was processed at nil income instead of loss, therefore. the loss carried forward by the assessee of Rs. 4,11,183/- was not to be adjusted in the Assessment Year 2000-01 which constitutes valid reason for initiating reassessment proceedings for assessment of the income which has escaped assessment for the Assessment Year 2000-01. The learned counsel submitted that it is settled law that the sufficiency of the reasons cannot be gone into by this Court in exercise of the extra ordinary jurisdiction under Article 226 of the Constitution of India. The learned counsel submitted that the petitioner is free to contest the validity of the reasons recorded for initiating the reassessment proceedings before the Assessing Officer who is under an obligation to decide the objections if any, raised by the petitioner. According to the learned counsel for the respondents, the writ petition preferred by the petitioner against the notice issued by the authority competent is pre-mature and, therefore, the same is not maintainable. 11. I have considered the rival submissions and perused the record of this petition and so also the record of assessment proceedings produced by the learned counsel appearing on behalf of the respondent for perusal of the Court. 12. Section 147 of the Act of 1961 empowers an Assessing Officer to assess or reassess income, chargeable to tax, if he has reason to believe that the said income for any assessment year has escaped assessment. The provisions of Section 147 as substituted by the Direct Tax Laws (Amendment) Act, 1987 and subsequently amendment by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 01.04.89 has brnught about a significant change inasmuch fulfillment of certain prerequisite mandatory conditions before the reassessment proceedings could be initiated, has been done away with. The provisions of Section 147 as substituted by the Direct Tax Laws (Amendment) Act, 1987 and subsequently amendment by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 01.04.89 has brnught about a significant change inasmuch fulfillment of certain prerequisite mandatory conditions before the reassessment proceedings could be initiated, has been done away with. It will be beneficial to examine the provisions of Section 147 of the Act of 1961, operative up to 31.03.89 and thereafter w.e.f. 01.04.89, which are reproduced hereunder :Before 01.04.89 "S. 147. If-- (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Assessing Officer or to disclose fully and truly and material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as maintained in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that 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 or recompute the loss or depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1. 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 income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject to excessive relief under this Act or under the Indian Income Tax, 1922 (XI of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2. Production before the Assessing Officer of account books or other evidence from which material could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of this Section." After 1.4.89 30 "147. Income escaping assessment. Explanation 2. Production before the Assessing Officer of account books or other evidence from which material could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of this Section." After 1.4.89 30 "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 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 139 or in response to a notice issued under sub-section (1) of Section 142 or section 148 or to disclose fully and trully 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 Authority will not necessarily amount to disclosure within the meaning of the foregoing proviso. 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 Authority 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 understated 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 of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." 13. It is to be noticed that as per the provisions of Section 147 operative upto 31.03.89 before the Assessing Officer could assume jurisdiction to issue notice, twin conditions set out in Section 147(a) of the Act of 1961 were required to be satisfied; firstly, the Assessing Officer must have reason to believe that the income of the assessee chargeable to tax during the relevant assessment year has escaped assessment and secondly, he must have reason to believe that such escapement is on account of either (i) omission or failure on the part of the assessment to make a return u/s. 139 or (ii) omission on the part of the assessment to disclose fully or truly all material facts necessary for his assessment of the relevant assessment year. Suffice is to say that if any of these two conditions is not satisfied, the notice issued by the Assessing Officer would be without jurisdiction.As per provisions of Section 147(b) operative upto 31.03.89 the Assessing Authority was empowered to initiate the reassessment proceedings if in consequence of information in his possession, he had reason to believe that income chargeable to tax has escaped assessment for any assessment year, notwithstanding that there has been no omission of failure on the part of assessee to disclose fully and truly all material facts necessary for his assessment in terms of Section 147(a). 14. As noticed above, Section 147 as substituted vide Amendment Act, 1989, brings about a significant change regarding the requirement of fulfillment of certain mandatory conditions required to be satisfied before initiating the reassessment proceedings. The clauses (a) and (b) of the Section 147 operative upto 31.03.89 stand merged and a single Section 147 has been brought into being wherein, the twin conditions referred supra have been done away with and existence of only first condition remains operative. Thus, as per the provisions of Section 147 operative w.e.f. 01.04.89, applicable to the present case, the Assessing Officer is empowered to initiate the reassessment proceedings, if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, notwithstanding that the assessee has disclosed fully and truly all material facts necessary for his assessment for that year.However, proviso to Section 147, puts an embargo to confer jurisdiction in cases where the reassessment is sought to be initiated after expiry of four years from the end of relevant assessment year, unless any 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 notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for that assessment years. Thus, the requirement of fulfilment of twin mandatory conditions set out in Section 147 of the Act of 1961, operative upto 31.03.89, remains operative even after coming into force of substituted Section 147, where the reassessment proceedings are sought to be initiated in the matters of completed assessment under Section 143(3) or under Section 147, after expiry of four years from the end of relevant assessment year. 15. 15. At this stage, it will be appropriate to consider the position of law settled by various decisions of the Hon'ble Supreme Court governing the reassessment proceedings under the provisions of the Act of 1961. 16. In the matter of Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District 1, Calcutta, (1961) 41 I.T.R. 191 (SC) , the Hon'ble Supreme Court while dealing with the ambit and scope of the provisions of Section 34 of the Indian Income Tax, 1922, which were similar to the provisions of Section 147 of the Act of 1961 explained the purports of Section 34 as under : "To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have, therefore, to be satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed. The second is that he must have also reason to believe that such "under-assessment", has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessment to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years, but within the period of eight years, from the end of the year in question.' The Hon'ble Supreme court further observed that it is duty of every assessee to disclose fully and truly all material facts necessary for his assessment. But, his duty does not extend beyond this. The Hon'ble Supreme Court opined that once all 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. 17. In the matter of S. Narayanappa v. Commissioner of Income Tax, Bangalore, (1996) 62 ITR 219 , the Hon'ble Supreme Court while relying upon the decision in the matter of Calcutta Discount Co. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. 17. In the matter of S. Narayanappa v. Commissioner of Income Tax, Bangalore, (1996) 62 ITR 219 , the Hon'ble Supreme Court while relying upon the decision in the matter of Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District 1, Calcutta, (1961) 41 I.TR. 191 (SC) , has observed as under : "But 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 to give jurisdiction to the Income-Tax Officer to issue the notice under section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression "reason to believe" in section 34 does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith : it cannot be merely a pretence. To put it differently, it is open to the court to examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under section 34 of the Act is open to challenge in a court of law." (Emphasis supplied) 18. In the matter of Income Tax Officer, I Ward Distt VI, Calcutta v. Lakhmani Mewal Das, (1976) 103 ITR 437 , the Hon'ble Supreme Court has observed as under : "Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence amount to disclosure contemplated by law. In the matter of Income Tax Officer, I Ward Distt VI, Calcutta v. Lakhmani Mewal Das, (1976) 103 ITR 437 , the Hon'ble Supreme Court has observed as under : "Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advice the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escarpment of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income-tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the assessee but not the sufficiency of the reasons for the belief. The expression "reasons to believe" does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The reason must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of section. The reason must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of section. To this limited extent, the action of the Income-tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law." The Hon'ble Supreme Court further observed : "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." 19. In the matter of M/s. S. Ganga Saran & Sons (Pvt.) Ltd., Calcutta v. Income Tax Officer & Ors., (1981) 3 SCC 143 , the Hon'ble Supreme Court held as under : "6. It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, he notice issued by the Income Tax Officer would be without jurisdiction. The important words under Section 147(a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The important words under Section 147(a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income Tax Officer in coming to the belief, but the court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under Section 147(a). If there is 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 entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any such escapment was by reason of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to be struck down as invalid." 20. In the matter of Sri Krishna Pvt. Ltd., Etc. v. Income Tax Officer, (1996) 221 ITR 538 , the Hon'ble Supreme Court has observed as to under : "The Income-tax Officer can issue notice under section 148 of the Income-tax Act, 1961, proposing to reopen an assessment on account of either the omission or failure on the part of the assessee to file the return or on account of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year, income has escaped assessment. The existence of the reason(s) to believe is intended to be a check, a limitation, upon his power to reopen the assessment. Section 148(2) imposes a further check upon the said power, viz., the requirement of recording of reasons for such reopening by the Income-tax Officer. The existence of the reason(s) to believe is intended to be a check, a limitation, upon his power to reopen the assessment. Section 148(2) imposes a further check upon the said power, viz., the requirement of recording of reasons for such reopening by the Income-tax Officer. Section 151 imposes yet another check upon the said power, viz., the Commissioner or the Board, as the case may be, has to be satisfied, on the basis of the reasons recorded by the Income-tax Officer, that it is a fit case for issuance of such a notice. The power conferred upon the Income-tax Officer by sections 147 and 148 is thus not an unbridled one. It is hedged in with several safeguards conceived in the interest of eliminating room for abuse of this power by the Assessing Officers. The idea was to save the assessees from harassment resulting from mechanical reopening of assessments but this protection avails only to those assessees who disclose all material facts truly and fully. Every disclosure is not and cannot be treated to be true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. A partial disclosure may very often be a misleading one. What is required is a full and true disclosure of all material facts necessary for making assessment for that year. All the requirements stipulated by section 147 must be given due and equal weight. It was further observed that : "Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that, in fact there existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief." 21. It is true that the power conferred under Section 147 as amended by Amendment Act, 1989 is very wide inasmuch the same is not hedged with the conditions incorporated in Section 147 operative upto 01.04.89. But then, even under the amended provision, the Assessing Officer has to record the reasons in terms of sub-Section (2) of Section 148, for formation of the belief that any income of the assessee chargeable to tax for the relevant assessment year has escaped assessment. As laid down by the Hon'ble Supreme Court the belief entertained by the Assessing Officer must be arbitrary or irrational, it must be reasonable and based on material on record. The assumption of jurisdiction by the Assessing Authority under the provisions of the Act of 1961 presupposes due application of mind by the Assessing Officer on the material on record and formation of the belief by the Assessing Officer that the income has escaped assessment cannot be based on his whims and fancy, there must exist a rational and intelligible nexus between the reason and the belief. That apart, the reasons must be held in good faith, it cannot be merely a pretense. [See Lakhmani Mewal Das (supra)].It is settled law that the sufficiency and adequacy of the reasons which have led to formation of a belief by the Assessing Officer that the income has escaped the assessment cannot be examined by the court but, the court can certainly examine as to whether the reasons are relevant and have bearing on the matters in regard to which he is required to entertain the belief before he can issue notice for reassessment u/s. 147 of the Act of 1961. 22. In this backdrop, adverting to the facts of the present case, it is to be noticed that the only reason recorded for formation of the belief by the Assessing Officer that the income of the assessee for the assessment year in the question has escaped assessment is that the return of income filed by the assessee for the A.Y. 1999-2000 was processed at Nil income instead of loss, therefore, the loss carried forward by the assessee of the A.Y. 1999-2000 was not open to be adjusted in the year 2000-01. 23. A bare perusal of the return filed by the assessee of the A.Y. 1999-2000 goes to show that in the Col. 23. A bare perusal of the return filed by the assessee of the A.Y. 1999-2000 goes to show that in the Col. No. 20 of the Income Tax return filed by the assessee in form 2D, the loss brought forward to the tune of Rs. 4,49,3401- has been specifically mentioned and further after deducting the profit of that assessment year, the loss carried forward to following assessment year has been mentioned as Rs. 4.11.183/-. That apart, in the sheet containing computation of the income filed along with the return, the loss carried forward to the next year a sum of Rs. 4,11,183/- has been duly disclosed.Obviously, the aforesaid loss to the tune of Rs. 4,11,183/- shown to be carried forward to the next assessment year has been shown as brought forward loss in the assessment year in question i.e. 2000-2001 and accordingly, set off thereof has been claimed by the assessee in the return filed. Similarly, in the sheet enclosed with the return for the assessment year in question disclosing the details of the computation of the income, brought forward loss from the assessment year 1999-2000, has been shown at Rs. 4,11,1831- and after adjustment of the income of the assessment year in question the loss carried forward to the next assessment year has been quantified at Rs. 1,96,913.60. Thus, it is not in dispute that the assessee has disclosed fully and truly all material facts necessary for his assessment for the relevant assessment year. But then, in view of the amended provisions of Section 147 of the Act of 1961 operative w.e.f. the disclosure of fully and truly all material facts necessary for assessment by itself does not preclude the Assessing Officer from assuming the jurisdiction to initiate the proceedings, if the reasons recorded by him while initiating the reassessment proceedings, have a rational connection or relevant bearing to the formation of belief that there has been escapement of the income of the assessee from the assessment in the relevant assessment year. 24. 24. In the instant case, it is to be noticed that all material facts relating to the carry forward losses were duly disclosed by the assessee but, ignoring the unequivocal facts on record, the Assessing Officer during the A.Y. 1999-2000 proceeded to process the return at Nil income instead of loss then, for no fault on the assessee, he cannot be deprived from carrying forward the loss to the next assessment year i.e. 2000-01 and claim set off thereof. It is not even the case of the revenue that the assessee was not entitled to carry forward the loss during the A.Y. 1999-2000 as disclosed in the return. It is also pertinent to note that in the return filed for the A.Y. 1999-2000, the petitioner has brought forward the losses of the previous A.Y. 1998-99 and after set off the loss carried forward against the profits and gains of the assessment year 1999-2000, the remaining amount of loss, not so set off was carried forward to the following assessment year i.e. 2000-2001. 25. It is relevant to mention here that as per Section 72 of the Act of 1961 where by any assessment year, net result of the computation under the head "profits and gains of business or profession" is a loss to the assessee not being a loss sustained in speculation business and such loss has not been so set off or where he has no income under any other head, the whole loss shall be carried forward to the following assessment year and if the same is not wholly set off in the next assessment year, it may be carried forward to the next following assessment year and so on. 26. On being pointedly asked, the petitioner's entitlement to carry forward the losses of the A.Y. 1998-99 to the A.Y. 1999-2000, has not even been disputed by the learned counsel appearing on behalf of the revenue. Similarly, it is also not in dispute that the losses of the year A.Y. 1998-99, carry forward to the A.Y. 1999-2000 were not fully adjusted and, therefore, the assessee was entitled to carry forward the losses to the A.Y. 1999-2000. If the assessee was entitled to carry forward the loss not set off in the assessment year 1999-2000 to the assessment year 2000-2001, and claim set off therein, then, the question of escapement of the assessment of the tax, does not arise. If the assessee was entitled to carry forward the loss not set off in the assessment year 1999-2000 to the assessment year 2000-2001, and claim set off therein, then, the question of escapement of the assessment of the tax, does not arise. 27. Thus, essentially, the reassessment proceeding is an outcome of a mistake committed by the Assessing Officer in processing the return filed by the assessee for the A.Y. 1999-2000 at Nil, which was admittedly a return of loss. Thus, instead of rectifying the mistake committed by Assessing Officer in processing the return for the A.Y. 1999-2000 at Nil, the attempt made to reassess the income of the assessee for the A.Y. 2000-01 on alleged escapement of the assessment of the income cannot be countenanced. 28. In my considered opinion, the reasons recorded by the Assessing Officer for initiating reassessment proceedings, does not reflect any reasonable ground for formation of the belief that the income of the assessee chargeable to tax has escaped assessment during the relevant assessment year. In other words, the formation of the belief by the Assessing Officer that the income of the assessee has escaped assessment is based on non existent reasons. 29. There is yet another important aspect of the matter. Even while dealing with the proceedings u/s. 154/155 for assessment year in question, the learned Assessing Officer has categorically observed that no tax is leviable on the assessee as there is a carried forward loss from earlier year and accordingly, concluded that the notice is infructuous as it is not a case of levy of tax at all. Thus, the factum of entitlement of the assessee to carry forward the loss and claim set off, has been accepted by the Assessing Officer consciously while concluding the proceedings u/s. 154/155 of the Act of 1961. 30. A perusal of the record further reveals that on scrutiny of the assessment record, an objection was raised by the audit party where it has been specifically recorded that in the return filed, the assessee has carried forward loss of Rs. 4,11,183/-. However, his entitlement for set off the loss in A.Y. 2000-01 was objected on the ground that the return was processed at Nil Income. 4,11,183/-. However, his entitlement for set off the loss in A.Y. 2000-01 was objected on the ground that the return was processed at Nil Income. It is further pertinent to note that the concerned Income Tax Officer while replying to the audit objection has stated in unequivocable terms that the assessee has worked out in computation net loss of Rs. 4,11,183/- after the claim of Rs. 1,00,000 u/s. 80P and set of Rs. 38,157/- from the carried forward loss of the A.Y. 1998-99. It was further pointed out that though income declared was Nil in the A.Y. 1999-2000, however, the figures are mentioned on the return of income of the income column. The Assessing Officer also pointed out that the position in A.Y. 2000-01 is also similar. Accordingly, he requested to crop the audit objection. 31. Thus, from the totality of the facts and circumstances of the case, it appears that ignoring the unequivocal facts on record, the reassessment proceedings have been initiated just on account of the audit objection. The record of the case does not disclose due application of mind by the Assessing Officer while proposing the reassessment proceedings for the reasons recorded as aforesaid or by the authority granting the approval in terms of Section 151 of the Act of 1961. Thus, in my considered opinion, the reasons which led to formation of the belief by the Assessing Officer have no material bearing on the question of assessment of income of the assessee alleged to have escaped assessment. The reasons recorded lacks bona fide and on that account, the Assessing Officer cannot assume the jurisdiction to initiate the reassessment proceedings against the petitioner for the assessment year in question. 32. In the result, the writ petition succeeds, it is hereby allowed. The impugned notice dated 26.03.07 issued by the Assessing Officer in exercise of the power conferred by Section 148 of the Act of 1961 is hereby quashed and set aside. Consequently, the impugned notice dated 06.07.07 (Annexure-7) issued u/s. 143(2) of the Act of 1961 and notice dated 06.07.07 (Annexure-8) issued under Section 142(1) of the Act of 1961, are also quashed. No order as to costs.Writ Petition Allowed. *******