Judgment D.G. Karnik, J. Mentioned at 2.30 p.m. At the request of Mr. Alok Sharma, learned Assistant Solicitor General, the order passed in the morning dismissing the appeal in default is recalled and the matter is restored to file. 2. Taken up for hearing on admission forthwith. 3. The question of law that is urged before us for the admission of the appeal is Whether the Income Tax Appellate Tribunal (For short Tribunal) erred in holding that the assessment made by the Assessing Officer in pursuance of a notice issued under section 148 of the Income Tax Act (For short "the I.T. Act") was null and void inasmuch as the notice was issued citing one reason and the order of assessment was made on another reason? 4. The respondent (hereinafter will be referred to as Assessee) filed a return of his income for the assessment year 2004-05 declaring a loss of Rs.19,91,742/-. The return was processed under section 143(1) of the I.T. Act, accepting the returned income. Subsequently, on 29th April 2005, the Assistant Commissioner of Income Tax, Circle-3 (for short ACIT) issued a notice under section 148 of the I.T. Act proposing to reopen the assessment on the ground that income by way of capital gain on sell of assets had escaped assessment. In pursuance of the notice, the Assessee filed a fresh return on 30th May 2005 declaring Nil income Mr. Sharma, learned Assistant Solicitor General appearing for the Revenue states that the Assessee subsequently filed a revised return declaring a loss of Rs.7,36,178/-. However, he is unable to furnish the details of the subsequent return allegedly filed by the Assessee. We are, however, not concerned with the revised return as revised return does not appear to have been processed and the proceedings appear to have continued on the return filed by the Assessee on 30th May 2005 in pursuance of the notice issued under section 148 of the I.T. Act. 5. During the relevant financial year, the Assessee had earned a short term capital gain of Rs.63,52,369/-and had incurred a business loss of Rs.7,36,178/-. He had also brought forward an accumulated loss of Rs.65,76,264/-. The Assessee set off the short term capital gain of Rs.63,52,369/-firstly against the current year's business loss of Rs.7,36,178/-and set off the balance of the short term capital gain against the brought forward losses of the previous year. He had also brought forward an accumulated loss of Rs.65,76,264/-. The Assessee set off the short term capital gain of Rs.63,52,369/-firstly against the current year's business loss of Rs.7,36,178/-and set off the balance of the short term capital gain against the brought forward losses of the previous year. According to the Assessing Officer the Assessee was entitled to set off short term capital gain against the current year's business loss under section 71 but was not entitled to set off the short term capital gain against the brought forward loss of the previous year under section 72 of the I.T. Act. He accordingly allowed the claim of the Assessee only for the set off of business loss of Rs.7,36,178/-under section 71 of the I.T. Act and treated the remaining short term capital gain of Rs.56,16,191/as income of the Assessee. He did not allow the Assessee to set off this short term capital gain of Rs.56,16,191/-against the brought forward loss of the previous year in view of section 72 of the I.T. Act. On Appeal, the CIT (Appeals) confirmed the order of the Assessing Officer. 6. Aggrieved by the decision of the Assessing Officer and CIT (Appeals), the Assessee approached the Tribunal. Before the Tribunal, the Assessee sought to raise a grievance regarding validity of the notice issued under Section 148 of the I.T. Act proposing to reopen the assessment and the further continuation of the proceedings before the Assessing Officer in pursuance of the said notice. The Tribunal allowed the ground to be raised, though it was not raised earlier. The Tribunal held the notice to be bad in law and further held that the assessment proceedings initiated and completed in pursuance of the notice dated 29th April 2005 issued under Section 148 of the I.T. Act were void and consequently quashed the proceedings. The Tribunal held that the reason mentioned in the notice issued under section 148 of the I.T. Act was : "Income from capital gains on sell of capital assets of the Assessee is to be assessed as per section 71 of the I.T. Act." However, the Tribunal held that it was evident from para 12(i) (b) of the Assessment order that the Assessing Officer did not find that reason or ground to be a correct ground for issuing the notice. Part of the short term capital gain was set off by the Assessee against the current year's income under section 71 of the I.T. Act and that was found to be correct by the Assessing Officer. The Assessee had, however, further set off the remaining part of the short term capital gains against the brought forward losses of the previous year and this according to the Assessing Officer was impermissible under section 72 of the I.T. Act. The Assessing Officer thus came to the conclusion that the claim of the Assessee for set off under section 72 of the I.T. Act was impermissible. However, the notice under section 148 of the I.T. Act did not say that setting off the loss of the previous year was impermissible or illegal and / or could not have been allowed under section 72 of the I.T. Act. Consequently, the Tribunal held that the notice u/s 148 of the I.T. Act was bad in law. It is this reasoning of the Tribunal, which is impugned in the present appeal. 7. Section 148 of the I.T. Act empowers the Assessing Officer to serve a notice on the Assessee requiring him to furnish a return of his income where he is of the view that the income has escaped an assessment. Sub section 151 of the I.T. Act says that no notice shall be issued under section 148 of the I.T. Act by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. Section 151 thus imposes two conditions before issuance of a notice under section 148 of the I.T. Act, they are -(i) Reasons for issuing a notice must be recorded by the Assessing Officer and (ii) Where the notice is issued by the Assessing Officer below the Rank of Assistant Commissioner or Deputy Commissioner, the Joint Commissioner must be satisfied, on the reasons recorded by the Assessing Officer, that it was the fit case for issuance of such notice. 8. In the case of "GKN Driveshafts (India) Ltd Vs. 8. In the case of "GKN Driveshafts (India) Ltd Vs. Income Tax Officer and Others" (2003) 259 ITC 19, the Supreme Court has held that after the receipt of the notice under section 148 of the I.T. Act, the Assessee must file the return, but he is entitled to ask for the reasons for issuance of a notice. The Supreme Court has further held that when the reasons are asked for, the Assessing Officer is bound to furnish the reasons within a reasonable time. Thus, the sine qua non for issuance of a notice under section 148 of the I.T. Act is recording of the reasons by the Assessing Officer. In our view recording of the reasons and furnishing copy thereof to the Assessee when asked is not an empty formality. If the reasons are recorded and a copy thereof is required to be furnished to the Assessee on demand the Assessee would be entitled to show that the reasons recorded were factually incorrect. Furthermore, the power of the Assessing Officer to proceed with the Assessment proceedings would be limited by the reasons recorded by him. He would be assessing or reassessing the income of the Assessee only on the reasons recorded by him and cannot travel beyond the reasons and continue the proceedings of assessment on different reasons. 9. Mr. Sharma, learned Assistant Solicitor General, invited our attention to paragraph No.16 of the decision of the Supreme Court in the "Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd.," 2007-EQ (SC) O748. It reads: "Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd., V. ITO (1991 (191) ITR 662), for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO V. Selected Dalurband Coal Co Pvt. Ltd., (1996 (217) ITR 597 (SC)) ; Raymond Woolen Mills Ltd., V. ITO (1999 (236) ITR 34 (SC))" In our view these observations do not help the revenue on the fact of the case before us. This case lays down that an Assessment can be reopened if the Assessing Officer has a "reason to believe" that any income chargeable to Tax has escaped assessment. The decision further says that the expression "reason to believe" does not mean that the Assessing Officer should have formed a final opinion or finally ascertained the fact by legal evidence or conclusion. In the present case the Tribunal was concerned with the notice required to be issued under section 148 before opening reassessment proceedings under section 147 of the I.T. Act and whether the Assessing officer could have travelled beyond the notice. The Tribunal has held, and in our view rightly, that power of reassessment can be exercised only on the grounds or reasons recorded by the Assessing Officer under section 151 of the I.T. Act. 10. Mr. The Tribunal has held, and in our view rightly, that power of reassessment can be exercised only on the grounds or reasons recorded by the Assessing Officer under section 151 of the I.T. Act. 10. Mr. Sharma, learned Assistant Solicitor General contended that the objection about the notice being illegal or that the Assessing officer travelled beyond the notice was not raised before the Assessing Officer and, therefore, ought not to have been allowed to be raised by the Tribunal. In paragraph No.3 of its order the Tribunal has given good reasons for allowing the Assessee to raise the ground for the first time before it. The ground involves pure legal issue arising out of undisputed facts. The discretion exercised by the Tribunal in allowing the ground to be raised, in the absence of any perversity in exercise of it, cannot be a ground for setting aside the order. 11. In the present case, as noted earlier, the reason recorded by the Assessing Officer under section 151 of the I.T. Act and disclosed in the notice u/s 148 of the I.T. Act was that "the income of the Assessee had escaped the Assessment by reason of section 71 of the I.T. Act" and the Assessing Officer had never recorded a reason that there was escapement of the income was on account of violation of section 72 of the I.T. Act or impermissibility of adjustment of brought forward losses in view of section 72 of the I.T. Act. However, while proceeding with the assessment, the Assessing Officer proceeded on the basis that the brought forward losses of the previous year could not be adjusted against the short term capital gain under section 72 of the I.T. Act. The finding recorded by the Tribunal that the Assessing Officer traveled beyond the notice and the reasons recorded under section 151 for issuance of a notice under section 148 of the I.T. Act is a well reasoned finding and does not give rise to any question of law much less a substantial question of law. The Appeal is accordingly dismissed summarily.