JUDGMENT : (Munnuri Laxman, J.) 1) The present writ petition has been filed with the following prayers:- (i) Quash the impugned notices u/s 148 of the Act (Annexure-1) issued by the Non-petitioner No.2. (ii) Hold that the reasons recorded u/s 148 as communicated vide impugned letter dated 26.8.2002 (Annexure-2) are illegal and cannot be sustained in the eyes of the law. (iii) Restrain the respondents from taking further proceedings in pursuance of the impugned notices u/s 148 (Annexure-1). (iv) Hold that the initiation of reassessment proceedings for all the assessment years in question, in the case of the petitioner is illegal and/or without jurisdiction. (v) Any other appropriate relief/reliefs as may be considered just and necessary by the Hon’ble Court in the facts and circumstances of the case to do complete justice to the petitioner. (vi) The cost of the writ petition may be kindly awarded” 2) The petitioner is a partnership firm and it is a regular assessee with the Income Tax Department. A survey was conducted in the business premises of the petitioner under Section 133 of the Income Tax Act, 1961 (hereinafter referred to as, “the Act”) on 16.10.2001. During the course of survey, nothing incriminating material was found, except a loose paper bearing No.60 (which is filed as Annexure-I/9). The statement of the assessee was recorded under Section 131 of the Act on 24.10.2001 relating to the loose paper, which was recovered in the said search. During the course of survey, nothing incriminating material was found, except a loose paper bearing No.60 (which is filed as Annexure-I/9). The statement of the assessee was recorded under Section 131 of the Act on 24.10.2001 relating to the loose paper, which was recovered in the said search. Hindi version of the said statement reads as follows: ^^iz'u %& losZ{k.k ds nkSjku vki dh QeZ esa eqYrkuh VwYl d- dh fcØh ds fcy QkbZy esa fcy la[;k 9735 fnukad 12&10&2002 ds lkFk ,d ywt isij yxk gqvk feyk gS ftlds Annexure I/9 ist 60 ds vuqlkj mijksDr fcy dh jkf'k e; lsYl VSDl bR;knh ds 5570@& crkbZ x;h gS vkSj blds vykok 7991@& dh jkf'k mij dh jde n'kkZ;h x;h gS vkSj bl izdkj bl fcy dh dqy jkf'k 13561@& crkbZ x;h gS ,oe fiNyk cdk;k : 3338@& tksM dj dqy cdk;k 16899@& crk;k x;k gS bl ywt isij dk /;ku ls ns[kus ij izrhr gksrk gS fd fcy dh jde 5570@& vkSj mij dh jde 7991@& dqy jde Øe'k% 41 izfr'kr o 59 izfr'kr vkrh gS vkSj bl izdkj fcØh dks v.Mj fcfyax fd;k x;k gS d`i;k Li"V djsa fd vki dh nksuksa QeksZa dh dqy fcØh dks 60 izfr'kr ls v.Mj fcfyax eku dj D;ksa ugha v/kksf"kr fcØh ekuh tk;@vkSj bl izdkj dh iw.kZ jde dks vki dh vk; eS tksMh tkosA mrj %& fcy ua- 9735 fnukad 12&10&2001 ds dh dksih ls bl fcy dh jkf'k : 5670@& : feyrh gSA rFkk fiNyk cdk;k : 3338@& fcy la- 9729 fnukad 26&9&2001 dh cdk;k jkf'k gSA blds vykok bl ikVhZ dks lsEiy ds fy, eky vi:oZy ds fy, Hkstk Fkk ftldk fcy ugha curk gS rFkk eky dh vi:oZy vkus ds ckn gh fcy cuk;k tkrk gSA : 7991@& dk lUnHkZ bl vi:oy ij Hksts eky dh vuqekfur dher dk gSA pwafd vi:oy vk;s fcuk eky dh fcØh ugha ekuh tkrh gSA vr% bls v/kksf"kr fcØh u ekuus dh d`ik djsaA^^ The translated English version of the said statement reads as follows: Question: - During the survey, a loose paper was found attached with bill number 9735 dated 12-10-2002 in the bill file of sales of Multani Tools Company in your firm. According to its Annexure 1/9 page 60, the amount of the above bill including sales tax etc. has been shown as Rs. 5570/- and besides this, an amount of Rs. According to its Annexure 1/9 page 60, the amount of the above bill including sales tax etc. has been shown as Rs. 5570/- and besides this, an amount of Rs. 7991/- has been shown as the upper amount and thus the total amount of this bill has been shown as Rs. 13561/- and by adding the previous dues of Rs. 3338/-, the total outstanding has been shown as Rs. 16899/-. After looking at this loose paper carefully, it appears that the bill amount of Rs. 5570/- and the upper amount of Rs. 7991/-, total amount comes to 41% and 59% respectively and thus the sales have been under-billed. Please clarify why the total sales of both your firms have been under-billed by more than 60%. Why not consider it as under billing and consider it as undisclosed sale and add the entire amount to your income. Answer- From the copy of Bill No. 9735 dated 12-10-2001, the amount of this bill is Rs. 5570/- and the previous outstanding amount of Rs. 3338/- is the real outstanding amount of Bill No. 9729 dated 26-9-2001. Apart from this, goods were sent to this party for approval for sample, for which no bill is made and the bill is made only after the approval of the goods. Rs. 7991/- refers to the estimated price of the goods sent for this approval. Since the goods are not considered sold without approval, please do not consider this as undeclared sale.” 3) Subsequently, by way of impugned notice issued under Section 148 of the Act, the Authorities initiated re-assessment proceedings for the assessment years 1995-1996 to 2001-2001. The petitioner obtained reasons assigned preceding the notice under Section 148 of the Act. The reasons given were not sufficient to believe the existence of valid grounds to proceed under Section 148 of the Act. The petitioner submitted explanation to the notice issued under Section 148 of the Act, which shows that on 12.10.2001, one piece of packing sample-goods worth Rs.5570/- was sent to the purchaser mentioning the date as 12.10.2001. It was also mentioned that if the purchaser likes the goods, then they undertook to send the goods worth of 6 pieces for Rs.7991/- within 2 or 4 days treating such payment remains pending. In spite of such reply, the Authorities tried to proceed with the re-assessment proceedings. It was also mentioned that if the purchaser likes the goods, then they undertook to send the goods worth of 6 pieces for Rs.7991/- within 2 or 4 days treating such payment remains pending. In spite of such reply, the Authorities tried to proceed with the re-assessment proceedings. In these circumstance, the present writ petition has been filed by the petitioner with the prayers indicated herein-above. 4) The grounds taken by the writ-petitioner to challenge the proceedings are that there were no valid reasons assigned in the notice under Section 148(7) of the Act so as to proceed for re-assessment under Section 148 of the Act. The further ground is that initiation of the re-assessment proceedings for six previous assessment years immediate prior to the assessment year in which survey was conducted, sought to be revised by assuming the income escaped 60% basing on the assumption that loose paper recovered was containing undervalue of the sale to the extent of 60% of the real value. Such assumptions were not based on any foundational material. Therefore, the re-assessment proceedings are required to be quashed. The last ground urged was that there was bar of limitation for initiation of re-assessment proceeding for six previous assessment years. 5) The pleadings of the respondent show that in the survey they have recovered an incriminating material under the loose paper No.60 (Annexure-I/9). The real value of the goods sold was Rs.13,561 and the bill amount was shown as Rs.5570/- and an amount of Rs.7,991/- was undervalued the bill by excluding such amount from the bill. The undervalued amount percentage comes to 60% and basing on such undervalued sales, the sales conducted by the petitioner for the previous six years assessment was taken as undervalued sales by the Authorities to the extent of variation found in the reasons given under Section 147 of the Act. Such assessment was reopened on account of incriminating material found in such survey. The Department also pleaded that the explanation offered by the petitioner to the notice issued under Section 148 of the Act for re-assessment was not satisfied and instead of participating in the proceedings, the petitioner has filed the present writ petition against the assessment proceedings, which is not maintainable. It is also their plea that limitation, then existing, was six years to proceeding for the re-assessment proceedings. It is also their plea that limitation, then existing, was six years to proceeding for the re-assessment proceedings. Therefore, the proceedings initiated against the petitioner for six previous years are within limitation. 6) Heard learned counsel for the petitioner as well as learned counsel appearing for the Department. 7) The primary contention of the learned counsel appearing for the assessee is that the loose paper, which was found in the search, does not reflect any undervalue of the bill and it was only value of the goods, which would be supplied in future basing on the satisfaction of the sample which was sent to the purchaser. Such facts were rightly brought to the notice of the Authorities in the statement recorded under Section 131 of the Act. The Department, without considering such an explanation and without existence of any valid material, which could be foundation for having a reason to believe existence of circumstance to proceed under Section 148 of the Act, has initiated the re-assessment proceedings against the petitioner. According to learned counsel for the petitioner, the reasons which were the foundation of proceedings under Section 148 of the Act, were not existing and proceedings under Section 148 of the Act cannot sustain without any valid reasons. 8) The other contention of the learned counsel for the petitioner is that on the basis of loose-paper contents, re-assessment was sought to be made by enhancing 60% of the value of the sales reflected for the assessment years 1995-96 to 2000-2001. Such a recourse was adopted without any valid material except the loose paper on the basis of assumption and surmises, which could not satisfy its reason to believe as contemplated under Section 147 of the Act so as to proceed further under Section 148 of the Act. Therefore, continuation of proceedings is an abuse of process of law. 9) The last contention canvassed by learned counsel for the petitioner is that re-assessment was sought to be made for the assessment years 1995-1996 to 2000-2001 for the six financial years immediate prior to the assessment year in which the survey was conducted. According to him, it was barred by limitation. 9) The last contention canvassed by learned counsel for the petitioner is that re-assessment was sought to be made for the assessment years 1995-1996 to 2000-2001 for the six financial years immediate prior to the assessment year in which the survey was conducted. According to him, it was barred by limitation. 10) The learned counsel appearing for the Department has vehemently opposed the contentions of the petitioner contending that the reasons furnished to the petitioner clearly indicate that the foundation for opening re-assessment for the previous six years financial year is basing on the foundational material recovered in the alleged search. The said proceedings clearly indicate that the petitioner shown sales undervalue. The difference of actual value and bill value is 60%. This means all the sales, which he has been conducting, were 60% undervalued and on the said material only, re-opening was sought for the previous six assessment years and such reason is valid reason so as to proceed under Section 148 of the Act. Such reason cannot be said to be based on assumption and surmises. They are based on the concrete material found in the search. It is also contended that re-assessment proceedings for six assessment years immediate prior to the assessment year, in which search was conducted, was within limitation as prescribed under Section 149 of the Act. 11) We have considered the rival submissions of both the parties and perused the impugned notice as well as material available on record. 12) It is undisputed that that a search was conducted in the business premises of the petitioner on 16.10.2001 and Authorities found a loose paper. The contents of such loose paper is hereunder:- 13) A glance of the contents of the above bill reflects that the bill amount shown is Rs.5,570/-. The amount above-on was shown as 7991/-. The total amount was shown as Rs.13,561/- and in addition Rs.3,338/- was made towards previous balance. The grand total amount was shown as Rs.16,899/-. The case of the Department was that the value of the goods sold under the above record bill was Rs.13,569, whereas the bill amount was only shown as Rs.5570/- and unbilled amount was shown as Rs.7,991. The percentage of variation was 60%. The grand total amount was shown as Rs.16,899/-. The case of the Department was that the value of the goods sold under the above record bill was Rs.13,569, whereas the bill amount was only shown as Rs.5570/- and unbilled amount was shown as Rs.7,991. The percentage of variation was 60%. On the basis of such incriminating material, the authorities found sales are undervalued and calculated escaped income for the six financial years by adding 60% to the sales value shown in the previous assessment years and basing on that, the notice under Section 148 of the Act was issued. The translated English version of reply of the notice u/ s. 148 of the Act, submitted by the petitioner, are as under:- 2. Loose Paper No. 60 under Bill dated 12-10-2001 against M/s Umiya Hardware, Ahmedabad is briefly shown as under:- Bill Amount- 5570 Amount above on- 7991 13561 Previous balance- 3338 16899 3. The meaning of the above is that on 12-10-2001, we sent one piece packing sample goods for Rs. 5570, date mentioned as 12-10-2001 and if you like the goods, then we will send you goods worth 6 pieces for Rs. 7991 within two to four days and the payment of Rs. 7991 will remain pending. 4. On 16-10-2001, due to income tax survey, the party got worried due to which they could not send the goods in two- four days and later we sent goods worth Rs. 7991 on 4-12-2001 through Bill No. 9743. We received the said payment through cheque number 680814. In this regard, the affidavit of the owner of Umiya Hardware is enclosed as an affidavit. 14) It is needless to say that the bone of contention with regard to incriminating material recovered in the search cannot be determined in the writ proceedings. The only question to be decided is whether a reason exists so as to believe any income chargeable to tax, has escaped the assessment or not. If such a reason exists, the impugned notice issued under Section 148 of the Act cannot be found faulty. The reasons which were furnished to the writ-petitioner by the respondent-Department vide letter dated 26.08.2002 show that the Authorities found difference of 60% in the actual value and the bill value. If such a reason exists, the impugned notice issued under Section 148 of the Act cannot be found faulty. The reasons which were furnished to the writ-petitioner by the respondent-Department vide letter dated 26.08.2002 show that the Authorities found difference of 60% in the actual value and the bill value. According to them, this 60% value of the goods sold are chargeable to tax, which were escaped in assessment and this bill was taken basis to infer that the sales made for the previous relevant assessment years were shown undervalue and as per the Authorities, 60% addition has to be made for such sales, which amount is chargeable tax and the said amount was escaped the assessment for those years. 15) The contention of the learned counsel for the petitioner that there is no material and the sole material which is recovered, cannot be made foundation for reopening of the proceedings for previous assessment years. We do not find any merit in this contention. The reason which was given as a foundation by way of recovered incriminating material clearly show undervalue of the sales, which can be the valid basis to assume that the previous sales made in the relevant assessment years could be undervalued. The petitioner can respond to such a notice and establish that those sales were not undervalued. This Court cannot decide such question of fact in the writ petition. This Court believes that there exists reason to believe that there is escapement of chargeable income for the relevant assessment years. Therefore, this contention of the learned counsel for the petitioner has no merit. 16) The other contention raised by the learned counsel for the petitioner is that re-assessment of six previous assessment years is barred by limitation. To answer such contention, it is relevant to refer to Section 149 of the Act then existing, which reads as under:- “Amendment of Section 149. 63. 16) The other contention raised by the learned counsel for the petitioner is that re-assessment of six previous assessment years is barred by limitation. To answer such contention, it is relevant to refer to Section 149 of the Act then existing, which reads as under:- “Amendment of Section 149. 63. In section 149 of the Income-tax Act, in sub-section (1), for clauses (a) and (b), the following clauses shall be substituted with effect from the 1st day of June, 2001, namely:- “(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year.” 17) From a reading of Sub-section (1) Clause (b), it is clear that where the escaped amount is more than one lakh for the relevant assessment year, the limitation is six years. In the present case, the alleged escaped amount, which is chargeable was more than one lakh. Therefore, the proceedings cannot be said to be barred by limitation. In these circumstances, we do not find any merit in this petition. 18) In the result, the writ petition being devoid of merit is hereby dismissed. However, liberty is given to the petitioner to place all the materials to rebut the inference drawn by the authority on the basis of recovered material. The authorities are duty bound to consider such materials. 19) In the circumstances, no costs. 20) Pending interlocutory applications, if any, shall stand disposed of.