JUDGMENT F.I. Rebello, J.
1. The petitioner-company carries on business of hiring of plant and machinery. The petitioner had by an agreement, dt. 28th June, 1982, entered into with Prerna Premises (P) Ltd., agreed to purchase three office premises, being office premises Nos. 22, 22A and 23 in Maker Chambers III, at Nariman Point, Bombay-400021 as well as four open car parking spaces, being car parking space Nos. 17 to 20, for a total cost of Rs. 28,66,634. It is the case of the petitioner that it subsequently became a member of the Maker Chambers III Premises Co-operative Society Ltd. By an agreement, dt. 19th June, 1984, entered into between the petitioner and the Bank of Maharashtra, the petitioner agreed to sell and the bank agreed to purchase from the petitioner all the right, title and interest of the petitioner in the said office premises and car parking spaces for a consideration, which was to be calculated at the rate of Rs. 1,600 per square foot for the office premises and at Rs. 80,000 for each of the car parking spaces. Under Clause 2 of the agreement the consideration was to be discharged in the following manner Rs. 2,00,000 as earnest money before the execution of the agreement and the balance to be paid at the time of execution of final document of sale and transfer of the property by the petitioner. It was also provided that if the petitioner puts the bank in possession of the premises before execution of the final document of sale and transfer, then the bank was to pay to the petitioner 95 per cent of the total consideration as reduced by Rs. 2,00,000 and the balance of 5 per cent on the execution of the final document of sale. Clause 3 of the agreement provided that from the date the bank was put in possession of the premises, the bank would be liable to pay the maintenance charges, municipal taxes, cesses and all other outgoings in respect thereof. Clause 5 provided that the sale of the premises would be completed only after expiry of five years from the date of the agreement but before the expiry of the sixth year from the date of the agreement, time being the essence of the contract. The agreement further provided that the bank would have an option either to complete the transaction or rescind the same and, in the event the bank rescinded the agreement, the petitioner would refund the entire amount that may have been paid by the bank to the petitioner within one year of the rescission on return of possession of the premises by the bank. It was further agreed that the parties would sign such papers and documents as were necessary for completion of the sale on payment of the full purchase price payable by the bank to the petitioner. By Clause 9 of the agreement, the bank had agreed that once the bank was put in possession of the premises, they would not sell, transfer, assign, let out or give on leave and licence basis or in any other manner part with possession of the premises or any position or portions thereof to anyone else pending completion of the sale. After the bank had paid to the petitioner, on 20th June, 1984, the sum of Rs. 84,47,111, being 95 per cent of the consideration agreed upon, the petitioner put and handed over possession in part performance of the agreement of sale to the bank on 20th June, 1984 itself.
2. By letter of 12th June, 1990, in terms of Clause 5 of the agreement of sale, dt. 19th June, 1984, the bank called upon the petitioner to complete the transaction and convey the property to the bank by 18th June, 1990, It is the case of the petitioner that certain disputes had arisen owing to which the petitioner did not complete the transactions. By letter of 16th June, 1993, the petitioner confirmed that the petitioner had put the premises in possession of the bank and that the petitioner would take all necessary steps for transfer of the said premises on or before 30th Sept., 1993. It is the case of the petitioner that even thereafter, the petitioner was unable to complete the transactions and there were demands by the bank of the petitioner to complete the transaction. The rest of the averments regarding the dispute between the bank and the petitioner need not be adverted to. Suffice it to say that the petitioner had also recorded, confirmed and assured the bank that it would take all steps for transfer of the property along with the share certificates on or before 30th Sept., 1997. It is the case of the petitioner that in view of the uncertainties prevailing and the fact that the transfer of premises had not been completed, the petitioner in the accounts of the year 1991 had disclosed the amount of Rs. 84,47,111 received by it as a current liability under the heading "Advance against deferred sale of building". Note No. 2 of the notes of accounts forming part of the balance sheet as on 31st March, 1991 reads as under :
"The company has entered into an agreement for sale of above buildings vide agreement dt. 19th June, 1984 which, inter alia, provides that the sale of the said buildings shall be completed only after the period of expiration of five years from the date pf agreement but before the expiration of sixth year at the option of the purchasers to complete the transaction or to rescind the same for a sum of Rs. 85,40,800 plus reimbursement of non-refundable deposits, transfer fees, etc. A sum of Rs. 84,47,111 (being 95 per cent of consideration agreed upon Rs. 81,13,760 deposits Rs. 1,27,831 and transfer fees Rs. 2,05,520) received from the purchasers have been shown under the head current liabilities and the possession of the buildings was given to the purchasers on 20th June, 1984 and they have agreed to reimburse the company the outgoings of the said building. The purchasers, though have exercised the option to purchase the same, the execution of the sale and conveyance is not completed pending negotiations with the purchasers and, hence, no adjustments in this regard have been made in the books of account of the company."
3. The petitioner filed its return of income for the asst. yr. 1991-92 on 31st Dec., 1991. Along with the return, the P&L a/c as well as the balance sheet were also enclosed. The notes on accounts referred to earlier, according to the petitioner, made a full and true disclosure of all the relevant facts. It is the case of the petitioner that till date it has not received any intimation or assessment order from the respondent No. 1 in respect of the return of income filed for the asst. yr. 1991-92. It is the case of the petitioner that thereafter it filed its return for the asst. yrs. 1992-93, 1993-94 and 1994-95, wherein a similar note appeared in the accounts of the respective years.
4. In the course of the assessment proceedings for the asst. yr. 1994-95, respondent No. 1 raised a query as to why the capital gains arising on the sale of the premises should not be taxed in the asst. yr. 1991-92. The petitioner in reply to the query filed a detailed letter, dt. 18th Oct., 1996, wherein the relevant facts were set out exhaustively. It was also pointed out that the amendments brought out in Section 2(47) by the insertion of Sub-clauses (v) and (vi) were applicable only to transactions entered into after the asst. yr. 1988-89. The petitioner also pointed out that possession of the premises had been handed over prior to 1st April, 1987; the amendment brought about in the definition in Section 2(47), therefore, could not be applicable for the asst. yr. 1991-92. It was also pointed out that the mere exercise of the option by the bank would not result in a transfer as the expression is understood in Section 2(47) of the Act. In these circumstances, the petitioner called upon the respondent No. 1 to drop the proceedings. It is the case of the petitioner that respondent No. 1 had fixed a hearing on 29th. Oct., 1996. The petitioner appeared before the CIT and as desired furnished details under cover of letter dt. 5th Nov., 1996. It is the case of the petitioner that respondent No. 1 thereafter completed the assessment for the asst. yr. 1994-95 by an order, dt. 4th Dec., 1996, under Section 143(3) and assessed the petitioner to the income returned.
5. It is the case of the petitioner that, therefore, they, were shocked and surprised to receive on 12th Dec., 1996 a notice under Section 148 dt. 4th Dec., 1996 by which the respondent No. 1 had recorded that he had reason to believe that the petitioner's income chargeable to tax for the asst. yr. 1991-92 had escaped assessment and, therefore, proposed to reassess the income for the asst. yr. 1991-92 and called upon the petitioner to furnish within 30 days from the date of service of the notice a return in the prescribed form. The petitioner by letter, dt. 3rd Jan., 1997, had called on the respondent No. 1 to furnish the reasons recorded by him prior to the issue of the impugned notice dt. 4th Dec., 1996. Petitioner contends that till date the petitioner has not received any reply to the said notice. The petitioner thereafter filed the present petition on 13th Jan., 1997. The petition came up for admission before this Court on 27th Jan., 1997, on which date, the learned Bench granted rule. However, this Court permitted the respondent No. 1 to proceed with the assessment but further ordered that the demand, if any, on the basis of such assessment, could be raised only after obtaining an order of this Court, The petitioner filed a return of income pursuant to notice, dt. 12th Feb., 1997. Petitioner declared Rs. 9,110 in the return as filed. By letter dt. 12th May, 1997, the respondent No. 1 forwarded a copy of the reasons recorded by him prior to the issuance of notice under Section 148. The respondent No. 1 thereafter completed the assessment under Section 143(3) r/w Section 147 by an order dt. 28th Jan., 1999. The respondent No. 1 held that on construction of relevant clauses of the agreement, it was clear that Clause 5 was inserted only with a view to avoid payment of capital gain tax immediately. The respondent No. 1 took the view that till the period the Bank of Maharashtra exercised the option of purchase, the agreement was a leave and licence agreement between the petitioner and the Bank of Maharashtra. He also came to the conclusion that the sale price was fixed not on the rates prevailing on 19th June, 1994 but the price which was estimated to be the prevailing price in 1989-90 when the buyer exercised the option. Respondent No. 1 held that the contract to sell the property became effective from 12th June, 1990, that is, the date on which the bank exercised its option to purchase the property. The respondent No. 1 also held that the petitioner allowed the buyer to retain the property in part performance from 12th June, 1990 and, hence, the transfer took place in terms of Section 2(47)(v) and on that date capital gains were chargeable.
6. The petitioner filed an appeal to the CIT(A), on 19th April, 1999. That appeal was dismissed by order dt. 21st Aug., 2000.
The petitioner has preferred an appeal against the order of the CIT(A), dt. 21st Aug., 2000. The respondent No. 1 thereafter forwarded a demand to the respondent No. 3 for recovery of the amount and issued a notice on 5th March, 2003. It is the case of the petitioner that it has duly replied to the notice dt. 5th March, 2003 and the summons dt. 27th March, 2003. Certain disputes that arose between the Bank of Maharashtra and the petitioner have also been set out. It is sought to be pointed out that in view of the proceedings which are pending in the suit filed by the Bank of Maharashtra, the office premises have not been conveyed or transferred to the Bank of Maharashtra. In the prayer clauses in the petition, an additional prayer Clause (c)(1) has been added to prohibit the respondents, etc., from in any manner taking steps or proceedings pursuant to or in implementation of the impugned demand notices, dt. 6th Dec., 1999, 5th March, 2003 and summons, dt. 27th March, 2003.
7. At the hearing of the petition on behalf of the respondent No. 1, the learned counsel has raised a preliminary objection as to the maintainability of the petition. It is firstly contended that the petitioner has an efficacious alternate remedy available to show cause to the AO, as well as an appeal and also a second appeal against the assessment order and in the light of that, this Court should not exercise its extraordinary jurisdiction. It is also submitted that in the present case, the petitioner has also filed an appeal against the assessment order passed by the AO on 28th Jan., 1999, which is pending before the Tribunal. It is, therefore, submitted that this Court should not exercise its extraordinary jurisdiction on the facts and circumstances of the case. Reliance has been placed firstly on the judgment of the Division Bench of the Rajasthan High Court in Rajan Products v. Union of India (2001) 247 ITR 101 (Raj). In that case the Court held that an assessee has an alternative remedy of filing appeal before the appropriate authority provided under the IT Act, 1961 and no cause of action had arisen for the assessee for filing a writ petition. It is in those circumstances that the High Court declined to exercise its extraordinary jurisdiction. Next, reliance is placed in the judgment of GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC), to contend that when a notice under Section 148 of the IT Act, 1961, is issued, the proper course of action for the noticee is to file the return and, if he so desires, to seek reasons for issuing the notices. In that case, on receiving the notices under Section 148, the appellant filed the returns. The appellant also received notices under Section 143(2) calling for further information on certain points in connection with the returns. Thereupon the appellant filed writ petitions challenging the notices. The High Court dismissed the writ petitions holding that the petitions were premature and the appellant could raise its objections to the notices by filing reply to the notices before the AO.
8. On the other hand, on behalf of the respondents, their learned counsel contends that this Court has admitted the petition and once it has admitted the petition, the issue of jurisdiction is alive for consideration by this Court and in these circumstances the mere fact that the respondents were permitted to carry on the assessment proceedings should not result in this Court declining to exercise its extraordinary jurisdiction. All these objections were available at the time the petition was filed. This Court, despite the efficacious alternate remedy available, admitted the petition, Once that be the case the petition shall be disposed of on merits. Our attention is invited to the judgment of the apex Court in the case of Coca Cola Export Corporation v. ITO (1998) 231 ITR 200 (SC). In that case the High Court had dismissed the petition on the ground that the petitioner had an alternative remedy available under the statute where all the questions raised by the appellant could be examined in detail. The High Court also held that the matter as to the exact scope and ambit of the two letters were awaiting decision at the appellate stage before the IT authorities and in that view of the matter it did not think fit to give expression to any opinion as to the scope of the two letters as that would seriously prejudice either the appellant or the Revenue and, accordingly, dismissed the petition and directed the ITO to make inquiry whether the deduction which had been allowed and which were in excess of the limit fixed by the two letters were legal or not. The apex Court held on the facts of that case that the High Court erred in not exercising jurisdiction when the facts were all there and law clear on the subject and, accordingly, set aside the order and allowed the appeal as filed by the assessee, the appellant before it.
9. Considering the arguments advanced, in our opinion, it would be inappropriate at this stage, after having admitted the petition and further having passed earlier a conditional order directing the AO to proceed with the assessment but to make a demand on the basis of such assessment only after obtaining an order from the Court, to dismiss the petition on that count after six years. In other words, though the petitioner was directed to go before the AO, yet this Court retained jurisdiction to decide the issue as to whether it was open to the assessing authority to issue the notices. In our opinion, on the facts of the present case, the fact that the petition was entertained even though the petitioner had an efficacious alternative remedy, it would be too late in the day to tell the petitioner to proceed with the appeal before the Tribunal, as the authorities have already held against the petitioner, if we find that the notices issued are without jurisdiction. The preliminary objection raised by the counsel for the respondents has to be rejected.
10. Coming to the merits of the matter on behalf of the petitioner, it is submitted that the reopening for the reasons recorded are erroneous and bad in law. It is firstly contended that for reopening an assessment, the AO must have valid "reasons to believe", which reasons must have a rational and a direct nexus and are intelligible and acceptable in law and do not amount to a change of opinion. Reliance for that is placed on the judgment of the apex Court in Ganga Saran and Sons (P) Ltd. v. ITO (1981) 130 ITR 1 (SC). Reliance is also placed on the judgment of the apex Court in Coca Cola Export Corporation's case (supra). It is then submitted that it is the duty of the assessee only to disclose primary facts and not inferences and for that purpose reliance is placed on the judgment of CIT v. Mangilal Dhanraj (1985) 155 ITR 71 (Bom), of this Court and the case of Chemicals and Fibres of India Ltd. v. M.K.N. Pillai (1984) 146 ITR 280 (Bom), again of this Court. It is then submitted that under the scheme of the Act for there to be a valid reopening, information must come from extraneous source. Otherwise irrespective of whether an assessment is made or not, it would mean that where a return has been processed under Section 143(2) and found by the then officer not to have understated any income on the basis of the very same documents, reassessment under Section 147 can be made on the same grounds that the assessee had understated the income. This' would render the limitation contemplated by the Act under Section 143(2) as totally meaningless. Reliance for the proposition that only extraneous information can be relied upon is placed on the judgment of Andhra Bank Ltd. v. CIT (1997) 225 ITR 447 (SC). It is then submitted that the'position of law pre-1988 and post-1988 is the same qua the fact that there cannot be a change in the opinion on the same facts irrespective of whether an assessment is made under Section 143(1) or otherwise. Reliance for that is placed on the judgment of the Full Bench of the Delhi High Court in CIT v. Kalvinator of India Ltd. (2002) 256 ITR 1 (Del)(FB). Reliance is also placed on the judgment of United Electrical Co. (P) Ltd. v. CIT (2002) 258 ITR 317 (Del), of the Delhi High Court. It is also submitted that the word 'noticed' which also means information, intelligence, as referred to in Webster's Dictionary and Random's House, also shows that the position post-1988 is pan materia with the old provision of law. Position of petitioner's return for the asst. yr. 1991-92 as stated by the respondents in their affidavit-in-reply clearly shows that they were processed in accordance with law and, therefore, there are only two possibilities following from the respondents' assertions (a) summary assessment made under Section 143(1)(a) on the petitioner but no Section 143(2) notice issued as the then AO was of the opinion that the assessee has not understated its income on examination of the return of income and (b) no summary assessment under Section 143(1)(a), but the AO still not exercising his rights under Section 143(2) and thus, obviously satisfied that in the return of income that there was no understatement of income. In either case it is contended that the exercise in 1996 was an attempt to invoke the jurisdiction based on the same documents from the return of income clearly discloses change of opinion on the same facts and must be held to be contrary to law. Reference is placed on the CBDT circular, which has been considered in the judgment of the Delhi High Court in the case of Kalvinator of India Ltd. (supra).
11. It is then submitted that the reasoning of the officer that Sub-clause (v) of Section 2(47) would apply is erroneous for the following reasons : (1) in respect of premises of co-operative society represented by shares of the society, Sub-clause (v) has no application and for there to be a valid transfer, there must be a transfer of shares of a society and thereafter Sub-clause (vi) of Section 2(47) would apply. Reliance is placed on the circular explaining the provision at the time of introduction of Sub-clauses (v) and (vi) issued by the CBDT; (2) when the officer himself accepts in the reasons for reopening that the agreement to sell coupled with possession as contemplated in Section 53A is done in 1984 when the Sub-clause (v) was not on the statute, the question of that sub-section applying does not arise; (3) option exercised by the purchaser is merely to complete formalities to sell, it does not amount to an agreement to sell for the following reasons, namely, that for a valid agreement under Section 53A it must be signed by the transferor, rt should be a contract for consideration, should be in writing and the transferor should deliver possession subsequent to the agreement for sale. Reliance for that is placed on the judgment of the Division Bench of this Court in Chaturbhuj Dwarkadas Kapadia v. CIT (2003) 260 ITR 491 (Bom) and also of the apex Court in Mool Chand Bakhru v. Rohan (2002) 2 SCC 612. It is then submitted that it is inconceivable to contemplate that having accepted that there was an agreement for sale coupled with possession in 1984, in respect of the same premises and in respect of the same parties and under the same agreement there could be a fresh agreement to sell coupled with possession in 1991. The reasons itself would show the errors in the officer's reasoning. It is further submitted that Section 53A applies where possession already exists in a character other than under the agreement to sell which changes the character and, therefore, possession must always follow an agreement or change character post-agreement. Reliance is placed in the judgment of Sardar Govindrao Mahadik v. Devi Sahai (1982) 1 SCC 237. It is then submitted that letter of 12th June, 1990 by the Bank of Maharashtra can never amount to an agreement to sell as an agreement by its nature contemplates two parties and shows meeting of mind, for example, as to who has to bear the stamp duty, etc. Lastly, it is submitted that as per the recorded reasons the exercise of option by the Bank of Maharashtra does not amount to an agreement to sell as it is a mere letter calling upon the petitioners to complete the formalities of sale. Prior to the amendment in Section 2(47)(v) in respect of immovable property, an agreement to sell coupled with possession without execution of a conveyance did not amount to a transfer under the IT Act rendering income chargeable to tax under the head capital gains. Reliance is placed on the judgment of Alapati Venkatammiah v. CIT (1965) 57 ITR 185 (SC) and India Finance and Construction Co. (P) Ltd. v. B.N. Panda, Dy. CIT (1993) 200 ITR 710 (Bom).
12. On the other hand, on behalf of the respondent-Revenue, it is contended that the present case is not a case of issuing of notice after scrutiny assessment under Section 143(3), but non-scrutiny assessment under Section 143(1) and as such extended period of limitation is available under Section 149 of IT Act and, in any case, it has been exercised within 4 years from the end of the relevant assessment year, that is, within 4 years from 1991-92. It is then submitted that the petitioner has not disclosed any jurisdictional error committed by the AO while issuing the impugned notice and as such the challenge for quashing the impugned notice does not survive. The learned counsel then points out that in view of the amendment to Section 2(47) of the IT Act, introducing Clause (v), any transaction involving the allowing of possession of any immovable property to be taken or retained in part performance of contract under Section 53A of the Transfer of Property Act and in view of option exercised by the Bank of Maharashtra by letter dt. 12th June, 1990 exercising their option to com