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7. The other limb of argument of the learned counsel challenging the validity of the initiation of proceedings under section 147 was that the reasons recorded in terms of section 148 were vague. It was further argued that the proceedings were initiated on the basis of the audit objection. The counsel submitted that the assessment proceedings for the immediately succeeding assessment year 1996-97 was completed by the assessing officer on 26-2-1999. Therefore, it was submitted that an audit objection was received in the office of the assessing officer on 8-2-2000. In the said audit objection it was stated that Rs. 50 lacs received by the assessed from BBLIL under a non-competition agreement have escaped taxation. On the basis of the said audit objection, the assessing officer issued a letter dated 12-2-2001, requiring the assessed to show-cause as to why income-tax assessment for the assessment year 1996-97 be not reopened under section 147/148 of the Act. In response thereto, it was submitted by the counsel that the assessed replied vide letter dated 3-3-2001, whereby it was stated that the amount of Rs. 50 lacs had been received by it in the previous year relevant to the assessment year 1995-96 and not in the assessment year 1996-97, as alleged in the letter dated 12-2-2001. In that letter the appellant further claimed that the sum of Rs. 50 lacs received from BBLIL is in the nature of capital receipt not chargeable to tax under the Act.

9. The learned Departmental Representative, on the other hand, relied on the order of the Commissioner (Appeals). It was submitted that the challenge to the initiation of proceedings under section 147 by the assessing officer, after having failed to issue notice under section 143(2) has been dealt at length by the Commissioner (Appeals). The learned Departmental Representative relied heavily on the decision of the Gujarat High Court in the case of Praful Chunnilal Patel v. Assistant Commissioner (1999) 236 ITR 832 (Guj) to contend that no bar can be read into the powers of the assessing officer to initiate proceedings under section 147 merely on the ground that the assessing officer had earlier failed to issue notice under section 143(2) of the Act. As regards the initiation of proceedings on the basis of the audit objection, it was submitted that there is nothing on record to suggest that the proceedings under section 147 were initiated on the basis of the audit objection. The learned Departmental Representative further submitted that the reasons recorded under section 148 are proper and cannot be termed as vague.

16. But the issue that is before us for consideration is whether the assessing officer has initiated the proceeding under section 147 of the Act on the basis of the audit objection or not. If the chain of events is recapitulated, the assessing officer issued intimation under section 143(1)(a) of the Act on 19-3-1996. The audit objection was received by the assessing officer on 8-2-2000. The audit party, commenting on the assessment framed for the assessment year 1996-97, did objected to the treatment of the receipt of Rs. 50 lacs as capital receipt and stated that the said amount has escaped taxation.

17. But it is further noted that the proceedings under section 147 were initiated vide notice dated 12-3-2001, i.e., after one year of the receipt of the objection of the audit party. In the reasons recorded by the assessing officer in terms of section 148 of the Act, there is no mention about the receipt of the audit objection. The reasons recorded, as held hereinbefore, are proper for initiating proceedings under section 147 of the Act.

18. The facts and circumstances of the case suggest that the assessing officer was not guided by the objection of the audit party at the time of issuing notice under section 148 of the Act. We cannot presume that the assessing officer did not independently entertain a belief that the claim of the appellant was erroneous resulting in escapement of income. We are, therefore, of the considered view that the proceedings under section 147 were not initiated on the basis of the audit objection and consequently, the proceedings under section 147 of the Act were validly initiated.