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8. On the other hand, Ld DR relied dutifully on the orders of the Revenue Authorities.

9. We have heard both the parties on this preliminary issue relating to the validity of notice u/s 148 of the Act and perused the paper book filed before us and the details relied upon by both the parties.

10. Firstly, we need to examine whether there are enquiries conducted by the AO into the issue of nature of business activities of the assessee for the year under consideration. For this purpose, we have examined the show cause notice/questionnaire issued by the AO along with the 142(1) notice dated 5.10.2007 (page 57 of the paper book). From the said enquiry notice it is noticed that the first item in the questionnaire reads as follows. "(1) Please furnish the details of nature of business activity carried out". In this regard assessee replied vide letter dated 12.10.2007 stated that "the company is engaged in infrastructure and development activities". Assessee furnished further reply vide letter dated 25.10.2010 elaborating the nature of business and the same reads as follows. "The company is engaged in the infrastructure development activities during the Financial Year 2005-2006 and the company is working on development of MIHAN project at Nagpur". It is also evident that the assessee submitted various details regarding to the commencement of the business relating to the paid-up capitals, expenditure incurred, income earned, services rendered etc in respect of the rest of the questions in the questionnaire. It is also evident from the orders that it is an admitted fact that the assessee does not have any fresh or tangible material which works out as a "livewire" to the AO to form an opinion or create a reason to believe that there is concealment of income. It is also obvious from the written reasons mentioned by the AO that the basis for re-opening is essentially the product of the "perusal of the assessment records". In our opinion, issue of notice u/s 148, under the circumstances and the details mentioned above, is not proper and not in tune with the settled position in law relating to the provisions of section 148 of the Act. Therefore, the preliminary issue raised in ground no. 1 and 2 by the assessee is allowed.

16. We shall now take-up arguments of the Ld Counsel on the above issues. Regarding the issue of set up and commencement of business activity of the assessee during the year under consideration, Ld Counsel stated as under:

"Assessee is engaged in the development of infrastructure development activities. The main object of the company is to design, plan, construct, erect, build, remodel, repair, execute, develop, operate, sell, lease, rent, improve, administer, manage, control, maintain road, railways, airport, Special Economic Zone etc. The business of the assessee is not only confined to construction of MIHAN project. The few of the objectives for which company is established are as follows:

"The assessee is engaged in the business of development of Infrastructure Development Activities. The main object of the company is to design, plan, construct, erect, construct, build remodel, repair, execute, develop, operate, sell lease, rent, improve, administer, manage, control maintain and / or demolish airports, air traffic equipment, traffic terminals, roads, railways, highways, expressways, bridges, tunnels, railroads, urban transport systems, alleys, township schemes, industrial parts, docks, shipyards, canals, wells, ports, reservoirs, embankments, dams, irrigation works, reclamations, improvements, sanitary system, water works, water supply gas or any other structural or architectural work and Special Economic Zones.

23. What is 'set up': Normally the process of 'set up' of the business commences with the creation or incorporation of the company. Subsequently, the requisite managers/CEO or manpower are appointed. Then, the procedures relating to obtaining of the permissions or clearances from the governmental departments shall follows. In this case, obtaining mandatory environmental clearances from concern Ministry of Central or state Government is the requirement. Further, with regard to SEZ, there is need for issue of Notification by the Ministry Commerce. Subsequently, purchase of requisite land from the farmers or from the Government's allotment as the case may be shall start and the requisite infrastructure development shall commence on the said land acquired by the assessee. Thus, the above discussion by the Gujarath High Court relates to the period subsequent to the time of obtaining the approvals or clearances or preparation of favourable feasibility reports etc. For deciding, if the business of airport infrastructure development or SEZ is set up or not in this year, we need to understand and appreciate the various phases involved in set up of the business of development of infrastructure of international airport at Nagpur. In the specialized business of the assessee ie airport infrastructure development as well as the SEZ development, important stages involves the obtaining of various clearances, approvals of the concerned departments of the Government, procurement of land should for part of the set up. Then after, the assessee must have infrastructure to develop the land to be fit enough to lease out or construct requisite infrastructure on the said land to commence business. In this line of business, we are of the opinion, the first stage must include obtaining of the necessary license/permissions/clearance to do the business after obtaining the favourable feasible reports. The second stage must include obtaining of the other clearances and permissions required under the provisions of various laws from ministries. Further, the assessee is required to undertake feasibility and other survey reports required for setting up the business. These stages constitute elementary stages which must be complete in all respects before the business of the assessee is designated as 'set up'. It is not required that the assessee must raise first invoice for constituting 'set up or commencement' of business as held by the Tribunal (Delhi Bench) in the case of CIT vs. Hughes Escorts Communications Ltd, which is subsequently upheld by the Hon'ble High Court of Delhi reported in [2009] 311 ITR 253 (Del). Therefore, the activity of commercial production is not needed to describe the business is set up. What is required is obtaining of all the clearances, favourable feasibility reports, approval of the development plans etc. Existence of skeletal staff and an office building are not sufficient to declare that the business is 'set up'. What if the stated clearances are negative and against such set up of the business? As analyzed by the jurisdictional High Court in the case of Western India Vegetable Products Ltd 26 ITR 151, the expression 'setting up' means 'to place on foot' or to 'establish' or 'to ready to commence'. The establishment or the readiness should always denote with all permissions and clearances and in accordance with the set procedures and law of the land. If the environmental clearance, which is mandatory in this case, is not obtained in this year, can we declare that the business is set up? In our considered opinion, the answer is negative. We have also examined the cited Special Bench decision in the case of Sardar Sarovar Narmada Nigam Ltd vs. ACIT [2012] 138 ITD 203 for the proposition that the business of the assessee should be considered to be set up from the date when water was supplied through main canals during current year. In our opinion, releasing of water into the canals must constitute very advanced stage in that case.