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4. The petitioners by letter dt. 18th April, 2007 submitted a return of income under protest. By the communication dt. 9th May, 2007 various objections were filed to the reasons recorded. It was submitted that the reasons recorded are baseless. By the communication dt. 7th June, 2007 the respondent No. 1 intimated to the principal officer of the petitioner that the objections filed had been rejected. It was further set out that the Volcker Committee Report is admittedly a published document in which the name of the petitioner company appears as being involved-whether the case gets covered factually in the alleged "kick back" payment or not is matter of scrutiny and investigation by the IT authorities and it could not be said that the documents in the form of Volcker Committee Report cannot be waived as hearsay information since the same has taken the shape of Government record.

6. A reply has been filed on behalf of the respondents by Shri R. Andiappan, Asstt. CIT. It is set out therein that the generalised report by the Volcker Committee involves names of 2,200 Indian companies and that would be enough ground for forming the opinion that the income chargeable to tax has escaped assessment in the case of the petitioners, whose name also appears in the said list of 2,200 companies. The awareness of the petitioners regarding its being involved in the said report cannot by itself make any exception from the observations contained in the said report. It is also pointed out that Ministry of Finance, Department of Revenue, CBDT in F. No. 414/117/2005-IT (Inv. I) dt. 18th Nov., 2005 has reproduced the subject of enquiry in respect of entities mentioned in Volcker Committee Report. It is pointed out that the kick back programme amongst other involved inland transportation fees which were not approved by the United Nations and such fees was paid directly to the Iraqi Government or to front companies outside Iraq which did not go into Escrow account which had been maintained in oil transactions under the programme. It is not necessary for us to cull out other excerpts from the said office memorandum. Suffice it to say that the office memorandum lists the petitioners as one of the companies to have paid the appropriate amount known as "kick back". It is, therefore, submitted that this Court ought not to interfere at this stage in the exercise of its extraordinary jurisdiction.

7. We have heard the learned Counsel for the parties. The question is whether prima facie there are reasons to believe, which gave jurisdiction to the respondent No. 1 to issue notice under Section 148 of the Act. The office memorandum was issued on 18th Nov., 2005. The subject of the memorandum is "Enquiry in respect of entities mentioned in the Volcker Committee Report". The said office memorandum lists the Indian companies. The petitioners' name is shown in one of the lists and appropriate amounts paid as "kick back" are set out. The Volcker Committee Report was put up on the website after 27th Oct., 2005. The petitioners' assessment for the relevant year was made before that. Therefore, on the date when the assessment order was passed, the report of the Volcker Committee was not available. The CBDT pursuant to the Volcker Committee Report by office memorandum dt. 18th Nov., 2005 had issued directions to all cadres of the Chief CIT to conduct enquiries in respect of the transactions entered in by the entities mentioned in the report.

On behalf of the petitioners, the learned Counsel has drawn our attention to the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO and Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC).

8. Considering the judgment the question that we are called upon to decide is whether it was open for the respondent No. 1 to have rejected the objections filed by the petitioners herein. As set out earlier, the report of the Volcker Committee was not available when the original assessment was done. The CBDT has taken note of the report of the Volcker Committee and the involvement of Indian companies and has issued an office memorandum with directions to make inquiries in respect of the entities mentioned in the report. It is not disputed that the said office memorandum would be binding on the authorities. As may be noted, the basis for exercise of jurisdiction by issuing such notice under Section 148 of the Act are 'reasons to believe'.