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BADAR DURREZ AHMED, J

1. By way of this writ petition, the National Thermal Power Corporation Limited (NTPC Limited), a public sector undertaking, is seeking the quashing of a notice dated 03.02.2006 issued by the respondent No.1 (Deputy Commissioner of Income Tax, New Delhi) issued purportedly under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act'), whereby the said respondent No.1 has indicated that he has reason to believe that the petitioner's income chargeable to tax for the assessment year 2000-01 has escaped assessment within the meaning of the said Section 148 and, therefore, the respondent No. 1 proposes to re-assess the income for the said assessment year. By virtue of the said notice, as is the requirement under law, the petitioner was required to deliver a return in the prescribed form for the said assessment year within thirty days of the service of the notice. The said notice was accompanied by a copy of the purported reasons for re- opening of the case.

38. We now come to the second purported reason for re-opening the assessment which pertains to taxability of income tax recoverable by the petitioner from the State Electricity Boards. It is stated in the recorded reasons that as per tariff notification issued by the Government of India the incidence of Income Tax on Income from generation of electricity is recoverable from the customers of NTPC, who are the State Electricity Boards. According to the recorded reasons, the amount of income tax recoverable by NTPC from the State Electricity Boards, inter alia for the assessment year 2000-01, have not been fully reported by NTPC Limited as revenue receipts and instead major portions of such amounts had been kept out of the credit side of the Profit & Loss Account. This, according to the respondent No.1, resulted in the income tax recoverable from the customers of NTPC escaping assessment due to the reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year in question.

on tax on tax basis (38.50 x 100/61.50) Grossed up tax payable by NTPC on 1,560.85 the generation income The said grossed up tax of ` 1,560.85 crores is recoverable from the customer. (What is shown as recoverable from the customer in the balance sheet is a lesser figure of ` 1345.50 crores worked out on a provisional basis at the time of finalizing the accounts) Add: Tax on non-generation income 258.20 of ` 670.67 crores at the normal rate of tax of 38.50% Total tax payable by NTPC as per 1819.05 the assessment order (Department's method - Grossing up of income):

(` in crores) Generation income as assessed by the AO 2493.31 Add: Amount of tax on generation income 1,560.85 recoverable from the customer (the amount shown as recoverable in the balance sheet is lesser figure of ` 1345.50 crores worked out on a provisional basis at the time of finalizing the accounts) Generation income to be taxed 4054.16 Normal rate of tax 38.50% Tax payable by NTPC on the generation 1,560.85 income Add: Tax on non-generation income of 258.20 ` 670.67 crores at the normal rate of tax of 38.50% Total tax payable by NTPC as per the 1819.05"