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R.K. Abichandani, J These matters raise common points and have been heard together at the instance of both the sides. The question involved is whether the impugned notices issued by the assessing officer against the petitioners under section 148, read with section 147 of the Income Tax Act, are without jurisdiction and not warranted by that provision.

2. In Special Civil Appln. No. 5453 of 1994, the relevant assessment years are 1987-88, 1988-89, 1989-90 and 1990-91. In respect of the assessment years 1987-88 and 1989-90, the assessment was being reopened on the ground that the assessee was allowed excessive deduction of expenses on ad hoc basis though as per the CBDT circular dt. 14-9-1965 as modified by the Circular dated 6-1-1984, such LIC agents who did not maintain detailed account regarding expenses incurred could be allowed a maximum deduction of only Rs. 10,000. In the reasons recorded by the assessing officer which are placed on record, it is stated that for the assessment year 1987-88, an amount of Rs. 44,703 had escaped assessment while in respect of the assessment year 1989-90, a sum of Rs. 49,844 had escaped assessment. In short, for these two assessment years 1987-88 and 1989-90, according to the assessing officer, he had reason to believe that the income chargeable to tax had escaped the assessment because in the assessments for these two years, the income in question was made the subject of excessive relief under the Act, making them deemed to be cases where income chargeable to tax had escaped assessment within the meaning of Explanation 2(c)(iii) of the Act.

3. In Special Civil Appln. No. 2381 of 1996, the assessment years involved are 1986-87, 1988-89, 1990-91 and 1991-92 while in Special Civil Appln. No. 10744 of 1996, the assessment year involved of the same petitioner- assessee is of 1989-90, This petitioner was also an LIC agent and as per the separate reasons which are placed on record, in respect of these five assessment years which are the subject-matter of these two petitions, according to the assessing officer there was escapement of income chargeable to tax under Explanation 2(c)(iii) of section 147 of the Act, because, excess relief was granted by allowing deduction of the commission on ad hoc basis beyond the maximum allowable deduction of Rs. 10,000 under the said circular dated 22-9-1965, as modified by the circular dated 6-1-1985, of the Board. According to the assessing officer, for the assessment year 1986-87 an income of Rs. 62,870, for the assessment year 1988-89 an income of Rs. 81,473 for the assessment year 1989-90 an income of Rs. 79,121, for the assessment year 1990-91 an income of Rs. 1,14,827 and for the assessment year 1990-91 and income of Rs. 1,98,187 had escaped assessment on the ground that excessive deduction beyond the maximum limit of Rs. 10,000 per annum was allowed in respect of these years.

4. The learned counsel appearing for the petitioners in all these matters contended that the assessing officer had no basis for issuing notices under section 148, in respect of the assessment years in question. He contended that on a bare reading of the circulars which were issued by the Board, it was clear that the LIC agents were entitled to get deduction on ad hoc basis at the rates mentioned in the circular and there was no question of applying any ceiling of Rs. 10,000 to the agents who were having commission income of more than Rs. 20,000. It was submitted that the ceiling of Rs. 6,000 which was provided in the circular dated 14/22-9-1965, was applicable only to cases where the gross insurance commission did not exceed Rs. 20,000 for the year. It was argued that in cases where gross insurance commission exceeded Rs. 20,000, the ad hoc deduction allowable for expenses incurred by such agent was at the rate of 40 per cent of the first year's commission and 15 per cent of the renewal commission where separate figures were available and if separate figures were not available, then the ad hoc deduction of 25 per cent of the total commission was to be allowed. It was argued that the limit of Rs. 10,000 which was mentioned in para 2 of the circular was not intended to be a ceiling beyond which no deduction could be allowed, but it was only an additional benefit which could be given beyond the deductions which were allowable on percentage basis and that such additional benefit not exceeding Rs. 10,000 could be given if special circumstances to justify such additional deduction were established. It was contended that the words "aforesaid ceiling" in para 2 of the circular referred to the maximum allowable ad hoc deduction of 40 per cent, 15 per cent or 25 per cent, as the case may be, and not the amount of Rs. 6,000 which was the maximum permissible by way of deduction only in a case, where the gross insurance commission did not exceed Rs. 20,000 for the year. The learned counsel contended that if any other view was taken, it would result in absurdity. It was argued that one cannot imagine that an agent getting gross insurance commission of Rs. 20,000 would be allowed deduction of Rs. 6,000 and an agent who may be getting gross insurance commission of several lakhs of rupees would be allowed deduction of Rs. 10,000 only. It was argued that such startling result was not intended by the Board, nor was the circular ever understood to impose such a ceiling on the gross insurance commission amount which exceeded Rs. 20,000. It was contended that the view taken by those who had occasion to construe the circulars, including the Commissioner, was that ad hoc deduction was allowable at the rate of 40 per cent, 15 per cent or 25 per cent, as the case may be, of the gross insurance commission upto any amount exceeding Rs. 20,000 and, therefore, the exercise undertaken by initiating the proceedings under section 147 by the assessing officer was an a front to the decision taken by his superiors and was nothing beyond a mere change of opinion, which was not permissible for initiating proceedings under section 147 for assessment/reassessment or recomputation of income.

12. The notices for the assessment years 1987-88 and 1989-90 (the return of which was found from the record transferred on inquiry by the assessing officer by the Income Tax Officer of the salary ward as stated in para 8 of the affidavit- in-reply) in Special Civil Appln. No. 5463/1994 and for all the assessment years in Special Civil Appln. Nos. 2381/1996 and 10744/1996 were given for the reason that the maximum amount of deduction to which an LIC agent was entitled was only Rs. 10,000 as per the circular dated 14/22-9-1965, as amended by the circular dated 6-1-1984. The circular dated 14/22-9-1965, provided for allowing an ad hoc deduction at the rate of the percentage specified of the commission where detailed accounts regarding expenses incurred were not maintained by the LIC agent. However, the amount of total expenditure allowed was subject to a ceiling limit of Rs. 6,000 per annum where the group commission did not exceed Rs. 20,000. When it exceeded Rs. 20,000, deduction beyond the aforesaid ceiling could be granted, but not exceeding Rs. 10,000. If the agent had incurred expenditure in excess of the above limits and desired allowance thereof, the regular accounts were required to be maintained. The deductions were not admissible on this ad hoc basis where complete and reliable accounts were maintained. The instruction dated 6-1-1984, by para 2 raised the percentage of allowance to 50 per cent of the years' commission where gross commission was less than Rs. 60,000 and modified the circular of 22-9-1965, only to this limited extent. The limit of Rs. 60,000 was obviously meant to identify those who would be eligible for claiming the ad hoc deduction at the higher rate of 50 per cent. It did not disturb the earlier circular on the aspect of the ceiling limits of Rs. 6,000 and 10,000. In other words these ceilings were not modified. It may be noticed that later, by Circular No. 648 of 30-3-1993, the circular dated 14/22-9-1965, and the instruction dated 6-1-1984, were both superseded and it was provided that those who were having total commission of Rs. 60,000 for the year and did not maintain accounts they may be allowed deduction at the percentage specified (50 per cent for first year, etc.). This was, however, made subject to a ceiling limit of Rs. 20,000. The benefit of ad hoc deduction was now not at all available to agents who earned total commission of more than Rs. 60,000 during the year. Thus, even under this circular an agent who earns commission of Rs. 60,000 cannot claim deduction of Rs. 30,000 at 50 per cent in view of the ceiling of Rs. 20,000. In fact the interpretation suggested on behalf of the petitioners that the ceiling of Rs. 6,000 which restricts the deduction for those who earned total commission upto Rs. 20,000 and who could have claimed upto Rs. 8,000 if the matter was to be decided only on the percentage basis, and that there was no ceiling at all for those who earned such commission income of even more than Rs. 60,000 sounds somewhat odd in view of the scheme of grant of such benefits, such as standard deductions, under the Act, to provide greater relief to those who fall in the lower income group. Claim to deductions of expenditure higher than the ceiling could always be made if accounts were duly maintained. There appears to be no justification for the criticism that the approach of the assessing officer was based on a reading of the circular which can be said to be absurd or startling. Having regard to the nature of the Board's circular dated 14/22-9-1965, read with the amending instruction dated 6-1-1984, it cannot be said that the assessing officer could not have formed a belief that the income chargeable to tax had escaped assessment in view of the ceiling referred to therein. The requisite jurisdictional fact for the issuance of the notice under section 147 did exist and there is no valid reason to thwart the proceedings under section 147 at the threshold. It will be open to the petitioners to respond to the impugned notices on merits and raise all the contentions that they may want to raise in accordance with law against the impugned notices, including on the question of the interpretation of the said circular and instructions. What Commissioner may have done in an earlier case of one of these two assessees under section 263 of the Act could not have prevented the assessing officer from forming his belief on the respect of income having escaped assessment in respect of the assessment years in question.