Assessee purchased assets in assessment years 1996-97 and 1997-98 under a hire purchase agreement from the company, REPL and these assets were leased back to same company. Subsequently, assessee came to know that said assets were non-existent and transaction of sale and lease back was fraudulent in nature. Assessee filed revised returns and paid resultant tax for assessment years 1996-97 and 1997-98. In subsequent assessment years 1998-99 and 1999-2000, no income was offered as lease rental as assessee had taken stand that assets were misappropriated and same was mentioned in notes of accounts of financials accompanying returns of income. Said returns were accepted and no proceedings from scrutiny assessment were initiated against assessee. Subsequently, the Assessing Officer issued reassessment notice on the ground that lease rental on turbine generator was not recognised as income. No material extraneous to that already on record or new had been discovered by the Assessing Officer indicating income that had escaped taxation. Court held that since the reassessment notice issued was beyond four years, and reasons disclosed that Assessing Officer reached to a belief that there was escapement of income only on going through return of income filed by assessee after it was accepted under section 143(1), without scrutiny, this was nothing but a review of earlier proceedings and, thus, reassessment notice issued was arbitrary exercise of power. Order of single judge affirmed. (AY. 2000-01)