Allowing the petition, that the Assessing Officer had no reason to believe that the payment made on account of settlement under the agreement with the on-site employees in the United States of America in the class action law suit was a payment towards a penalty imposed and therefore, there was no reason for the Assessing Officer to believe that income had escaped assessment under section 147. The Department had not alleged that the penalty imposed upon the assessee was a part of a sentence in criminal proceedings which if it were, would result in denying the benefit of the deductions claimed. The Assessing Officer had sought to accord a fresh consideration to an issue which was already concluded in the regular assessment proceedings. There was no basis for the Assessing Officer for forming reason to believe and the basis shown on the face of it was totally perverse. The notice issued under section 148 and the order rejecting the assessee’s objections were set aside.(AY.)