Prakhar Tandon vs Assessing Officer, Ward ...
2022 Latest Caselaw 2125 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


 
Court No. - 3
 

 
Case :- WRIT TAX No. - 379 of 2022
 
Petitioner :- Prakhar Tandon
 
Respondent :- Assessing Officer, Ward No.1(3)(5), Kanpur And 2 Others
 
Counsel for Petitioner :- Prakhar Tandon
 
Counsel for Respondent :- A.S.G.I.,Gaurav Mahajan
 

 
Hon'ble Surya Prakash Kesarwani,J.

Hon'ble Jayant Banerji,J.

1. Heard Sri Prakhar Tandon, Advocate, in person and Sri S.P. Singh, learned Additional Solicitor General of India assisted by Sri Dinesh Varun, learned counsel for the respondent no.3 and Sri Gaurav Mahajan, learned counsel for the respondent - Income Tax Department.

2. This writ petition has been filed praying for the following relief :

"i) Issue a writ, order or direction in the nature of certiorari to quash the impugned notice dated 30.03.2021 U/s 148 of I.T. Act, 1961 issued by the respondent no.1.

ii) Issue a writ, order or direction in the nature of certiorari to quash the impugned order dated 09.02.2022 passed by the assessing officer rejecting the petitioner's objection to the impugned notice dated 30.03.2021.

iii) Issue a writ, order or direction in the nature of certiorari to quash the impugned show cause notice dated 14.02.2022 U/s 144 of I.T. Act, 1961 issued by the respondent no.1."

3. This writ petition was heard at length on 06.04.2022 and 18.04.2022. On 18.04.2022, this Court passed the order in which the order dated 06.04.2022 was also reproduced. The aforesaid orders contain the facts of the case as well the controversy. The order dated 18.04.2022 is reproduced below :

"Heard Sri Prakhar Tandon, learned counsel for the petitioner and Sri Gaurav Mahajan, learned Senior Standing counsel for the respondent nos. 1, 2 and 4.

None appears for the respondent no.3.

On 06.04.2022, this Court passed the following order :

"1. On the oral request of the learned counsel for the petitioner, the National Faceless Assessment Centre, Delhi through Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer, is allowed to be impleaded as respondent no. 4.

2. Necessary correction in the array of party shall be carried out within three days.

3. Notice on behalf of the respondent no. 4 has been accepted by Shri Gaurav Mahajan, learned Senior Standing Counsel for the Income Tax Department.

4. Heard Shri Prakhar Tandon in person and Shri Gaurav Mahajan, learned Senior Standing Counsel for the Income Tax Department.

5. Number of cases are regularly coming before this Court challenging the notices under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act, 1961') or the re-assessment order under Section 147 of the Act, 1961 and some of which, prima facie, indicated arbitrary exercise of powers and harassment by the Income Tax Authorities including the officers at the National Faceless Assessment Centre, Delhi. Suffice would be to refer to some of the writ petitions in this regard, namely, Writ Tax No. 465 of 2022 (Harish Chandra Bhati Vs. Principal Commissioner of Income Tax Noida and 2 others) in which in respect of one co-owner of the same property the land was held to be agricultural land beyond eight kilometers of the municipal limits and thus sale thereof not liable to long term capital gain tax, while in respect of the same property the other co-owner was held to be liable to tax and capital gain tax has been assessed, in Writ Tax No. 202 of 2022 (Katiyar Cold Storage Private Limited Vs. Union of India and 2 others) the challenge is to the notice under Section 148 of the Act, 1961, which has been issued on the basis of an anonymous information about some other person regarding cash deposit and despite the petitioner-assessee repeatedly disclosed every fact before the assessing authority and the National Faceless Assessment Centre that neither the information relates to him nor any such transaction was entered by him and yet National Faceless Assessment Centre baselessly created huge tax liability even after admitting that the information which was made basis to issue notice under Section 148, was totally unfounded.

6. The present writ petition is an another example of illegal, arbitrary and unauthorized exercise of powers and practicing harassment on assessees by the respondent-Income Tax Authorities/National Faceless Assessment Centre inasmuch as the impugned notice under Section 148 of the Act, 1961 for the assessment year 2013-14 has been issued to the petitioner on the basis of an alleged information that the petitioner gained the capital gain of Rs. 26,02,150/- during the assessment year in question by sale of an immovable property but has not disclosed it in his income tax return. The income declared by the petitioner in his income tax return for assessment year 2013-14 is Rs. 82,010/-. The petitioner submitted objection to the reasons before the assessing authority in which he specifically stated that he has not sold any immovable property during the assessment year in question. Yet, in a most arbitrary manner the objection filed by him was rejected by the respondent no. 4 vide order dated 14.2.2022 who had not take pain even to look as to whether there is any such information and if it is there then whether it relates to the petitioner or has any factual foundation. The respondent no. 4, thereafter, issued draft re-assessment order dated 14.2.2022 in which in eight pages he merely reiterated or reproduced the contents of the notice, reasons, objection to the reasons filed by the assessee and the order rejecting the objections. Thereafter, at the ninth page, he all together changed the story and without any whisper about unfounded jurisdictional notice under Section 148 of the Act, 1961, he mentioned that the petitioner has purchased house property for a consideration of Rs. 10,00,000/- and since the income disclosed by him during the assessment year in question is Rs. 82,010/-, therefore, the differential amount of Rs. 9,17,990/- is added under Section 69 of the Act, 1961. This itself evidences that either there was no information with the assessing authority for sale of property or capital gain of Rs. 26,02,150/- by the petitioner during the assessment year 2013-14 or the information was totally unfounded and unverified. Prima facie, the authorities acted without jurisdiction, arbitrarily and to harass the assessee. The draft re-assessment order issued by the respondent no. 4 dated 14.2.2022 itself shows that there was no material before the assessing authority to issue notice under Section 148 of the Act, 1961, the notice itself would be without jurisdiction and no proceeding for re-assessment could have been carried against the petitioner and yet the respondents in continuation of their journey to harass the assessee, continued with the re-assessment proceedings. It is informed by Shri Gaurav Mahajan, learned Senior Standing Counsel for the respondents that as per oral instructions received by him, re-assessment order has been passed.

7. Matter requires consideration not only because, prima facie, the entire proceedings under Section 148 of the Act, 1961 are without jurisdiction but also on account of arbitrary exercise of powers and harassment of assessee, which prima facie, is becoming a practice of the respondents which needs to be checked by the higher authorities.

8. Learned counsel for the respondents prays for and is granted a week's time to file a counter affidavit. Petitioner shall have three days, thereafter, to file a rejoinder affidavit.

9. Put up as a fresh case for further hearing on 18.4.2022 at 2:00 PM along with records of Writ Tax No. 202 of 2022 (Katiyar Cold Storage Private Limited Vs. Union of India and 2 others) and Writ Tax No. 465 of 2022 (Harish Chandra Bhati Vs. Principal Commissioner of Income Tax Noida and 2 others).

10. Considering the facts and circumstances of the case, all proceedings in consequence to the impugned notices and the draft re-assessment order, shall remain stayed till the next date fixed.

11. Liberty is granted to the petitioner to file an amendment application bringing on record the re-assessment order, if any. "

Today, learned Senior Standing counsel for the respondent Nos. 1, 2 and 4 prays for and is granted two weeks and no more time to file counter affidavit.

The respondent no.4 shall separately file a counter affidavit within the same period.

The respondent no.3 shall file a counter affidavit in which it shall be communicated that what action and measures are being proposed by the Government against illegal and arbitrary exercise of powers by the respondent nos.1, 2 and 4 while issuing notice under Section 148 of the Income Tax Act, 1961 or while passing the reassessment order under Section 147 of the Act, 1961.

Connect with Writ Tax No.465 of 2022 and put up as a fresh case for further hearing on 4.5.2022.

Interim order passed earlier is extended till the next date fixed.

In the event counter affidavit is not filed within the time allowed as aforesaid, and the respondent no.2 shall remain personally present and shall show cause for non filing of the counter affidavit.

This order shall be communicated in writing by the learned counsel for the Income Tax Department to all the respondents within three days."

4. Undisputedly, the Assessing Authority issued notice under Section 148 of the Income Tax Act 1961, dated 30.03.2021. The reasons to believe recorded by the Assessing Authority for issuing aforesaid notice under Section 148 is reproduced below :-

"Sir/Madam/M/s.

Whereas I have reasons to believe that your income chargeable to Tax for the Assessment Year 2013-14 has escaped Assessment within the meaning of section 147 of the Income Tax Act, 1961.

I, therefore, propose to assess/re-assess the income/loss for the said Assessment Year and I hereby require you to deliver to me within 30 days from the service of this notice, a return in the prescribed form for the said Assessment Year.

This notice is being issued after obtaining the necessary satisfaction of the PCIT, Kanpur-1

Rakesh Kumar Gupta

Ward 1(3)(5), Kanpur"

5. In this case there is information on INSIGHT PORTAL that during the F.Y. 2012-13 relevant to A.Y. 2013-14 the Assessee was engaged in sale of immovable property with a capital gain of Rs.26,02,150/- was occurred, as per insight verification details. The petitioner filed objection to the aforesaid notice under Section 148 of the Act 1961, reasons to believe in which the petitioner has specifically stated in paragraphs 4, 5, 6 & 7 of the reply as under :-

"4. That in reply to the reason recorded by the AO, it is submitted that the reason recorded is based on conjecture and surmises. It is most truly submitted that assessee has not sold any property in the year F.Y. 2012-13 and as such there is no alleged capital gain of Rs.26,02,150/- out of sale of immovable property in the year F.Y.2012-13 relevant to A.Y. 2013-14. The reason has been recorded without due application of mind. There is no reason to believe that the income of the assessee in the F.Y. 2012-13 chargeable to tax has escaped assessment.

5. That the finding of the assessing officer that during the previous year relevant to the above period, the assessee was having income exceeding the taxable limit is false and perverse.

6. That the AO, has no reason to believe that this is a fit case for reopening and there is an escapement of income under the income Tax Act, 1961.

7. That the approval by the PCIT-1 Kanpur was given in a most cryptic and mechanical manner without applying the judicious mind and thus the sanction is not a valid sanction within the meaning of Section 151 of I.T. Act, 1961."

6. The objection filed by the petitioner was rejected by the respondent no.4 vide order dated 09.02.2022, stating as under :

"6. The assessee has claimed in point 6 that the AO has no reason to believe that this is a fit case for reopening.

Rebuttal by the AO:

Assessee has claimed that AO has no reason to believe that this is a fit case for reopening. In the case of the assessee, case has been reopened as there is a clear reason to believe that income has escaped assessment after information has been received from the INSIGHT portal of income tax department.

This is very specific information received in the office of Jurisdiction AO from ADIT(Inv.)-I, Kanpur, it clearly leads to prima-facie belief that income has escaped assessment as assesee has been involved in the sale of immovable property with a gain of Rs.26,02,150/-. It is pertinent to mention here that in CIT V Nova Promoters & Finlease (P) Ltd (ITA No.342 of 2011) dated 15.02.2012, the Hon'ble Delhi High Court, which is the jurisdictional High Court, held that "We are aware of the legal position that at the stage of issuing the notice u/s 148, the merits of the matter are not relevant and the Assessing Officer at that stage is required to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment."

7. Thereafter, the respondent no.4 prepared a draft reassessment order dated 14.02.2022 which was followed by reassessment order dated 12.03.2022 under Section 147 read with Section 144 and 144 B of the Act, 1961. In the draft order and reassessment order the respondent no.4 has taken altogether a new stand that the petitioner assessee had purchased an immovable property for consideration of Rs.10,00,000/- during the A.Y. 2013-14 and after adjusting the disclosed income as per ITR Rs.82,010/- added the balance amount of Rs.9,17,990/- in the total income of the petitioner. Aggrieved with the aforesaid impugned notice under Section 148 of the Act, 1961 and the reassessment order, the petitioner has filed the present writ petition.

8. It is wholly undisputed that "reasons to believe" recorded by the Assessing Authority for assuming jurisdiction under Section 148 of the Act, 1961 by issuing impugned notice, was totally unfounded and non existent. The Assessing Authority formed the "reasons to believe" on the ground that petitioner - Assessee has sold an immovable property and gained the capital gain of Rs.26,2,0150/- during the F.Y. 2012-13 relevant to A.Y. 2013-14 but has not shown the same in his return of income, which was totally unfounded and not bonafide.

Reason to Believe - Meaning, Scope and Consequence:-

9. In the case of State of Uttar Pradesh & Others vs. Aryaverth Chawal Udyog & Others reported in (2015) 17 SCC 324 (paragraphs 28 to 30), the Hon'ble Supreme Court has held as under:

"28. This Court has consistently held that such material on which the assessing Authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing Authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by assessing Authority on such "reason to believe" as arbitrary and bad in law.

In case of the same material being present before the assessing Authority during both, the assessment proceedings and the issuance of notice for re-assessment proceedings, it cannot be said by the assessing Authority that "reason to believe" for initiating reassessment is an error discovered in the earlier view taken by it during original assessment proceedings. (See: Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan, (1980) 4 SCC 71).

29. The standard of reason exercised by the assessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Ltd. v. CCT,(2007) 15 SCC 435; A.L.A. Firm v. CIT, (1991) 2 SCC 558). If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to "change of opinion".

If an assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment.

30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion" and the material present before the assessing Authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v. Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360)."

(emphasis supplied)

10. In the case of The Commissioner of Sales-Tax U.P. vs. M/s. Bhagwan Industries (P) Ltd., Lucknow, AIR 1973 SC 370 (Paras 9 & 10), Hon'ble Supreme Court has held as under:

"9. The controversy between the parties has centered on the point as to whether the assessing authority in the present case had reason to believe that any part of the turnover of the respondent had escaped assessment to tax for the assessment year 1957-58. Question in the circumstances arises as to what is the import of the words "reason to believe", as used in the section. In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in the section. To put it differently, if there are, in fact, some reasonable grounds for the assessing authority to believe that the whole or any part of the turnover of a dealer has escaped assessment, it can take action under the section. Reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court or this Court, for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. What can be challenged is the existence of the belief but not the sufficiency of reasons for the belief. At the same time, it is necessary to observe that the belief must be held in good faith and should not be a mere pretence.

10. It may also be mentioned that at the stage of the issue of notice the consideration which has to weigh is whether there is some relevant material giving rise to prima facie inference that some turnover has escaped assessment. The question as to whether that material in sufficient for making assessment or re-assessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary."

(Emphasis supplied)

11. A Division Bench of this Court, while dealing with the validity of the re-assessment notice under Section 148 in Writ Tax No.874 of 2010 (M/S Parmarth Steel And Alloys Pvt. Ltd. vs. State of U.P. and Others, decided on 28.03.2022, held as under (Para 17) :

"17. It is settled principles of law that proceedings under Section 21 of the Act, 1948 can be initiated if the material on which the Assessing Authority bases its opinion, is not arbitrary, irrational, vague, distant or irrelevant. There must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in Section 21 of the Act, 1948. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. The question as to whether that material in sufficient for making assessment or re-assessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary.

12. In the case of Sheo Nath Singh vs. Appellate Assistant CIT, (1972) 3 SCC 234 (Para-10), Hon'ble Supreme Court while considering the similar provisions of Section 34 (1-A) of the Indian Income Tax Act, 1922, held as under:-

"................. There can be no manner of doubt that the words "reason to believe" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court."

13. In the case of Union Of India And Others vs M/S. Rai Singh Dev Singh Bist & others, AIR 1974 SC 478 : (1973) 3 SCC 581 (para-5), Hon'ble Supreme Court held as under:-

"................. before an Income-tax Officer can be said to have had reason to believe that some income had escaped assessment, he should have some relevant material before him from which he could have drawn the inference that income has escaped assessment. His vague feeling that there might have been some escape of income from assessment is not sufficient... .............."

14. In the case of ITO vs. Lakhmani Mewal Das, (1976) 3 SCC 757 (para-11 and 12), Hon'ble Supreme Court has held as under:-

"11. As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words "definite information" which were there in section 34 of the Act of 1922 at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to the conclusion that action cannot be taken for reopening assessment even if the information is wholly vague, indefinite, farfetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence.

12. The powers of the Income-tax Officer to reopen assessment though wide are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter's failure or omission to disclose fully and truly all material facts was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned Judges in the High Court, in our opinion, were not in error in holding that the said material could not have led to the formation of the belief that the income of the assessee respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs."

15. In the case of M/s. S. Ganga Saran and Sons (P) Ltd. Calcutta vs. ITO and others, (1981) 3 SCC 143 (Para-6), Hon'ble Supreme Court held as under:-

"6. It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under section 147 (a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the Income Tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147 (a). It there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to he struck down as invalid."

16. In the case of Income Tax Officer, Ward No.62 vs. TechSpan India (P.) Ltd. and another, (2018) 6 SCC 685 (Paras 14 to 18), Hon'ble Supreme Court held as under:

"14. The language of Section 147 makes it clear that the assessing officer certainly has the power to re-assess any income which escaped assessment for any assessment year subject to the provisions of Sections 148 to 153. However, the use of this power is conditional upon the fact that the assessing officer has some reason to believe that the income has escaped assessment. The use of the words ''reason to believe' in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such re-assessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order.

15. Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review.

16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words "change of opinion" implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection.

17. It is well settled and held by this court in a catena of judgments and it would be sufficient to refer Commissioner of Income Tax, Delhi vs. Kelvinator of India Ltd. (2010) 320 ITR 561(SC) wherein this Court has held as under: (SCC p.725, para 5-7)

"5....where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe"..... Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen.

6. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place.

7. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief."

18. Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings."

17. In the case of Radha Krishna Industries vs. State of H.P., (2021) 6 SCC 771, Hon'ble Supreme Court reiterated the law laid down in its earlier judgments in the case of Kelvinator of India Limited (supra) and TechSpan India (P.) Ltd. (supra) and held that the power to reopen an assessment must be conditioned on the existence of "tangible material" and that "reasons must have a live link with the formation of the belief".

18. Since the impugned notice under Section 148 of the Act, 1961 is a jurisdictional notice and the "reasons to believe" recorded by the Assessing Authority was totally unfounded and not bonafide, therefore, the notice itself was without jurisdiction and the Assessing Authority could not have assumed jurisdiction to issue notice under Section 148 of the Act, 1961. Therefore, the impugned notice under Section 148 of the Act, 1961 issued by the Assessing Authority can not be sustained and deserves to be quashed. Consequently, the impugned reassessment order can also not stand and, therefore, it also deserves to be quashed.

19. For all the reasons aforestated, the writ petition is allowed.

20. The impugned notice under Section 148 of the Act, 1961 and the impugned reassessment order under Section 147 read with Section 144 and 144 B of the Act, 1961 passed by the respondent no.5 are hereby quashed.

Order Date :- 6.5.2022/vkg