Lsi India Research And ... vs Additional Commissioner For ...
2022 Latest Caselaw 4668 Kant

        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 14TH DAY OF MARCH 2022

                          BEFORE

         THE HON'BLE MR. JUSTICE B. M. SHYAM PRASAD

             WRIT PETITION NO. 51208/2019 (T-IT)

BETWEEN :

LSI INDIA RESEARCH AND DEVELOPMENT
PRIVATE LIMITED
(SUCCESSOR-IN-INTEREST TO
RENESAS MOBILE INDIA PVT. LTD.)
S1, WIPRO ELECTRONIC CITY
SPECIAL ECONOMIC ZONE,
DODDATHOGUR VILLAGE,
BEGUR HOBLI,
ELECTRONIC CITY,
BANGALORE-560 100.

REPRESENTED HEREIN BY
ITS AUTHORIZED REPRESENTATIVE,
MS. REKHA JOSHI.
                                 ... PETITIONER
(BY SRI. T. SURYANARAYANA, SENIOR ADVOCATE FOR
    MS. THANMAYEE RAJKUMAR, ADVOCATE)
AND :
1.      ADDITIONAL COMMISSIONER FOR
        INCOME TAX SPECIAL RANGE-1,
        2ND FLOOR, BMTC BUILDING,
        6TH BLOCK, 80 FEET ROAD,
        KORAMANGALA, BANGALORE - 560 095.
                            2



2.   JOINT COMMISSIONER OF INCOME TAX
     CIRCLE-4(1)(1), BMTC BUILDING,
     6TH BLOCK, 80 FEET ROAD,
     KORAMANGALA,
     BANGALORE - 560 095.

3.   THE PRINCIPAL COMMISSIONER OF
     INCOME TAX, BANGALORE-1,
     5TH FLOOR, BMTC BUILDING,
     6TH BLOCK, 80 FEET ROAD,
     KORAMANGALA,
     BANGALORE - 560 095.

                                      ... RESPONDENTS
(BY SRI.K.V. ARAVIND, ADVOCATE)

     THIS WRIT PETITION IS FILED UNDER ARTICLE 226
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
ORDER DATED 23.08.2019 (ANNEXURE-M) PASSED BY THE
R-1 REJECTING THE PETITIONERS OBJECTIONS AS TO HIS
JURISDICTION IN RESPECT OF THE ASSESSMENT YEAR
2014-15;   QUASH   THE     NOTICE   DATED   28.03.2019
(ANNEXURE-E) ISSUED BY THE R-1 U/S. 148 R/W SECTION
147 OF THE ACT FOR THE ASSESSMENT YEAR 2014-15
AND ETC.

     THIS WRIT PETITION HAVING BEEN HEARD AND COMING
ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT
DELIVERED THE FOLLOWING:
                                3



                           ORDER

The petitioner has impugned the Notice dated

28.03.2019 (Annexure- E) issued under Section 148 read with

Section 147 of the Income Tax Act 1961 and the order dated

23.08.2019 (Annexure-M) by the Additional Commissioner of

Income Tax, Special Range-I (the first respondent) rejecting

the petitioner's objections against re-opening of assessment

for the assessment year 2014-2015. The first respondent, on

the petitioner's request has offered reasons for reassessment,

and the reasons offered by the first respondent read as under:

"Basis of forming reason to believe and the details of escapement of income.

On verification of records it is reveals (sic) that assessee had debited subcontracting charges of Rs.23,03,36,536/- in the profit and loss account under the head 'other expenses'. On perusal of records, it is observed that the assessee has debited and expenditure under the head 'contractors and subcontractors' and has deducted TDS on Rs.35187025 against payment of

Rs.74931004 (Clause 34 (a) of Form 3CD). Further it was also observed that the assessee has paid sub-

contractors charges to M/s Broadcom Communications Technologies Private Limited of Rs.3.77 crore which means that the assessee had not deducted TDS on payment of subcontracting charges paid of Rs.3,97,43,979/- (74931004 - 35187025) which would have been deducted u/s. 194C of the Act. Since the assessee has not deducted TDS, the amount of Rs.3,97,43,979/- is not allowable to the assessee u/s. 40 (a)(ia.) of the IT Act, 1961. This amount has thus escaped assessment. The case of assessee for AY:2014- 2015 is being reopened to bring to tax the income escaping assessment u/s 147 r.w.s 148 of IT Act, 1961"

2. The first respondent, after opportunity to the

petitioner to file objections to the reasons offered, has issued

the impugned order dated 28.03.2019 (Annexure-M). The

first respondent, in this impugned order, has opined that re-

assessment is not because of mere suspicion but there is

reason to believe that Rs.3,97,43,979/- has escaped taxation

and the re-assessment need not be based only on fresh

material. The first respondent has further opined that there is

no change of opinion as the question of non-deduction of TDS

was not examined at the time of assessment order under

section 143(3) of the Income Tax Act [for short, 'the I-T Act'].

3. A brief statement of facts would be as follows. The

petitioner was issued with notice under Section 142(1) read

with Section 129 of the I-T Act on 11.08.2016. This notice

required the petitioner to furnish, amongst others, the details

of the payments covered under Section 40A (2)(b) of the I-T

Act in a particular format. This notice required the petitioner

not only to furnish the details of the related party, nature of

transaction, payments made but also to furnish details on

whether TDS is deducted or not and if TDS is deducted the

necessary details in this regard. The petitioner has furnished

these details. The Assessing Officer [AO] has extended the

benefit of hearing to the petitioner, and during the course of

this hearing, the AO has asked the petitioner to furnish

certain details/information with regard to the AY: 2014-2015.

4. The petitioner, by its reply dated 15.11.2016

[Annexure - C], has furnished such details. The details

furnished by the petitioner include reconciliation of the

amount paid to the related persons under Section 40A (2) (b)

of the Act. The petitioner has also furnished the details of

taxes withheld on behalf of the Sub-contractor charges viz.,

M/s. Broadcom Communications Technology Limited - the

related party for whom, according to the re-assessment

notice, the petitioner had to effect TDS for a sum of

Rs.3,97,43,973/-. The details in this regard are appended as

Annexure 7 to Annexure - C. This Annexure-7 discloses that

a sum of Rs.40,17,326/- was withheld on behalf of M/s.

Broadcom Communications Technology. Thereafter, the AO

has passed the assessment order dated on 22.11.2016 under

Section 143(3) of the I-T Act. It is after this assessment order,

the impugned notice dated 28.03.2019 is issued under

Section 148 read with Section 147 of the I-T Act resulting in

the impugned order dated 23.08.2019.

5. Sri. T.Suryanarayana, the learned Senior counsel

for the petitioner and Sri. K.V.Aravind, the learned counsel

for the authorities, submit at the threshold that the question

that will have to be decided by this Court would be:

"Whether in the facts and circumstances of the case, this Court could opine that there is a deemed opinion of the assessing officer [AO] on the expenditure filed by the petitioner disclosing the actual TDS affected and the tax withheld on behalf of M/s.Broadcom Communications Technologies Limited with the assessment order dated 22.11.2016 under Section 143(3) of the IT Act"

Sri T. Suryanarayana submits that if the petitioner persuades

this Court to accept that indeed the AO has expressed an

opinion on the details furnished by the petitioner towards the

tax withheld on payments made to M/s.Broadcom

Communications Technologies Limited in issuing the

assessment order dated 22.11.2016 under section 143 (3) of

the I-T Act, reopening of assessment would amount to change

of opinion and therefore, re-opening of the assessment would

be impermissible in law.

6. Sri. T.Suryanarayana also submits that this Court

must decide whether, in the facts and circumstances of the

case, where the first respondent, who relies upon the records

already submitted during the hearing of the proceedings

under section 143 of the I-T Act, could be held to have

reasons to believe that any income chargeable to income tax

has escaped assessment. Sri T. Suryanarayana emphasizes

that if it could be held either that the first respondent

proposes to change opinion or that there is no reason to

believe, the impugned re-assessment notice and the

subsequent order would be without jurisdiction.

7. Sri. T.Suryanarayana in support of his

submissions that this Court must opine that the AO has

accepted the explanation offered by the petitioner in the

proceedings under Section 143 of the I-T Act and therefore

there is AO's deemed opinion in this regard urges the

following grounds.

7.1 The AO had issued notice under Section 143(1)

read with 129 of the I-T Act as the petitioner's returns for the

relevant assessment year was selected for scrutiny through

Computer Aided Scrutiny Selection [CASS] and in the course

of the hearing after the said notice, the petitioner is extended

opportunity of hearing. Though the petitioner was called

upon to furnish the details of related party transactions

including related party sub-contractors, for the purposes of

Section 40A of the I-T Act, the petitioner was also specifically

called upon to file certain additional information and details.

The petitioner accordingly filed the details on 15.11.2016.

The petitioner along with these details has furnished the

party wise details of the payment to sub-contractors

(including M/s. Broadcom Communications Technology

Limited) indicating the tax withheld. It is after the detailed

discussion and the scrutiny of the details furnished, the

assessment order dated 22.11.2016 is passed under Section

143(3) of the I-T Act without any additions.

7.2 It is settled law that an AO need not offer reasons

for acceptance of the cause shown on an issue [or a query]

during the assessment proceedings and the reasons must be

offered only when an assessee's claim is disallowed. When an

order of regular assessment is made under section 143(3) of

the I-T Act after a query, there would be a presumption that

such order is the result of application of mind1. The

assessment order dated 22.11.2016, after the query and the

response, can only be construed as a result of the AO's

deemed opinion on the petitioner's claim for allowance. In

1 In this regard, reliance is placed upon paragraph 23 of the Full Bench decision of the High Court of Delhi in Commissioner of Income Tax v. Kelvinator of India Ltd stating that this decision is considered by the Apex Court in the proceedings between the same parties in its decision reported in (2010) 187 taxman 312 (SC).

which event, the threshold bar of a subsequent change in the

deemed opinion on an issue or a query raised and considered

would apply and the proposed reassessment would be

without jurisdiction.

7.3 In continuation, it is contended that the

reassessment proceedings will be invalid in case where a

query is raised and is answered by the assessee in the

original assessment proceedings but thereafter the AO does

not make any addition in the assessment order as in such

situations it must be considered that the AO has examined

the issue but did not find any ground or reason to make

addition or reject the assessee's stand, and in this there is a

deemed opinion. In support of this contention, a strong

reliance is placed upon another Full Bench decision of the

High Court of Delhi viz., Commissioner of Income-tax VI,

New Delhi v. Usha International Ltd2.

2 (2012) 25 Taxmann.com 200 (Delhi) (FB)

7.4 A change in the AO's opinion cannot be a reason

for reopening assessment. If change of opinion by itself could

confer jurisdiction for reopening of assessment, it would

tantamount to review and an AO has no power to review.

Therefore, change of opinion is an inbuilt test to check abuse

of power by an AO. After the Amendment Act, 1989 (w.e.f.

01.04.1989), an AO can reopen assessment provided there is

subsequent 'tangible material' to come to the conclusion that

there is escapement of income from assessment as against

mere change of opinion. In this regard reliance is placed

upon paragraph 4 of the decision of the Apex Court in

Commissioner of Income Tax, Delhi v. Kelvinator of India

Ltd3.

7.5 The petitioner, in furnishing the details of the tax

withheld qua M/s Broadcom Communications Technologies

Ltd., in response to a query during the hearing prior to the

assessment order dated 22.11.2016, had truthfully placed all

3 ibid

material details and it is on the perusal of these details that

the AO has accepted the expenditure claimed without issuing

a demand. The reassessment proceedings in such

circumstances based on the very same records/details would

be impermissible. In the event a reassessment has to be

made when all the details are furnished, it would be only

when subsequent tangible materials are brought out to justify

reassessment. But, in this case no tangible materials are

placed on record to justify that the assessment order dated

22.11.2016 does not have a deemed opinion and therefore, the

change of opinion cannot be a reason for reassessment. In

support of this proposition, reliance is placed upon the

decision of this court in TTK Prestige Ltd v. DCIT4.

7.6 As regards the recent decisions both by the Apex

Court and this Court, reliance is placed upon the decision of

the Apex Court in Income Tax Officer v. TechSpan India

4 (2018) 97 Taxmann.com 112 (Karnataka)

(P.) Limited5 and ACIT v. Marico Ltd6, and the decisions of

this Court in Infosys Ltd v. DCIT7 and Dell India (P.)

Limited v. JCIT8. These decisions are to reiterate the

propositions that though alternative remedy would be

available for an assessee if aggrieved by the reasons for

reopening of the assessment, this Court could exercise

jurisdiction under Article 226 of the Constitution of India if it

is shown that the proposed reopening would be without

jurisdiction; if the notice under section 147 read with section

148 of the I-T Act is only based on a change of opinion, the AO

would not have jurisdiction and the other propositions

reiterated by the earlier decisions referred to hereinabove.

8. Sri K. V. Aravind, the learned counsel for the

revenue, contests the maintainability of the writ petition while

not contesting the proposition that if there is a deemed

5 (2018) 92 Taxmann.com 361 (SC) and also Income Tax Officer v.

TechSpan India (P.) Limited in (2007) 158 Taxmann.com 182 (Delhi) 6 (2020) 117 Taxmann.com 244 (SC) 7 (2019) 109 Taxmann.com 107 (Karnataka) 8 (2021) 123 Taxmann.com 468 (Karnataka)

opinion at the time of assessment, and if reassessment is

commenced because of change of opinion, such

commencement of the assessment would be without

jurisdiction. However, Sri K V Aravind strenuously refutes

the canvass on behalf of the petitioner that there is a deemed

opinion in the assessment order dated 22.11.2016 and the

impugned notice is because of a change in this opinion.

8.1 Sri K V Aravind contends that, at the stage of

issuance of notice under section 147 read with section 148 of

the I-T Act, the only question that would be relevant is

whether there is relevant material on which a reasonable

person could have formed the requisite belief regarding

escapement of tax; if this threshold is established, whether

the materials will conclusively prove the escapement - the

final outcome - would not be material. He emphasizes that

this is the proposition underlined by the Hon'ble Apex Court

in ACIT v. Rajesh Jhaveria Stockbrokers (P) Limited9. He

argues that in the present case, it is obvious that the

question of non-deduction of TDS and the consequence

thereof under section 40(a)(ia) of the I-T Act was not

considered by the AO in the original proceedings, and

therefore there is prima facie reason to conclude that the

commencement of the reassessment proceedings would be

justified. The petitioner will not be without remedy as it would

be open to it to present its case before the first respondent.

8.2 Sri K V Aravind next submits that relevant

material for requisite belief on escapement of tax i.e,

information, could be obtained even from the record of the

original assessment or from an investigation of the material

on record; if it is shown that the relevant issue, the reason

d'être for commencement of the reassessment, was not gone

into in the assessment proceedings, it cannot be argued that

because the reassessment proceedings is based on the

9 (2007) 291 ITR 0500 (SC)

material on record the reassessment must be invalidated. Sri

K V Aravind relies upon the decision of the Hon'ble Apex

Court in Kalyanji Mavji and Co v. CIT, West Bengal - II10,

and he argues that the exposition in this regard in the above

decision cannot be disputed in view of the later decision of the

Hon'ble Apex Court in Indian and Eastern Newspaper

Society v. CIT11 only because the second proposition

exposited in Kalyanji Mavji and Co., is held to be bad.

8.3 Sri K V Aravind also argues that there can be no

legal impediment in the reopening of assessment in cases

where material is available with the AO but the same escapes

attention while making the assessment. He relies upon the

decision of the decision of the Division Bench of Delhi High

Court in TechSpan v. ITO and the later affirmation of this

decision by the Hon'ble Apex Court in ITO v. TechSpan

supra in support of the above proposition and to contend that

10 (1976) 102 ITR 0287 (SC) 11 (1976) 119 ITR 0996 (SC)

an attempt to bring to tax that income which has escaped

assessment cannot be absorbed by judicial intervention on an

assumption that there is change of opinion even in cases

where the assessment order does not address itself to a given

aspect sought to be examined in the reassessment

proceedings.

9. The Hon'ble Apex Court in Kalyanji Mavji and

Co. v. CIT, West Bengal-II supra while considering the

provisions of section 34(1) of the I-T Act, 1922, and the

amendments thereto over a period of time, and the

significance of the expression, "information" as found in the

last of the amendments to this section12, has declared that for

[34. Income escaping assessment.--(1) If--

(a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under- assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or

the purposes of reassessment, "information" contemplated for

reassessment in 34(1)(b) could be when it is secured by the

AO in certain circumstances. The circumstances delineated

by the Hon'ble Apex Court are as follows:

(1) where the information is as to the true and correct state of the law derived from relevant judicial decisions;

(2) where in the original assessment the income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the Income-tax Officer. This is obviously based on the principle that the taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority;

(3) where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts

(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income- tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed,

which were not present at the time of the original assessment;

(4) where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law.

10. In the later decision in Indian and Eastern

Newspaper Society, New Delhi v. CIT, New Delhi supra,

examining the question of reassessment commenced under

the provisions of section 147 read with section 148 of the I-T

Act [as it stood at the relevant time], and considering the

circumstances delineated in Kalyanji Mavji and Co. v. CIT,

West Bengal-II supra has declared that the observation in

this decision that 'where income had escaped assessment due

to the oversight, inadvertence are mistake must fall within

section 34 (1)(b) of the I-T Act' travels farther than the statute

warrants and any observation in this regard does not lay

down the correct law. The significance of the other three

circumstances are reiterated.

11. Later the provisions of section 147 have been

amended w.e.f 01.04.198813 and again w.e.f 01.04.198914.

The significance of these amendments are stated in Circular

No. 549 dated 31.10.1989. As regards the significance of the

first Amendment it is inter alia stated as follows:

Separate provisions contained in clauses (a) and (b) of the old section have been merged into a single new section, which provides that if the Assessing Officer is of the opinion that income chargeable to tax for any assessment year has escaped assessment, he can assess or reassess, the same after recording in writing the reasons for doing so.

This merger also introduced certain changes as discussed in

the decisions relied upon by the parties, but a discussion in

this regard will not be relevant for the case on hand15. This

amendment also dispensed with the requirement that the AO

(Income Tax Officer) should have reason to believe or

information in his possession before taking action for

13 Direct Tax Laws (Amendment) Act, 1987-III

Direct Tax Laws (Amendment) Act, 1989-III 15 The discussion on the differences could be found in the full bench decision of the High Court of Delhi in CIT v. Kelvinator of India Ltd supra

reassessment under the substituted provisions of section 147

of the I-T Act. However, by the later amendment, the

requirement of reason to believe is brought back into the

statute replacing reasons to be recorded in writing and

opinion.

12. In the later decision in A.L.A. Firm v. CIT,

Madras supra, the Hon'ble Apex Court, after referring to

these amendments, has reiterated that only the second

proposition delineated in Kalyanji Mavji and Co. v. CIT,

West Bengal-II is doubted and not the other three

propositions, and insofar as 'information' gathered by the AO

for commencing reassessment based on the material already

on record, the Hon'ble Supreme Court has held as follows.

What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Mavji (supra)? The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the I.T.O. initiates reassessment proceedings in the light of "information" obtained by

him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the I.T.O., having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax. In other words, as pointed out in IENS case, it also ropes in cases of a "bare or mere change of opinion" where the I.T.O. (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor I.T.O.) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the IENS case (supra) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji (supra). The second paragraph from the judgment in the IENS case earlier extracted has also reference

only to this situation and insists upon the necessity of some information which make the ITO realise that he has committed an error in the earlier assessment. This paragraph does not in any way affect the principle enumerated in the two Madras cases cited with approval in Anandji Haridas, Even making allowances for this limitation placed on the observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law:

"The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the original assessment. If the Income-tax Officer had considered and formed an opinion on the said material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income-

tax Officer had not considered the material and subsequently come by the material from

the record itself, then such a case would fall within the scope of section 147(b) of the Act

13. It follows from the aforesaid proposition that, the

reiteration that the material which is part of the original

assessment proceedings could be the basis for reopening of

assessment prevails and this is provided the other conditions

are satisfied16. This Court, as such, cannot interfere with the

impugned show cause notice dated 28.03.2019 (Annexure- E)

or the order dated 23.08.2019 (Annexure-M) only because the

proposed reassessment is based on the materials furnished

during the hearing prior to the Assessment order dated

22.11.2016.

14. At this stage, this Court must refer to the decision

of the Full Bench of the High Court of Delhi in Commissioner

of Income Tax - VI, New Delhi v. Usha International Ltd.,

supra because circumstances akin to the present case's

16 This Court can also draw support from the decision of the Hon'ble Apex Court in Commissioner of Income Tax, Delhi versus Kelvinator of India Ltd supra

circumstances are discussed. The relevant part reads as

under:

Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons.

15. In the present case, it is undisputed, as recorded

in annexure C, that the petitioner was asked to submit

certain details/information relating to the relevant

assessment year viz., AY 2014-15. The petitioner in response

thereto, furnished different details including the details as

regards the payments made to related parties, the TDS

affected and the tax withheld. The petitioner has furnished

such details relating to M/s Broadcom Communications

Technologies Pvt. Ltd. After these details are furnished, the

assessment order is issued on 22.11.2016 without any

additions, or rejection.

16. These circumstances would be material to decide

whether the assessment order dated 22.11.2016 incorporates

the AO's deemed opinion on the query raised. It is now

settled that an assessment order can be passed either in

terms of section 143(1) or 143(3) of the I-T Act, and when a

regular order of assessment is passed in terms of section 143

(3), a presumption that such an order is passed on

application of mind is attached to it. This presumption is

raised with the aid of section 114(e) of the Evidence Act which

stipulates that judicial and official acts are regularly

performed. A useful reference in this regard could be made to

the decision of the Full Bench of the High Court of Delhi in

Commissioner of Income Tax v. Kelvinator of India Ltd.,

supra. In the considered opinion of this court, when it is

undisputed that the AO asked for details relating to the

details of the payments made as subcontractor charges and

the TDS affected and the petitioner has furnished those

details, with the AO issuing the assessment order dated

22.11.2016 without any additions, it must be deemed that

the AO has opined in favour of the petitioner on the TDS

deductions made.

17. It is settled by the decision of the Hon'ble Apex

Court with the decision in Commissioner of Income Tax,

Delhi v. Kelvinator of India Ltd., supra [which holds the

field even today] that mere change of opinion cannot by itself

be a reason for reopening of the assessment as it would

amount to the AO reviewing the assessment; the change of

opinion must be applied as a built-in check to prevent such

review and the AO can reopen assessment only when there is

tangible material to conclude that there is escapement of

income from assessment.

18. The question of tangible material that would justify

the reason to believe that certain income has escaped tax

must be tested against the settled law that, 'material on which

the assessing authority bases its opinion must not be arbitrary,

irrational, vague, distant or irrelevant and it must bring home

the appropriate rational of the action taken by the AO in

pursuance of such belief; if the material relied upon by the AO

for reopening assessment does not satisfy these requirements,

the AO's action would be held as arbitrary and bad in law17.

19. The reason offered in justification of the notice

issued under section 147 read with section 148 of the I-T Act

is that on perusal of records it is observed by the AO that

though the petitioner has paid subcontractor charges in a

sum of Rs.7,4,931,004/- to M/s Broadcom Communications

Technologies Private Limited, the petitioner has not deducted

the TDS for the entire amount and therefore a sum of

17 State of Uttar Pradesh v. Aryaverth Chawl Udyog reported in (2015) 53 Taxmann.com 66 (SC)

Rs.39,743,979/- cannot be allowed under section 40(a)(ia) of

the I-T Act. If there is conscious application of mind on an

issue during assessment, and this Court as in the

circumstances of the case has already opined that there was

such conscious application of mind and therefore a deemed

opinion, there cannot be reassessment only because of an

error in such opinion. The reasons offered by the A.O to

justify reassessment cannot be accepted as an objective view

based on any subsequent information in the absence of

necessary material in this regard.

20. In the light of the afore discussion, this Court is of

the considered view that the impugned notice dated

28.03.2019 (Annexure- E) issued under Section 148 read with

Section 147 of the Income Tax Act 1961 and the order dated

23.08.2019 (Annexure-M) by the Additional Commissioner of

Income Tax, Special Range-I (the first respondent) cannot be

sustained and must be quashed on the ground of lack of

jurisdiction. Therefore, the following:

ORDER

The writ petition is allowed, and the

impugned notice dated 28.03.2019 (Annexure- E)

issued under Section 148 read with Section 147 of

the Income Tax Act 1961 and the order dated

23.08.2019 (Annexure-M) by the Additional

Commissioner of Income Tax, Special Range-I (the

first respondent) are quashed.

Sd/-

JUDGE

RB