Digitally Signed Byshraddha Oracle Financial Services Software Limited Shraddha Kamlesh Kamlesh Talekar Talekar Date: Oracle Park, Off Western Express 2022.01.1 v. Deputy Commissioner Of India Tax Circle 13(1) (1) Having His Offce At Room

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3551 OF 2019 Digitallysigned bySHRADDHAOracle Financial Services Software Limited SHRADDHAKAMLESHKAMLESHTALEKARTALEKARDate:Oracle Park, Off Western Express2022.01.1417:20:17Highway, Goregaon (E),+0530Mumbai-400 063.Vs.1. Deputy Commissioner of IndiaTax Circle 13(1) (1) having hisoffce at Room No.21,, Aayakar Bhavan, M.K. Road, Mumbai-400 020. ....Petitioner 2. Assistant Commissioner of IncomeTax, Circle 13(1)(1) having hisoffce at Room No. 21,, AayakarBhavan, M.K. Road, Mumbai-400 020. 3. Additional Commissioner of IncomeTax, Range 13(1), Mumbai havinghis offce at Room No.221, AayakarBhavan, M.K. Road, Mumbai400 020. 4. Union of India, through theSecretary, Department of Revenue,Ministry of Finance, Government ofIndia, New Delhi-110001 ...Respondents ---- Shri G.C. Srivastava a/w. Shri Sukhsagar Syal i/b Shri SameerDalal for petitioner. Shri Akhileshwar Sharma for respondent Nos.1 and 2. CORAM :K.R. SHRIRAM &N. J. JAMADAR, JJ.DATE :10[th] JANUARY, 2022(THROUGH VIDEO CONFERENCE) JUDGMENT (PER N.J. JAMADAR, J.) : 1.Rule. Rule made returnable forthwith. With the consent oflearned counsel for the parties, heard fnally. 2.By virtue of this petition under Article 226 of theConstitution of India, the petitioner assails the notice dated 26[th]February 2019, under section 14, of the Income Tax Act, 1961(‘the Act, 1961’), issued by the respondent No.2-AssistantCommissioner of Income Tax, Circle 13(1)(1) seeking to reopen theassessment for the assessment year 2014-15, and the order dated1,[th] October 2019 passed by respondent No.2 (the AssessingOffcer) rejcting the petitioner’s objction to reopening ofassessment for assessment year 2014-15. 3.The petition arises in the backdrop of the following facts :(a)The petitioner-company is engaged in the business ofproviding comprehensive information technology solutions tobanks and other fnancial institutions globally. Thepetitioner develops and markets software products andoperates primarily in two business segments : (i) Productsand (ii) Services. Under the product business, the petitioner(a)The petitioner-company is engaged in the business ofproviding comprehensive information technology solutions tobanks and other fnancial institutions globally. Thepetitioner develops and markets software products andoperates primarily in two business segments : (i) Productsand (ii) Services. Under the product business, the petitioner markets its package application software and derivesrevenue from license fee, customization fee and annualmaintenance charges. Under the Service business, thepetitioner provides services to customers which include ITsolutions and consulting and professional services accordingto customer's requirements and standards. (b)For the said business, the petitioner has subsidiariesin different countries. The installation and implementationof the product at the location of the overseas customersrequires the presence and supervision of technicalpersonnel. These personnel are temporarily seconded bypetitioner on employment basis to the overseas subsidiariesto perform such functions. During the period ofsecondment, the personnel are kept on employment andpayroll of the overseas subsidiaries. Their salary and relatedexpenses are subsequently reimbursed by the petitioner tothe said subsidiaries, on a cost to cost basis. (c)For the assessment year 2014-2015, the petitioner fledits return of income on 2,[th] November 2014. The petitioner’s case was selected for scrutiny assessment under theComputer Aided Scrutiny Selection (CASS) and one of thestated parameters for selection of the petitioner’s case was,“large outward remittances made to non-residents”. (c)For the assessment year 2014-2015, the petitioner fledits return of income on 2,[th] November 2014. The petitioner’s case was selected for scrutiny assessment under theComputer Aided Scrutiny Selection (CASS) and one of thestated parameters for selection of the petitioner’s case was,“large outward remittances made to non-residents”. (d)During the course of assessment, the petitioner fled,inter-alia, copies of its Audited Financial Statements, TaxAudit report in Form 3CD under section 44AB of the Act,1961 and Accountant’s report in Form 3CFB under section92E of the Act, 1961. (e)The Assessing Offcer, in a notice dated 14[th] November2017, specifcally stated that large outward remittances toforeign companies was the prime reason for scrutinyassessment and called upon the petitioner to furnishnecessary details and explanation. It is the case of thepetitioner that the petitioner explained that the foreignremittances were, inter-alia, towards reimbursement ofexpenses incurred by its overseas subsidiaries on its behalf.Necessary details including particulars in Form No.15CAand Form 15CB were furnished. Copies of several invoices and debit notes raised by the overseas subsidiaries on thepetitioner for reimbursing the employee cost were also fledalongwith letter dated 11[th] December 2017. (f)During the course of assessment, the Assessing Offcermade a reference to Additional Commissioner of Income Tax,Transfer Pricing Offcer, 3(1) (‘TPO’) under section 92CA(I) ofthe Act, 1961. Thereupon the petitioner fled a copy oftransfer pricing study report. The TPO, in turn, called uponthe petitioner to submit details in respect of reimbursementof expenses to the overseas subsidiaries. The petitioneragain furnished the requisite information along with entity-wise break-up and details of employee cost and other costsreimbursed by the petitioner, vide letter dated 21[st] July 2017.The TPO passed an order under section 91CA(3) of the Act,1961 on 30[th] October 2017. (g)Eventually, fnal assessment order was passed on 6[th]February 201,. (h)By the impugned notice dated 26[th] February 2019, theAssessing Offcer sought to reopen the assessment on the ground that he had reason to believe that the petitioner’sincome chargeable to tax for the assessment year 2014-15has escaped assessment. Thereupon, the petitioner solicitedthe reasons for the proposed reopening of the assessment.Vide communication dated 1,[th]February 2019, theAssessing Offcer provided the petitioner with a copy of thereasons for the proposed reopening of the assessment. Itwas, inter-alia, recorded that from note 30, (expenditure inforeign currency) of the fnancial statement for theassessment year 2014-15, the petitioner had debited anamount of Rs.72,.793 Crore as ‘Employee Cost’. However, inAssessment Year 2015-16, under same head of ‘EmployeeCost’, a sum of Rs.626.416 Crore had been disallowed undersection 40(a)(i) of the Act, 1961, for non-deduction of TDSunder section 195 of the Act, 1961. On parity of reasoning,for assessment year 2014-15, a sum of Rs.65,.31, (whichconstituted 90.33% of total employee cost of Rs.72,.793Crore) was liable to be disallowed on pro-rata basis inAssessment Year 2014-15, being reimbursement of employeesalary and related expenses. It was further noted that thesaid aspect was neither discussed nor considered and examined during the course of assessment for theAssessment Year 2014-15. Hence, it was necessary to re-open the assessment. (i)The petitioner fled the objctions against the reasonsfor reopening recorded by Assessing Offcer. By an orderdated 1,[th] October 2019, the Assessing Offcer disposed of allthe objctions raised against the reopening of theassessment by ascribing reasons. It was concluded that theobjctions raised by the petitioner were not tenable. examined during the course of assessment for theAssessment Year 2014-15. Hence, it was necessary to re-open the assessment. (i)The petitioner fled the objctions against the reasonsfor reopening recorded by Assessing Offcer. By an orderdated 1,[th] October 2019, the Assessing Offcer disposed of allthe objctions raised against the reopening of theassessment by ascribing reasons. It was concluded that theobjctions raised by the petitioner were not tenable. 4.Being aggrieved by the notice under section 14, forreopening of the assessment and the order disposing of theobjctions against reopening, the petitioner has invoked writjeurisdiction of this Court. 5.The substance of the challenge is that the assessment isproposed to be reopened on a mere change of opinion. All therelevant facts, documents and materials were present before andconsidered by the Assessing Offcer, while passing the assessmentorder for the assessment year 2014-15. There is no tangiblematerial which would warrant reopening of the assessment. The Assessing Offcer had no reason to believe that the incomechargeable to tax escaped assessment in assessment year 2014-15. Thus, the jeurisdictional condition for reopening theassessment is singularly absent. 6.Though an order was passed on 1,[th] December 2019granting time to the respondents to fle an affdavit in reply, iffound necessary, no affdavit in reply has been fled. 7.We have heard Shri G.C. Shrivastava, the learned counselfor the petitioner and Shri Akhileshwar Sharma, the learnedcounsel for respondent Nos.1 and 2 at length. With the assistanceof the learned counsel, we have perused the material on recordincluding the assessment order for assessment year 2014-15,notice under section 14,, reasons recorded by the AssessingOffcer, objctions thereto, and the order disposing of theobjctions. ,.Shri Shrivastava, the learned counsel for the petitioner,submitted that the order disposing of the objctions of thepetitioner to the reasons recorded for reopening the assessment for assessment year 2014-15 is wholly unsustainable. Theimpugned notice under section 14, of the Act, 1961 and thereasons recorded, preceding the issue of the said notice, sufferfrom the vice of mere change of opinion. Amplifying thesubmission, Shri Shrivastava would urge that the issue ofremittance of employee cost was duly considered during thecourse of assessment for assessment year 2014-15. All therelevant material facts and documents, which were solicitedduring the course of assessment, were placed before the AssessingOffcer by the petitioner. The bold stand of the Assessing Offcer,in the reasons, that the aspect of employee cost was not advertedto and considered by the Assessing Offcer, during the course ofassessment for the Assessment Year 2014-15, is against theweight of the material on record. Laying emphasis on the queriesraised during the course of assessment and the response of thepetitioner thereto, Shri Shrivastava strenuously submitted thatthe impugned action is nothing but an endeavour of taking adifferent view of the matter on the same set of facts without therebeing an iota of tangible material. Thus, it cannot be said thatthere was tangible material to form a reason to believe thatincome chargeable to tax had escaped assessment for the 9.In opposition to this, Shri Sharma, the learned counsel forrespondent Nos.1 and 2 supported the impugned action. It wasurged that the Assessing Offcer was well within his rights inissuing the notice under section 14, of the Act, 1961 as anidentical claim under head “Employees Cost” was disallowed bythe Assessing Offcer in succeeding assessment years. In thebackdrop of the material on record, according to Shri Sharma, itcannot be said that there was no tangible material to reopen theassessment. Shri Sharma would further urge that the assessmentbeing reopened within four years of the end of assessment year2014-15, the additional requirement, under the proviso, of failureon the part of the assessee to disclose fully and truly all thematerial facts, is not required to be fulflled. Thus, the challengeto the impugned notice and order disposing of the objctions toreopen the assessment is without any substance, urged ShriSharma. 10.On a plain reading, section 147 of the Act 1961 enables theAssessing Offcer to assess or reassess any income chargeable to tax which, he has reason to believe, has escaped assessment in anassessment year. The frst proviso to section 147 imposes certainadditional conditions, where an assessment is sought to bereopened beyond a period of four years from the end of therelevant assessment year. In the instant case, the power undersection 147 is sought to be exercised within the period of fouryears and, therefore, the additional requirement envisaged by thefrst proviso does not come into play. Nonetheless, where theAssessing Offcer professes to exercise the power under section147, even within a period of four years of the end of relevantassessment year, the condition precedent to the exercise of thesaid power is the formation of a reason to believe that any incomechargeable to tax has escaped assessment. 11.The legality, propriety and correctness of the action undersection 147 hinges upon the existence of the reason to believe.However, the said exercise is neither unregulated nor uncanalized.The Assessing Offcer has no unfettered discretion to resort tosection 147 on the premise that on a fresh consideration of thesame set of material, he has formed a reasonable belief thatincome has escaped assessment. A principle has emerged and well ingrained that “a mere change of opinion”, cannot jeustify therecourse to the provisions contained under section 147 of the Act,1961. 12.‘Existence of reason to believe’ can be jeudged on the basis ofthe reasons recorded by the Assessing Offcer. The test to beapplied to jeudge the reasonability of belief is whether there istangible material for the Assessing Offcer to resort to the powerunder section 147 of the Act, 1961. Lest, the exercise of powersuffers from the vice of arbitrariness. 13.A proftable reference, in this context, can be made to thejeudgment of the Supreme Court in the case of Commissioner ofIncome-Tax Vs. Kelvinator of India Ltd. & Anr. [1], wherein the testof “tangible material” to save the power under section 147 fromthe vice of arbitrariness, was enunciated. The observations of theSupreme Court in paragraph 6 are instructive and thus extractedbelow : “6……………….However, one needs to give a schematicinterpretation to the words "reason to believe" failingwhich, we are afraid, Section 147 would give arbitrarypowers to the Assessing Offcer to re-open assessments onthe basis of "mere change of opinion", which cannot be per 13.A proftable reference, in this context, can be made to thejeudgment of the Supreme Court in the case of Commissioner ofIncome-Tax Vs. Kelvinator of India Ltd. & Anr. [1], wherein the testof “tangible material” to save the power under section 147 fromthe vice of arbitrariness, was enunciated. The observations of theSupreme Court in paragraph 6 are instructive and thus extractedbelow : “6……………….However, one needs to give a schematicinterpretation to the words "reason to believe" failingwhich, we are afraid, Section 147 would give arbitrarypowers to the Assessing Offcer to re-open assessments onthe basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind theconceptual difference between power to review and power tore-assess. The Assessing Offcer has no power to review; hehas the power to re-assess. But reassessment has to bebased on fulfllment of certain precondition and if theconcept of "change of opinion" is removed, as contended onbehalf of the Department, then, in the garb of re-openingthe assessment, review would take place. One must treatthe concept of "change of opinion" as an in-built test tocheck abuse of power by the Assessing Offcer. Hence, after1st April, 19,9, Assessing Offcer has power to re-open,provided there is "tangible material" to come to theconclusion that there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief………...” 14.A useful reference can also be made to a Division Benchjeudgment of this Court in the case of Aroni Commercials Ltd. Vs. Deputy Commissioner of Income-tax 2(1)[2], wherein, afteradverting to the provisions contained in sections 147 and 14, ofthe Act, 1961, and the aforesaid pronouncement of the SupremeCourt in the case of Kelvinator of India Ltd. (Supra), the Division Bench expounded the law, in the following words : “11………..The law with regard to reopening ofassessment is fairly settled by decisions of Courts. Thepower of the Assessing Offcers under Sections 147 and14, of the Act to reopen an assessment is classifed intotwo :- (a) Reopening of assessment within a period of 4 yearsfrom the end of the relevant assessment year and (b) Reopening of assessment beyond a period of 4 yearsfrom the end of the relevant assessment year. The common jeurisdictional requirement for reopening ofassessment both within and beyond a period of 4 yearshas to be on the basis of reason to believe that incomechargeable to tax has escaped assessment and the reason for issuing a notice to reopen are recorded before issuing anotice. However, there is one additional jeurisdictionalrequirement to be satisfed while seeking to reopen theassessment beyond the period of 4 years from the end ofthe relevant assessment year viz. that there must havebeen a failure on the part of the assessee to disclose fullyand truly all material facts necessary for assessmentduring the original assessment proceedings. Thus theprimary requirement to reopen any assessment is areason to believe that income chargeable to tax hasescaped assessment. However, as observed by theSupreme Court in the case of CIT vs. Kelvinator IndiaLimited 320 ITR 561 in the context of Sections 147/14, ofthe Act that reason to believe found therein does not givearbitrary powers to reopen an assessment. The concept ofchange of opinion is excluded/omitted from the wordsreason to believe. Thus a change of opinion would not bereason to believe that income chargeable to tax hasescaped assessment. Besides the power to reassess is nota power to review. Further reopening must be on the basisof tangible material. 12.Therefore the power to reassess cannot beexercised on the basis of mere change of opinion i.e. if allfacts are available on record and a particular opinion isformed, then merely because there is change of opinionon the part of the Assessing Offcer notice under Section147/14, of the Act is not permissible. The powers underSection-147/14, of the Act cannot be exercised to correcterrors/mistakes on the part of the Assessing Offcer whilepassing the original order of assessment. There is asanctity bestowed on an order of assessment and thesame can be disturbed by exercise of powers underSections 147/14, of the Act only on satisfaction of thejeurisdictional requirements. Further, the reasons forreopening an assessment has to be tested/examined onlyon the basis of the reasons recorded at the time of issuinga notice under Section 14, of the Act seeking to reopen anassessment. These reasons cannot be improved uponand/or supplemented much less substituted by affdavitand /or oral submissions. Moreover, the reasons forreopening an assessment should be that of the AssessingOffcer alone who is issuing the notice and he cannot actmerely on the dictates of any another person in issuingthe notice. Moreover, the tangible material upon the basisof which the Assessing Offcer comes to the reason tobelieve that income chargeable to tax has escapedassessment can come to him from any source, however,reasons for the reopening has to be only of the AssessingOffcer issuing the notice. At the stage of issuing notice under Section 14, of the Act to reopen a concludedassessment the satisfaction of the Assessing Offcerissuing the notice is of primary importance. Thissatisfaction must be prima facie satisfaction of having areason to believe that income chargeable to tax hasescaped assessment. At the stage of the issuing of thenotice under Section 14, of the Act it is not necessary forthe Assessing offcer to establish beyond doubt thatincome indeed has escaped assessment.” 15.The principles which emerge from the aforesaidpronouncements and a plethora of decisions of this Court and theSupreme Court, can be summarized as under : Existence of the reason to believe that income chargeable totax has escaped assessment is a jeurisdictional condition forinvoking the power under section 147 of the Act, 1961, both withinand beyond a period of four years from the end of relevantassessment year. The Assessing Offcer is enjeoined to recordreasons before a notice to reopen the assessment under section14, of the Act is issued. In case, the assessment is reopenedbeyond the period of four years, where the assessment wascompleted under section 143(3) of the Act, an additional conditionthat the income must have escaped assessment on account offailure on the part of the assessee to disclose fully and truly allmaterial facts necessary for assessment is required to be fulflled.The existence of reason to believe is further qualifed by the fact that it should be based on tangible material. Firstly, it cannot bethe product of mere ipse dixit of the Assessing Offcer. Secondly, itshould not partake the character of a mere change in opinion asregards the same material and facts, which were considered at thetime of original assessment. For the power is of reassessment andnot review. Once the primary facts necessary for assessment arefully and truly disclosed and the Assessing Offcer takes aconclusive view thereon, it is not permissible to reopen theassessment based on the very same material on the premise thatit is susceptible to a different opinion favourable to the revenue. 16.On the aforesaid touchstone, reverting to the facts of thecase, it may be apposite to note the reasons for reopening theassessment communicated vide communication dated 1,[th] February 2019. The relevant part reads as under : 16.On the aforesaid touchstone, reverting to the facts of thecase, it may be apposite to note the reasons for reopening theassessment communicated vide communication dated 1,[th] February 2019. The relevant part reads as under : “2 It is found from Note 30 (expenditure in foreigncurrency) of the Financial Statements for A.Y.2014-15 of theassessee company that the assessee has debited an amountof Rs.72,.793 Crore as ‘Employee Costs’ 3It is pertinent to mention here that in A.Y. 2015-16, anamount of Rs.693.406 Crore is debited as employee cost.Out of the total employee cost of Rs.693.406 Crore, a sumof Rs.626.416 Crore (90.33% of 693.406) has beendisallowed u/s.40(a)(i) of the Act and as per various DoubleTaxation Avoidance Agreement (DTAAs) for non-deductionof TDS u/s.195 of the Act in assessment order u/s.143(3) of the Act. This amount of Rs.626.416 Crore is termed as‘reimbursement of the employee salary and relatedexpenses’ as per submission made by the assesseecompany. 5The nature of expenses under the head ‘Employee Cost’in Note 30 in both the fnancial years i.e. F.Y. 2014-15 andF.Y. 2013-14 is the same. Although further break-up ofemployee cost of Rs.72,.793 Crore in A.Y. 2014-15 is notavailable on record, a sum of Rs.65,.31, Crore (90.33% oftotal employee cost) is liable to be disallowed on pro ratabasis in A.Y. 2014-15 being reimbursement of employeesalary and related expenses as it is similar to the nature ofamount of Rs.626.416 Crore in the A.Y. 2015-16. Therefore, applying the same reasons in A.Y. 2014-15 alsofor the transaction of similar nature, i.e., payment ofEmployees Cost made by the assessee company to its NRssubsidiaries, is dis-allowable u/s. 40(a)(i) of the Act and asper various Double Taxation Avoidance Agreements (DTAAs)for non-deduction of TDS u/s.195 of the Act. 6It is pertinent to mention here that assessment recordsof A.Y. 2014-15 is duly perused and it is found that theissue in question here is neither discussed nor consideredand examined by way of any questionnaire, order-sheet,noting an assessee’s submission during the assessmentproceedings and the assessing offcer has not given anyopinion on the issue in A.Y. 2014-15. Therefore, reopeningof assessment does not involve any change of opinion. Further, on perusal of the assessment records of A.Y. 2014-15, it is seen that the assessee company had not providedthe details/ break-up of Employee Cost during the course ofassessment proceedings. Hence, issue of ‘reimbursement ofthe employee salary and related expenses’ which isembedded in employee cost of and not separatelymentioned, was not examined by the assessing offcer dueto failure on the part of assessee to disclose fully and trulyall the material and facts necessary for the assessment ofA.Y. 2014-15. Therefore, the case falls under the purview ofincome which has escaped assessment as prescribed inExplanation 1 to Sec. 147 of the Act which is reproduced asunder : “Production before the Assessing Offcer of accountbooks or other evidence from which material,evidence could with due diligence have beendiscovered by the Assessing Offcer will not necessarily amount to disclosure within the meaningof the foregoing proviso.” In any case the above provision is not applicable as thecase is being reopened within 4 years from the end of therelevant assessment year.” “Production before the Assessing Offcer of accountbooks or other evidence from which material,evidence could with due diligence have beendiscovered by the Assessing Offcer will not necessarily amount to disclosure within the meaningof the foregoing proviso.” In any case the above provision is not applicable as thecase is being reopened within 4 years from the end of therelevant assessment year.” 17.Shri Shrivastava, the learned counsel for the petitionersubmitted that the assertion of the Assessing Offcer, in theaforesaid reasons, especially in paragraph 6 extracted above, thatthe issue in question was neither discussed nor considered andexamined by any questionnaire, order-sheet, noting and assessee’ssubmission, during the original assessment proceedings, andconsequently the Assessing Offcer had no opportunity to considerthe issue in the assessment order for assessment year 2014-15 isplainly against the weight of the material on record. This factuallyincorrect premise vitiates the impugned action as the saidexercise clearly falls within the ambit of “mere change of opinion”on the same set of material facts. 1,.Shri Shrivastava, the learned counsel for the petitionerwould urge that aspect of expenses under the head ‘EmployeeCost’ was not only considered by the Assessing Offcer during thecourse of assessment year 2014-15, but the said issue was alsoconsidered by the TPO. In fact, the assessment order refers to the observations of the TPO as regards remittances, the volume ofwhich was admittedly the cause for scrutiny assessment. 19.We fnd that the aforesaid submissions of Shri Shrivastavaare borne out by the material on record. On the core issue ofoverseas remittances, vide notice dated 14[th] November 2017, theAssessing Offcer had called the petitioner to furnish theinformation and explanations. It was inter-alia mentioned thereinthat the case was selected for scrutiny under CASS on followingTP risk parameter : (i) Large Relief Claimed u/s. 90/91.(ii)Large outward remittances to anon resident not being a company, or to aforeign company. 20.In response thereto, vide communication dated 11[th]December 2017, the petitioner furnished details of the remittancesalong with the sample copies of Form 15CA/15CB and relevantinvoices copies, which evidence the nature of the remittances,with the following explanation : “(ii)In this regard, we submit that details of theremittance (i.e. purpose of remittances, amounts etc.)are appearing in the copy of ITS provided to us. Aswould be noted from the ITS form, the foreignremittances made by the company during the year aretowards reimbursement of expenses incurred by foreigngroup companies on the company’s behalf, fees forprofessional and technical services, procurement of fxed assets,rentpayments,insurancepremium,membership, fees etc. In this regard, we are enclosingAnnexure 5,sample copies of Form 15CA/15CB, alongwith relevant invoice copies, which evidence the natureof the remittance.” 21.In form No.15CA, against the nature of reimbursement, it was mentioned that “reimbursement of payroll incurred outside India”. In form No.15CB, the following note was added : “The payment was to be made on account ofreimbursement of expenses incurred outsideIndia and paid by Oracle Financial ServicesSoftware b.v. on behalf of Oracle FinancialServices Software Limited. Since the paymentis to be made on account of reimbursementonly, no Tax is required to be deducted.” 22.The order under section 92CA(3) of the Act, 1961 passed byTPO also indicates that the petitioner had fled detailedsubmissions and furnished the details of reimbursement made toforeign subsidiaries. The break-up of total employee costreimbursement and other costs reimbursement was alsofurnished. 23.The TPO, in his order dated 30[th] October 2017, inter-alia,recorded as under : India”. In form No.15CB, the following note was added : “The payment was to be made on account ofreimbursement of expenses incurred outsideIndia and paid by Oracle Financial ServicesSoftware b.v. on behalf of Oracle FinancialServices Software Limited. Since the paymentis to be made on account of reimbursementonly, no Tax is required to be deducted.” 22.The order under section 92CA(3) of the Act, 1961 passed byTPO also indicates that the petitioner had fled detailedsubmissions and furnished the details of reimbursement made toforeign subsidiaries. The break-up of total employee costreimbursement and other costs reimbursement was alsofurnished. 23.The TPO, in his order dated 30[th] October 2017, inter-alia,recorded as under : “5.6.6 It is further evident that the Assessee payshuge reimbursement cost to the AEson account ofsalary reimbursement cost of its employees everyyear. During the year, the Assessee madereimbursement of Rs.7,30,36,09,522/-. This reimbursement charges payment to the AE’sindicates that the Assessee routinely send itsemployees for onsite work to various countries,where the AEs actually concluded the deal on behalfof the Assessee. Accordingly, it is clear that thesalary of the employee paid by the AE is reimbursedby the Assessee to AE. This clearly shows that theentire business activity has been carried out only bythe Assessee in those countries and the AEs aremere conduit for the Assessee to carry out itsoperation in those countries.” 24.It is imperative to note that the Assessing Offcer in theassessment order dated 6[th] February 201,, adverted to theaforesaid order passed by the TPO, in paragraph 4.1.3. Theaforesaid material would thus indicate that the petitioner wascalled upon by the Assessing Offcer, by raising a query, to furnishexplanation as regards the foreign remittances, to which petitionerhad submitted the requisite information and details thereof. 25.Shri Sharma, the learned counsel for respondent Nos.1 and2 was jeustifed in canvassing a submission that the order undersection 92CA(3) was restricted to ascertain correctness of theamount paid to the companies outside India. However, the factremains that the issue of remittances concerning the employeecost was also agitated before and considered by the TPO, and theobservations of the TPO were, in turn, adverted to by theAssessing Offcer. In the circumstances, an inference becomes jeustifable that the entire issue regarding the reimbursement ofemployee cost was under the active consideration of the AssessingOffcer. 26.There can be no duality of opinion that it is the assessee’sduty to disclose all primary facts. Once the assessee discloses allthe primary facts, the inferences to be drawn thereon is a matterwithin the exclusive province of authority of the Assessing Offcer.This duty of assessee does not extend beyond disclosure ofprimary facts. The assessee is not expected to suggest aninference on those facts, correct or otherwise. In a given case, thefact that the assessee had suggested a particular inference, whichupon reconsideration, does not fnd favour with the AssessingOffcer subsequently, may not furnish a jeustifable ground to holdthat there was non-disclosure of primary facts. 27.A proftable reference, in this context, can be made to thepronouncement of the Supreme Court in the case of CalcuttaDiscount Co. Ltd. Vs. Income Tax Offcer [3], wherein the aforesaidaspect was illuminatingly postulated : (10)Does the duty however extend beyond the 3(1961) 41 ITR 191 (SC) 27.A proftable reference, in this context, can be made to thepronouncement of the Supreme Court in the case of CalcuttaDiscount Co. Ltd. Vs. Income Tax Offcer [3], wherein the aforesaidaspect was illuminatingly postulated : (10)Does the duty however extend beyond the 3(1961) 41 ITR 191 (SC) full and truthful disclosure of all primary facts ? Inour opinion, the answer to this question must be inthe negative. Once all the primary facts are before theassessing authority, he requires no further assistanceby way of disclosure. It is for him to decide whatinferences of facts can be reasonably drawn and whatlegal inferences have ultimately to be drawn. It is notfor somebody else-far less the assessee--to tell theassessing authority what inferences-whether of factsor law should be drawn. Indeed, when it isremembered that people often differ as regards whatinferences should be drawn from given facts, it will bemeaningless to demand that the assessee mustdisclose what inferences-whether of facts or law-hewould draw from the primary facts. (11)If from primary facts more inferences thanone could be drawn, it would not be possible to saythat the assessee should have drawn any particularinference and communicated it to the assessingauthority. How could an assessee be charged withfailure to communicate an inference, which he mightor might not have drawn ? (12)It may be pointed out that the Explanationto the sub- section has nothing to do with " inferences" and deals only with the question whether primarymaterial facts not disclosed could still be said to beconstructively disclosed on the ground that with duediligence the Income-tax Offcer could have discoveredthem from the facts actually disclosed. TheExplanation has not the effect of enlarging thesection, by casting a duty on the assessee to disclose "inferences "-to draw the proper inferences being theduty imposed on the Income-fax Offcer. (13-14)We have therefore come to the Conclusionthat while the duty of the assessee is to disclose fullyand truly all primary relevant facts, it does not extendbeyond this.” (emphasis supplied) 2,.Undoubtedly, as pointed out by Shri Sharma, the issue has not been specifcally dealt with in the assessment order. However,the said consideration is not decisive. As laid down in the case ofAroni Commercials Ltd. (Supra), once a query is raised during theassessment proceedings and the assessee has furnished a replythereto, it implies that the query so raised was a subjct matter ofconsideration of the Assessing Authority. It is not an immutablerule that an assessment order should contain reference and/ordiscussion on such query. 29.For the foregoing reasons, we are satisfed that, in thepeculiar facts of the case, the impugned notice under section 14,of the Act, 1961 can be said to be based on a mere change ofopinion. In view of the settled legal position that mere change ofopinion does not furnish a jeustifcation for formation of reason tobelieve that income chargeable to tax has escaped assessment, wefnd the impugned action legally unsustainable. 30.Shri Sharma attempted to salvage the position bycanvassing a submission that for the assessment year 2015-16,the Assessing Offcer has rejcted the petitioner’s contention asregards the employee cost and that constitutes a tangible material 29.For the foregoing reasons, we are satisfed that, in thepeculiar facts of the case, the impugned notice under section 14,of the Act, 1961 can be said to be based on a mere change ofopinion. In view of the settled legal position that mere change ofopinion does not furnish a jeustifcation for formation of reason tobelieve that income chargeable to tax has escaped assessment, wefnd the impugned action legally unsustainable. 30.Shri Sharma attempted to salvage the position bycanvassing a submission that for the assessment year 2015-16,the Assessing Offcer has rejcted the petitioner’s contention asregards the employee cost and that constitutes a tangible material for reopening the assessment. We are afraid to accede to thissubmission. In our view, the aforesaid submission overlooks thefact that the Assessing Offcer who passed the originalassessment order for assessment year 2014-15 can be said to havebeen satisfed with the explanation furnished by the petitioner.Looking at the issue from a slightly different perspective, it can besaid that the Assessing Offcer could have called for the materialand information, sought by the Assessing Offcer who carried outthe assessment for the year 2015-16, and yet would have formedthe same opinion, different from the one formed by the AssessingOffcer for the assessment year 2015-16. The issue, thus, squarelyfalls in the realm “change of opinion”. In our view, the only reasonthat in the succeeding assessment years, the Assessing Offcerhas come to a different opinion, by itself, may not be a ground toreopen the assessment for an earlier year, wherein a view wasconclusively recorded by the concerned Assessing Offcer. 31.The upshot of the aforesaid consideration is that the petitiondeserves to be allowed. 32.Hence, the following order : O R D E R The petition stands allowed in terms of prayer clause (a), which reads as under : “(a)this Hon’ble Court may be pleased toissue a Writ of Certiorari or writ in the nature ofCertiorari or any other appropriate writ, order ordirection under Article 226 of the Constitution ofIndia calling for the records of the Petitioner’s caseand after examining the legality and validitythereof quash the notice dated 26[th] February 2019issued by Respondent No.2 under section 14, ofthe Act seeking to reopen the assessment for theassessment year 2014-15 and the order dated 1,[th]October 2019 passed by Respondent No.2,disposing off the objections raised by thePetitioner.” In the circumstances, there shall be no order as tocosts. Rule made absolute to the aforesaid extent. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)