Indrakant Parikh v. Oral Judgment

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2796 of 2022 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE N.V.ANJARIA andHONOURABLE MR. JUSTICE BHARGAV D. KARIA ==========================================================1Whether Reporters of Local Papers may be allowedto see the judgment ?2To be referred to the Reporter or not ?3Whether their Lordships wish to see the fair copyof the judgment ?4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ? 1Whether Reporters of Local Papers may be allowedto see the judgment ?2To be referred to the Reporter or not ?3Whether their Lordships wish to see the fair copyof the judgment ?4Whether this case involves a substantial questionof law as to the interpretation of the Constitutionof India or any order made thereunder ?========================================================== ANMOL SPINTEX PRIVATE LIMITED THRU DIRECTOR NAISHADH INDRAKANT PARIKH Versus THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 1(1)(1) ==========================================================Appearance:HIREN J TRIVEDI(8808) for the Petitioner(s) No. 1MR MR BHATT SENIOR COUNSEL WITH MR KARAN SANGHANI WITH MR MUNJAAL BHATT FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 29/08/2022 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned advocate Mr. Hiren j. Trivedifor the petitioner and learned Senior Advocate Mr. M.R. Bhatt with learned advocateMr. Karan Sanghani with learned advocate Mr.Munjaal Bhatt for M.R. Bhatt and Co. for therespondent. 2.Having regard to the controversy involved inthe present case which lies in a very narrowcompass, with the consent of the learnedadvocates for the respective parties, thematter is taken up for final hearing. 3.Rule returnable forthwith. Learned advocate Mr. Karan Sanghani waives service of noticeof rule on behalf of the respondent. 4.By this petition under Article 226 of theConstitution of India, the petitioner has challenged the notice dated 26.03.2021 issuedunder section 148 of the Income Tax Act, 1961(For short “the Act”) for reopening of theassessment proceedings for the AssessmentYear 2014-2015 and order disposing objectionsraised by the petitioner company dated22.11.2021. The petitioner has alsochallenged order dated 21.03.2022 passedunder section 147 read with section 143(3)read with section 144B of the Act and noticeof demand dated 21.03.2022. 5.1)The petitioner is a companyincorporated under the provisions of theCompanies Act, 1956 and is engaged inmanufacturing business. 5.2)The petitioner company filed its return of income under section 139(1) of the Act for the Assessment Year 2014-2015 on29.09.2014 declaring total loss of Rs.(-)5,41,319/-. 5.3)Case of the petitioner was taken forscrutiny assessment under section 143(2) ofthe Act. The Assessing Officer issued noticeunder section 142(1) of the Act dated09.11.2016 calling for details of sharepremium received along with details like PAN,address and copies of income tax return. 5.4)The petitioner vide letter dated17.01.2016 supplied the necessary details ascalled for. 5.5)The Assessing Officer issued yetanother notice dated 2.12.2016 calling forproviding copy of CA certificate for marketvalue of shares by applying Rule 11UA of theIncome Tax Rules, 1962 (for short “Rules,1962”)withregardtoRs. 2,76,00,000/- shares issued to Amazon TextilePvt. Ltd and also asked the petitionercompany to explain why provisions of section56(2) of the Act should not be invoked. 5.3)Case of the petitioner was taken forscrutiny assessment under section 143(2) ofthe Act. The Assessing Officer issued noticeunder section 142(1) of the Act dated09.11.2016 calling for details of sharepremium received along with details like PAN,address and copies of income tax return. 5.4)The petitioner vide letter dated17.01.2016 supplied the necessary details ascalled for. 5.5)The Assessing Officer issued yetanother notice dated 2.12.2016 calling forproviding copy of CA certificate for marketvalue of shares by applying Rule 11UA of theIncome Tax Rules, 1962 (for short “Rules,1962”)withregardtoRs. 2,76,00,000/- shares issued to Amazon TextilePvt. Ltd and also asked the petitionercompany to explain why provisions of section56(2) of the Act should not be invoked. 5.6)The petitioner vide reply dated8.12.2016 provided the CA certificate andgave explanation for non applicability ofsection 56(2)(viib) of the Act to the factsof the case of the petitioner. 5.7)The Assessing Officer passed theassessment order dated 09.12.2016 wherein noadditions were proposed. notice under section 148 of the Act dated26.03.2021 for the Assessment Year 2014-2015for reopening the assessment stating thatincome chargeable to tax has escaped assessment within the meaning of section 147of the Act and asked the petitioner to filereturn of income. 5.9)The petitioner therefore, filed thereturn of income on 19.04.2021 and requestedfor a copy of the reasons recorded by theAssessing Officer. Such reasons recorded on22.03.2021 were provided to the petitioner bycommunication dated 12.05.2021. The reasons recorded by the Assessing Officer for reopening the assessment under section 147 ofthe Act read as under : : “Reasonsforreopeningtheassessment in the case of M/s. ANMOLSPINTEX PVT LTD.for A.Y.2014-15 u/s147 of the I.T. Act. Brief facts of the case: Theoriginal return of income was filedby the assessee on 28.09.2014declaring total income of Rs.(-)5,41,319/-.Assessmentu/s.143(3) was completed on 10.12.2016by determining total income at ofRs. (-)5,41,319/-. received: In this case, during thecourse of the assessment proceedingsthe case of Amazon Textiles Pvt Ltd.(PAN ) for A.Y.2014-15, itis seen that the Amazon Textiles PvtLtd. has purchased shares ofRs.34,86,90,000/- from the assesseeon more than fair market value. Onperusal of the case records of theassessee, it is seen that during theyear under consideration, theassessee has received share premiumof Rs.34,86,90,000/-. The assessee-company has claimed tohave complied with the rule 11UA ofthe I.T. Rules. Further, theassessee-company has declared thenominal income of Rs.2,56,200/- asper Return of income for AY 2013-14.Thus, the financial results of theassessee-company had been adverselyaffected. Therefore, the assesseehas received share premium amountingto Rs.34,86,90,000/- which isrequired to be taxed under theprovisions of section 56(2)(viib) ofthe Act. 3. Analysis of information received:As per information, during thecourse of the assessment proceedingsin the case of Amazon Textiles PvtLtd. (PAN ) for A.Y.2014-15, it is seen that the AmazonTextiles Pvt Ltd. has purchasedshares of Rs.34,86,90,000/- from theassessee on more than fair marketvalue. On perusal of the caserecords of the assessee, it is seenthat during the year under The assessee-company has claimed tohave complied with the rule 11UA ofthe I.T. Rules. Further, theassessee-company has declared thenominal income of Rs.2,56,200/- asper Return of income for AY 2013-14.Thus, the financial results of theassessee-company had been adverselyaffected. Therefore, the assesseehas received share premium amountingto Rs.34,86,90,000/- which isrequired to be taxed under theprovisions of section 56(2)(viib) ofthe Act. The assessee-company has claimed tohave complied with the rule 11UA ofthe I.T. Rules. Further, theassessee-company has declared thenominal income of Rs.2,56,200/- asper Return of income for AY 2013-14.Thus, the financial results of theassessee-company had been adverselyaffected. Therefore, the assesseehas received share premium amountingto Rs.34,86,90,000/- which isrequired to be taxed under theprovisions of section 56(2)(viib) ofthe Act. 4. Enquiries made by the AO assequel to information collected/received: In this case, specificinformation has been receivedclearly outlining the systematicevasion of taxes by the assessee.The facts as enumerated above havebeen found out on examination on thecase records of the assessee and areself explanatory. Therefore, nofurther enquiry is required in thiscase. On the basis of the same thereare reasons to believe that theincome chargeable to tax has escapedassessment. 5. Findings of the AO: Afteranalysis of the information with thefacts available on record, it can beconcluded that the Amazon TextilesPvt Ltd. has purchased shares ofRs.34,86,90,000/- from the assessee on more than fair market value. Onperusal of the case. records of theassessee, it is seen that during theyear under consideration, theassessee has received share premiumof Rs.34,86,90,000/-. The assessee-company has claimed to have compliedwith the rule 11UA of the I.T.Rules. Further, the assessee-companyhas a declared the nominal income ofRs.2,56,200/- as per the Return ofIncome for A.Y 2013-14. Thus, thefinancial results of the assessee-company had been adversely affected.Therefore, the assessee has receivedshare premium amounting to Rs.34,86,90,000/- which is required tobe taxed under the provisions ofsection 56(2)(vilb) of the Act.Therefore,anamountofRs.34,86,90,000/-hasescapedassessment and the same is requiredto be brought to tax. 6. Basis of forming reason tobelieve and details of escapement ofincome: In this regard, it is stated thatthe information was not in thepossession of the undersignedearlier. The said information/schemeof tax evasion could be unearthedonlyafterreceivingtheinformation. Although, during thecourse of assessment proceedings,the assessee submitted, P&L account,Balance sheet and other details, thescheme of tax evasion was embeddedin annual report, audited P&L A/c,balance sheet and books of account in such a manner that it could notbe detected by the AO and could bedetectedonlyreceivingtheinformation. It can be reasonablyconcluded that there is failure onthe part of assessee to disclosefully and truly all necessary factsduring the assessment proceedings. For aforesaid reasons, it is not acase of change of opinion by the AO.It is evident from the above factsas mentioned in the para 3 & 5, thatthe assessee had not truly and fullydisclosed material facts necessaryfor his assessment for the yearunder consideration. On the basis of the above, I havereason to believe that income of theassesseetotheextentofRs.34,86,90,000/-hasescapedassessment for the year underconsideration. Therefore, I amsatisfied that it is a fit case forinitiating proceedings u/s 147 ofthe Act. 7. Paragraph will include escapementof income chargeable to tax inrelation to any assets (includingfinancial interest in any entity)located outside India: NA 8. Applicability of the provisionsof section 147/151 to the facts ofthe case: In this case a return of income wasfiledfortheyearunderconsideration and regular assessment On the basis of the above, I havereason to believe that income of theassesseetotheextentofRs.34,86,90,000/-hasescapedassessment for the year underconsideration. Therefore, I amsatisfied that it is a fit case forinitiating proceedings u/s 147 ofthe Act. 7. Paragraph will include escapementof income chargeable to tax inrelation to any assets (includingfinancial interest in any entity)located outside India: NA 8. Applicability of the provisionsof section 147/151 to the facts ofthe case: In this case a return of income wasfiledfortheyearunderconsideration and regular assessment u/s. 143(3) of the Act on 10.12.2016Since, 4 years from the end of therelevant year has expired in thiscase, the requirement to initiateproceedings u/s. 147 are reason tobelieve that income for the yearunder consideration has escapedassessment because of failure on thepart of the assessee to disclosefully and truly all material factsnecessary for assessment for theassessment year under consideration.It is pertinent to mention here thatreasons to believe that income hasescaped assessment for the yearunder consideration have beenrecorded above (refer paragraph 4, 5and 6). In this regard, it is alsopertinent to mention here that abovereferred details have not beencalled for by the AO and thus arenot been examined by the AO nor suchdetails are furnished by theassessee. It was only afterreceiving the information that thisscheme of tax evasion could beunearthed. It is pertinent tomention here that the aforesaidinformation was not in thepossession of the undersignedearlier. I have carefully consideredthe assessment records containingthe submissions made by the assesseein response to various noticesissuedduringtheassessmentproceedings and have noted that theassessee has not fully and trulydisclosed the following materialfacts necessary for assessment forthe year under consideration: In the AY 2014-15, there is anescapement of income chargeable totaxaggregatingto Rs.34,86,90,000/-. It is evident from the above factsthat the assessee had not truly andfully disclosed material factsnecessary for assessment for theyear under consideration therebynecessitating reopening u/s. 147 ofthe Act. It is true that the assessee hasfiled a copy of annual report andaudited Profit & Loss A/c andBalance Sheet along with return ofincomewherevarious information/material were disclosed.However, the requisite full and truedisclosure of all the material factsnecessary for assessment has notbeen made as noted above. It ispertinent to mention here that eventhough the assessee has producedbooks of account, annual report,audited P&L A/c and Balance Sheet orother evidence as mentioned above,the requisite material facts asnoted above in the reasons forreopening were embedded in such amanner that material evidence couldnot be discovered by the AO andcould have been discovered with duediligence, accordingly attractingprovisions of Explanation 1 ofsection 147 of the Act. It is evident from the abovediscussion that in this case, theissues under consideration were never examined by the AO during thecourse of regular assessment. Thisfact is corroborated from thecontents of notices issued by the AOu/s 143(2)/142(1) and order sheetentriesrecordedduringtheassessment proceedings. It isimportant to highlight here thatmaterial facts relevant for theassessment on the issue(s) underconsideration were not filed duringthe course of assessment proceedingand the same may be embedded inannual report, audited P&L A/C,Balance sheet and books of accountsin such a manner that it wouldrequire due diligence by the AO toextract these information. For aforestated reasons, it is not a case ofchange of opinion by the AO. It is evident from the abovediscussion that in this case, theissues under consideration were never examined by the AO during thecourse of regular assessment. Thisfact is corroborated from thecontents of notices issued by the AOu/s 143(2)/142(1) and order sheetentriesrecordedduringtheassessment proceedings. It isimportant to highlight here thatmaterial facts relevant for theassessment on the issue(s) underconsideration were not filed duringthe course of assessment proceedingand the same may be embedded inannual report, audited P&L A/C,Balance sheet and books of accountsin such a manner that it wouldrequire due diligence by the AO toextract these information. For aforestated reasons, it is not a case ofchange of opinion by the AO. In this case more than four yearshave lapsed from the end of theassessment year under consideration.Hence necessary sanction to issuethe notice u/s. 148 is beingrequestedfromPrincipalCommissioner of Income tax as perthe provisions of section 151 of theAct.” detailed objections to the reasons recordedvide letter dated 27.05.2021. objections vide order dated 22.11.2021.Thereafter, assessment proceedings continuedand notice under section 142(1) of the Actdated 22.11.2021 was issued. However, as suchnotice is not being reflected on the onlineportal, the petitioner company has not filedany response to such notice. 5.12)It appears that thereafter thepetitioner approached this Court and wasprotected vide order dated 14.02.2022 whereinthe reassessment proceedings were stayed. 5.13)Thereafter, assessment order dated21.03.2022 came to be passed by the AssessingOfficermakingtotaladditionofRs.27,90,000/- under section 56(2)(viib) ofthe Act and vide demand notice of even date,demand of Rs. 7,35,160/- was raised. 5.14) Being aggrieved by such action of the respondent, the petitioner has preferred this petition. 6.Learned advocate Mr. Hiren J. Trivedi for thepetitioner submitted that only reason forreopening of assessment under section 147 ofthe Act is that as per the Assessing Officer,the assessee company has issued shares andreceived share premium i.e. amount in excessof fair market value of shares amounting toRs. 34,86,90,000/- which is required to betaxed under the provisions of section 56(2)(viib) of the Act. It was submitted that theassessee company had already been assessedand order section 143(3) of the Act waspassed on 9.12.2016. At the time of filingthe return of income as well as during the course of assessment proceedings, theassessee company had filed the financialstatement of the company which shows that thecompany has issued equity shares during the year under consideration at premium. It wastherefore, submitted that all necessarymaterials pertaining to the issue for whichthe case of the company has been reopened was already available on record and in factduring the assessment proceedings, the assessee had submitted various explanationsas well as documentary evidences whichincluded certain details with respect to theissue of 2,76,00,000 shares which the assessee company had already supplied to theAssessing Officer. It was submitted thatafter consideration of all these materials,the order under section 143(3) of the Actaccepting the return filed by the assesseecame to be passed. 6.1) It was submitted that during theoriginalassessmentproceedingsthe petitioner had provided copy of auditedfinancial statement, copy of Form No.2 with respecttoallotmentofshares, acknowledgment of return of income filed bythe shareholder and copy of share applicationmoney on account appearing in the books ofaccount of petitioner along with copy of bankstatement as called for by the Assessing assessee company had already supplied to theAssessing Officer. It was submitted thatafter consideration of all these materials,the order under section 143(3) of the Actaccepting the return filed by the assesseecame to be passed. 6.1) It was submitted that during theoriginalassessmentproceedingsthe petitioner had provided copy of auditedfinancial statement, copy of Form No.2 with respecttoallotmentofshares, acknowledgment of return of income filed bythe shareholder and copy of share applicationmoney on account appearing in the books ofaccount of petitioner along with copy of bankstatement as called for by the Assessing Officer. It was further submitted that thepetitioner company also provided the CAcertificate for market value of shares byapplying Rule 11UA/11U of the Rules,1962 ascalled for by the Assessing Officer. It wassubmitted that since the shares were issuedat fair value, the petitioner company has notreceived any excess payment and thusprovisions of section 56(2)(viib) of the Actare not applicable to the case of thepetitioner which fact was brought to thenotice of the Assessing Officer. 6.2) LearnedadvocateMr.Trivedi submitted that after examining the issue threadbare, the Assessing Officer made no additions and therefore, reopening of assessment is nothing but mere change of opinion. It was further submitted that reason to believe must have a live link with formation of opinion on the basis of any tangible new material and no such newmaterial has been brought on record. 6.3) Learned advocate Mr. Trivedi further submitted that reopening of assessment is beyond the applicable limit of period oflimitation of four years as per section 147 read with section 149 of the Act. It wassubmitted that during the course of originalassessment proceedings, the petitionercompany duly submitted each and every detailcalled for and such details were verified bythe Assessing officer and therefore, reassessment proceedings beyond a period of four years cannot be permitted. 6.4) Learned advocate Mr. Trivedi for thepetitioner submitted that the reasonsrecorded and the order disposing of theobjection fails to disclose the quantum ofincome which the Assessing Officer thinks isin excess and is liable to be taxed undersection 56(2)(viib) of the Act. It wasfurther submitted that the Assessing Officerhas treated the face value of shares as zeroand proposed to treat the entire amount ofconsideration for issue of shares as incomeunder section 56(2)(viib) of the Act which iswithout application of mind. 7.On the other hand learned Senior Advocate Mr.M.R. Bhatt for the Revenue submitted that thepetition is filed at a pre-mature stageinasmuch as only a notice under section 148read with section 147 of the Act for theAssessment year 2014-2014 has been issued and in the event the petitioner is aggrieved bythe reassessment proceedings, alternativeefficacious remedy is available by way of anappeal before the CIT(Appeal) and thereafterbefore the Tribunal as per the provisions ofthe Act. 7.1) Learned Senior Advocate Mr. Bhattsubmitted that the case was reopened on thebasis of information that during the yearunder consideration, Amazon Textiles Pvt.Ltd. purchased shares of Rs. 34,86,90,000/-from the petitioner on more than fair marketvalue and therefore, it was apparent that thepetitioner has received share premium of Rs.,34,86,90,000/-. It was further submitted that the petitioner has declared the nominalincome of Rs.2,56,200/- as per the return ofincome for the Assessment Year 2013-2014 andthus the share premium amounting toRs.24,30,50,000/- does not commensurate with the financial status of the petitioner andtherefore, the share premium amounting toRs.24,30,50,000/- has escaped assessment andis required to be taxed under the provisionsof section 56(2)(viib) of the Act. the petitioner has declared the nominalincome of Rs.2,56,200/- as per the return ofincome for the Assessment Year 2013-2014 andthus the share premium amounting toRs.24,30,50,000/- does not commensurate with the financial status of the petitioner andtherefore, the share premium amounting toRs.24,30,50,000/- has escaped assessment andis required to be taxed under the provisionsof section 56(2)(viib) of the Act. 7.2) Learned Senior Advocate Mr. Bhattsubmitted that petitioner failed to submitvaluation report under Rule 11UA based on theaudited balance sheet and therefore, there isclear failure on part of the petitioner tofully and truly disclose material factsnecessary for assessment. It was therefore,submitted that there is escapement of incomein view of the aforesaid facts which givejurisdiction to the Assessing Officer toreopen the assessment. 8.Considering the submissions made by the learned advocates on both the sides, itappears that the impugned notice under section 148 of the Act, 1961 is issued onlyon the ground that the assessee has receivedsharepremiumofamountingtoRs.34,86,90,000/- which is required to betaxed under the provisions of section56(viib) of the Act. 9.During the original assessment proceedings the petitioner had provided copy of auditedfinancial statement, copy of Form no.2 withrespecttoallotmentofshares,acknowledgment of return of income filed bythe shareholder and copy of share applicationmoney on account appearing in the books ofaccount of the petitioner along with copy ofbank statement. 10.The petitioner had also providedfinancial statement showing that the companyhad issued equity shares during the yearunder consideration at premium. The Assessing Officer had specifically inquired aboutcertain details with regard to the issue of2,76,00,000 shares. The assessee had given explanation that the company had issued2,76,00,000 shares during the year at facevalue of Rs.10/- per share and at premium ofRs.2.5/- per share. The petitioner also provided the CA certificate for market valueof shares by applying Rule 11UA/11U of the Rules,1962 with regard to shares issued to Amazon Textile Pvt. Ltd. All other detailsproving the identity, creditworthiness andgenuineness of the shareholders have also been provided to the Assessing Officer. Thusit is apparent that the petitioner providedall the details of shares issued to AmazonTextile Pvt. Ltd. 11.The Assessing Officer finalised the regular assessment after examining the issuethreadbare and did not make any addition under section 56(2)(viib) of the Act. Thus,the present reopening of assessment is basedupon mere change of opinion as there is nofresh tangible material to show escapement ofincome due to failure on part of thepetitioner to disclose fully and truly anymaterial fact necessary for assessment. Onbare perusal of the notice for reopeningassessment, it appears that reopening is notbased on any fresh tangible material but isbased upon the material already on record. 12.It is therefore, apparent that there ischange of opinion by the Assessing Officer toreopen the assessment for the Assessment Year2014-2015, more particularly, when the issueof share premium required to be taxed wasalready considered during the assessmentproceedings under section 143(3) of the Act,1961. The Assessing Officer cannot have anyjurisdiction to issue the notice under section 148 of the Act, 1961 for reopeningthe assessment for the year underconsideration more particularly, when theassessment is sought to be reopened beyond aperiod of four years as held by the SupremeCourt in case of Commissioner of Income tax v. Kelvinator of India Ltd. reported in 2010(2) SCC 723 as under: 12.It is therefore, apparent that there ischange of opinion by the Assessing Officer toreopen the assessment for the Assessment Year2014-2015, more particularly, when the issueof share premium required to be taxed wasalready considered during the assessmentproceedings under section 143(3) of the Act,1961. The Assessing Officer cannot have anyjurisdiction to issue the notice under section 148 of the Act, 1961 for reopeningthe assessment for the year underconsideration more particularly, when theassessment is sought to be reopened beyond aperiod of four years as held by the SupremeCourt in case of Commissioner of Income tax v. Kelvinator of India Ltd. reported in 2010(2) SCC 723 as under: “2. A short question which arises fordetermination in this batch of civilappeals is, whether the concept of"change of opinion" stands obliteratedwith effect from 1st April, 1989, i.e.,after substitution of Section 147 ofthe Income Tax Act, 1961 by Direct TaxLaws (Amendment) Act, 1987? xxx 6. On going through the changes, quotedabove, made to Section 147 of the Act,we find that, prior to Direct Tax Laws(Amendment) Act, 1987, re-opening couldbe done under above two conditions andfulfillment of the said conditionsalone conferred jurisdiction on theAssessing Officer to make a backassessment, but in section 147 of theAct [with effect from 1st April, 1989],they are given a go-by and only onecondition has remained, viz., thatwhere the Assessing Officer has reasonto believe that income has escapedassessment, confers jurisdiction to re-open the assessment. Therefore, post- 1st April, 1989, power to re-open ismuch wider. However, one needs to givea schematic interpretation to the words"reason to believe" failing which, weare afraid, Section 147 would givearbitrary powers to the AssessingOfficer to re-open assessments on thebasis of "mere change of opinion",which cannot be per se reason to re-open. We must also keep in mind theconceptual difference between power toreview and power to re-assess. TheAssessing Officer has no power toreview; he has the power to re-assess.But re-assessment has to be based onfulfillment of certain pre-conditionand if the concept of "change ofopinion" is removed, as contended onbehalf of the Department, then, in thegarb of re-opening the assessment,review would take place. One must treatthe concept of "change of opinion" asan in-built test to check abuse ofpower by the Assessing Officer. Hence,after 1st April, 1989, AssessingOfficer has power to re-open, providedthere is "tangible material" to come tothe conclusion that there is escapementof income from assessment. Reasons musthave a live link with the formation ofthe belief. Our view gets support fromthe changes made to Section 147 of theAct, as quoted hereinabove. Under theDirect Tax Laws (Amendment) Act, 1987,Parliament not only deleted the words"reason to believe" but also insertedthe word "opinion" in Section 147 ofthe Act. However, on receipt ofrepresentations from the Companiesagainst omission of the words "reasonto believe", Parliament re-introducedthe said expression and deleted theword "opinion" on the ground that itwould vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of CircularNo.549 dated 31st October, 1989, whichreads as follows: Assessing Officer. We quote hereinbelow the relevant portion of CircularNo.549 dated 31st October, 1989, whichreads as follows: "7.2 Amendment made by theAmending Act, 1989, to reintroducethe expression `reason to believe'in Section 147.--A number ofrepresentationswerereceivedagainst the omission of the words`reason to believe' from Section147 and their substitution by the`opinion'oftheAssessingOfficer. It was pointed out thatthe meaning of the expression,`reason to believe' had beenexplained in a number of courtrulings in the past and was wellsettled and its omission fromsection 147 would give arbitrarypowers to the Assessing Officer toreopen past assessments on merechange of opinion. To allay thesefears, the Amending Act, 1989, hasagain amended section 147 toreintroduce the expression `hasreason to believe' in place of thewords `for reasons to be recordedby him in writing, is of theopinion'. Other provisions of thenew section 147, however, remainthe same." considering the facts of the case impugnednotice under section 148 of the Act, 1961 dated 26.03.2021 is not tenable in law and is accordingly quashed and set aside andaccordingly, the order dated 22.11.2021disposing of the objections raised by thepetitioner against reopening of assessment isalso quashed and set aside. Simultaneously,impugned order dated 21.03.2022 passed undersection 147 read with section 143(3) readwith section 144B of the Act and notice ofdemand of even date are quashed and setaside. 14.Rule is made absolute to the aforesaid extent. No order as to costs. (N.V.ANJARIA, J) RAGHUNATH R NAIR (BHARGAV D. KARIA, J)