Jrs Pharma And Gujarat Microwax Private Limited v. Deputy/Assistant Commissioner Of Income Tax, Circle 2(1)(1

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 1217 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALAand -Sd/ HONOURABLE MR. JUSTICE ILESH J. VORA Sd/ ====================================== 1Whether Reporters of Local Papers may beNOallowed to see the judgment ?allowed to see the judgment ?2To be referred to the Reporter or not ?YES3Whether their Lordships wish to see the fairNOcopy of the judgment ?3Whether their Lordships wish to see the fairNOcopy of the judgment ? YES 4Whether this case involves a substantialNO question of law as to the interpretation of theConstitution of India or any order madethereunder ?Constitution of India or any order madethereunder ? ====================================== JRS PHARMA AND GUJARAT MICROWAX PRIVATE LIMITED VersusDEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE2(1)(1) ======================================Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 for the Respondent(s) No. 2,3 MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ====================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALAandHONOURABLE MR. JUSTICE ILESH J. VORA Date : 11/06/2021 ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE ILESH J. VORA) 1. By filing this writ application under Article 226 of theConstitution of India, the writ applicant – assesseecompany seeks to challenge the Notice dated 31.03.2018issued by the respondent under Section 148 of theIncome Tax Act, 1961 (‘the Act’ for short) seeking toreopen the writ applicant’s income tax assessment forthe A.Y 2013-14.Constitution of India, the writ applicant – assesseecompany seeks to challenge the Notice dated 31.03.2018issued by the respondent under Section 148 of theIncome Tax Act, 1961 (‘the Act’ for short) seeking toreopen the writ applicant’s income tax assessment forthe A.Y 2013-14. 2. The brief facts can be summarized as under: i. The writ applicant – assessee Company is acompany incorporated on 5[th] January, 1985 and isengaged in the business of manufacturing ofpharmaceutical excipients like Micro CrystallineCellusse Powder (MCCP), Crosscarmellose Sodium(CCS), Sodium Starch Giycolate (SSG) etc.company incorporated on 5[th] January, 1985 and isengaged in the business of manufacturing ofpharmaceutical excipients like Micro CrystallineCellusse Powder (MCCP), Crosscarmellose Sodium(CCS), Sodium Starch Giycolate (SSG) etc. ii. During the F.Y 2012-13, the assessee company hadentered into various international transactions withits associated enterprises for which the companyhad obtained an Accountant’s report in Form No.3CEB under Section 92E of the Act determining theArm’s Length Price (‘ALP’ for short) of theinternational transactions entered with itsassociated enterprises. entered into various international transactions withits associated enterprises for which the companyhad obtained an Accountant’s report in Form No.3CEB under Section 92E of the Act determining theArm’s Length Price (‘ALP’ for short) of theinternational transactions entered with itsassociated enterprises. iii. The assessee Company filed its return of income on16.09.2013 for the A.Y. 2013-14, declaring totalincome at Rs. 17,35,26,420/-. Initially, the case was16.09.2013 for the A.Y. 2013-14, declaring totalincome at Rs. 17,35,26,420/-. Initially, the case was processed under Section 143(1) of the Act andthereafter, was selected for scrutiny assessmentand accordingly, on 18.03.2016, assessment wasframed under Section 143(3) of the Act determiningtotal income Rs.17,89,32,690/- disallowing theexpenditure of commission expenses paid to non-residence and the same had been added back tothe total income. iii. The assessee Company filed its return of income on16.09.2013 for the A.Y. 2013-14, declaring totalincome at Rs. 17,35,26,420/-. Initially, the case was16.09.2013 for the A.Y. 2013-14, declaring totalincome at Rs. 17,35,26,420/-. Initially, the case was processed under Section 143(1) of the Act andthereafter, was selected for scrutiny assessmentand accordingly, on 18.03.2016, assessment wasframed under Section 143(3) of the Act determiningtotal income Rs.17,89,32,690/- disallowing theexpenditure of commission expenses paid to non-residence and the same had been added back tothe total income. iv. During the scrutiny proceedings, the AO had issuednotice under Section 92(C) read with Section 142(1)of the Act dated 05.02.2016 for A.Y. 2013-14 andcalled for various details and information and thesame was complied with by the assessee vide itsletter dated 19.02.2016 (04.03.2016) and hadfurnished such details like Transfer Pricing Order forA.Y. 2012-13, copy of the original Transfer PricingStudy Report and Accountant’s Report in Form No.3CEB and also submitted revised Transfer PricingStudy Report and Accountant’s report vide its letterdated 14.03.2016 (submitted on 18.03.2016) andafter perusing various details/information, the AOpassed an assessment order vide order dated18.03.2016 under Section 143(3) of the Act andassessed the income at Rs.17,89,32,609/- afterdisallowing the commission paid to non-residentamounting to Rs.54,06,265/-. During the course ofscrutiny proceedings, the AO did not refer thematter to Transfer Pricing Officer (TPO) by relyingon instructions No.3/2016 dated 10.03.2016. v. Thereafter, the AO reopened the assessment for A.Y2013-14 by issuing impugned notice dated31.03.2018 under Section 148 read with Section147 of the Act. Pursuant to impugned notice, theassessee vide letter dated 11.04.2018 filed itsreturn of income and by same letter, had requestedthe respondent to furnish copy of the reasonsrecorded for reopening of the assessment. Therespondent vide letter dated 18.07.2018, suppliedthe copy of reasons recorded for reassessment. Theassessee Company filed its detailed objectionsagainst the reassessment proceedings/reasonsrecorded vide its letter dated 01.08.2018(07.08.2018). The objections came to be disposedof by the revenue vide its order dated 18.07.2018. vi. The relevant portion of the reasons recorded by theAO for reopening of the assessment reads as under:AO for reopening of the assessment reads as under: “i) Assessee company filed its return of income for AY2013-14 on 16.09.2013 declaring income ofRs.17,35,26,420/-. The same was assessed under Sec.143(3) and returned income was determined atRs.17,89,32,690/- vide order dated 18.03.2016. (ii) On perusal of the case records, it is seen that theassessee had various international transaction and it isalso seen that average rate of sale of its products to itsAssociated Enterprises (AE's) is much less than therate at which it sells to other unrelated parties. As regards to TP study, the assessee company vide itsletter dated 19.02.2016 have shown that thepreparation of the TP study for the FY 2012-13 is underprogress and will be furnished later on. This TP studyreport was submitted by the assessee only after 14[th]March, 2016 because of which the AO could not referthe matter to the TPO nor could he examine the issue.In this view of the matter, the assessee had exportedgoods its AE's at lower price then to other unrelated parties, I have reason to believe that income hasescaped assessment. (iii) In this case not more than four years have lapsedfrom the end of assessment year under consideration.Hence, necessary sanction to issue notice U/s 148 isobtained separately from the Joint Commissioner ofIncome-tax as per provision of Section 151 of the Act. parties, I have reason to believe that income hasescaped assessment. (iii) In this case not more than four years have lapsedfrom the end of assessment year under consideration.Hence, necessary sanction to issue notice U/s 148 isobtained separately from the Joint Commissioner ofIncome-tax as per provision of Section 151 of the Act. In view of the matter, | have reason to believe thatincome of Rs.7,40,57,709/- has escaped for the A.Y.2013-14 in the spirit of provision of Section 147 of theIncome Tax Act, 1964.” 3. Being aggrieved by the disposal of the objections againstthe notice for reopening of the assessment, the writapplicant has come up before this Court with the presentwrit application.the notice for reopening of the assessment, the writapplicant has come up before this Court with the presentwrit application. 4. We have heard Mr. Saurabh Soparkar, learned SeniorCounsel assisted by Mr.Bandish Soparkar, learnedadvocate appearing for the writ applicant and Mr. ManishBhatt, learned Senior Counsel assisted by Mrs. MaunaBhatt, learned Senior Standing Counsel appearing for therevenue.Counsel assisted by Mr.Bandish Soparkar, learnedadvocate appearing for the writ applicant and Mr. ManishBhatt, learned Senior Counsel assisted by Mrs. MaunaBhatt, learned Senior Standing Counsel appearing for therevenue. 5. Mr. Soparkar, learned Senior Counsel appearing for thewrit applicant raised the following contentions: writ applicant raised the following contentions: i.It was submitted that the impugned notice is badin law and without jurisdiction as the conditionsprecedent for initiation of the reassessmentproceedings are not complied with and therefore,impugned notice is bad in law and required to bequashed.in law and without jurisdiction as the conditionsprecedent for initiation of the reassessmentproceedings are not complied with and therefore,impugned notice is bad in law and required to bequashed. ii.The reasons recorded are erroneous. The AO hasproceeded completely on wrong factual premise.proceeded completely on wrong factual premise. The reasons, therefore, lack validity. In thiscontext, it was submitted that, the assesseeCompany had submitted its audit report in FormNo.3CEB on 26.07.2013 and the same was filedonline on 19.09.2013, which is evident that,there was no delay on the part of the assesseeCompany to submit the reports. It was furthersubmitted that, during the course of scrutinyassessment proceedings, the copy of audit reportand Transfer Pricing Study Report as sought forby the AO vide his letter dated 05.02.2016 hadbeen submitted on 04.03.2016 and revised FormNo.3CEB as well as Transfer Pricing Study Reportwere submitted on 18.03.2016. Thus, it clearlyestablished that before completion of scrutinyproceedings, necessary information as soughtwas available with the AO and thereafter, theassessment order was completed under Section143(3) of the Act on 18.03.2016. In thisbackground facts, it was vehemently submittedthat, while recording the reasons for reopening ofassessment, the observations made by the AOthat, non-submission of the Revised Accountant’sReport in Form No.3CEB and Transfer PricingStudy Report, the AO could not refer the matterto the Transfer Pricing officer nor he couldexamine the issue, are factually incorrect andcontrary to the facts available on record andtherefore, on this ground, the notice is bad in lawand deserves to be quashed. iii.Referring to the reasons record, learned SeniorCounsel submitted that, at the relevant point oftime i.e. for A.Y. 2013-14, the originalAccountant’s Report in Form No.3CEB wassubmitted to the respondents disclosing all theinternal transactions with its associatedenterprises and during the course of scrutinyproceedings, the assessee company had suppliedall the details and information as well as revisedreports. Thus, it is evident on record that, theobservations made in the reasons recorded that,the average rate of sales to its associatedenterprises is less than the rate at which it sellsto another related parties is baseless and withoutany basis and contrary to the material on recordand there was complete non-application of mindon the part of the AO to the materials availableon record, prior to reopening of the assessment.Thus, basic requirement of law to conferjurisdiction under Section 147 of the Act forreopening of assessment is not satisfied and onthis ground, the notice deserves to be quashed. Counsel submitted that, at the relevant point oftime i.e. for A.Y. 2013-14, the originalAccountant’s Report in Form No.3CEB wassubmitted to the respondents disclosing all theinternal transactions with its associatedenterprises and during the course of scrutinyproceedings, the assessee company had suppliedall the details and information as well as revisedreports. Thus, it is evident on record that, theobservations made in the reasons recorded that,the average rate of sales to its associatedenterprises is less than the rate at which it sellsto another related parties is baseless and withoutany basis and contrary to the material on recordand there was complete non-application of mindon the part of the AO to the materials availableon record, prior to reopening of the assessment.Thus, basic requirement of law to conferjurisdiction under Section 147 of the Act forreopening of assessment is not satisfied and onthis ground, the notice deserves to be quashed. iv.Placing reliance on the decision of the Apex Courtin the case of CIT Vs. Kelvinator of India Ltd.[(2010) 2 SCC 723], it was submitted that,during the course of scrutiny assessment, all thenecessary information with respect tointernational transactions were submitted by theassessee Company and all the materials likeoriginal Form No.3CEB, Transfer Pricing Studyin the case of CIT Vs. Kelvinator of India Ltd.[(2010) 2 SCC 723], it was submitted that,during the course of scrutiny assessment, all thenecessary information with respect tointernational transactions were submitted by theassessee Company and all the materials likeoriginal Form No.3CEB, Transfer Pricing Study Report, revised Accountant’s Report and TPSreport were available on record. However, the AOdid not refer the issue to the Transfer PricingOfficer to determine the Arm’s Length Price andrelying on the Circular consciously thought it fitnot to determine the price or refer the matter tothe Transfer Pricing Officer. Thus, presentreassessment proceeding is nothing, but freshapplication of mind to the same set of facts andtherefore, mere a change of opinion does notconfer jurisdiction on the AO to initiateproceedings for reassessment without tangiblematerial available on record. Report, revised Accountant’s Report and TPSreport were available on record. However, the AOdid not refer the issue to the Transfer PricingOfficer to determine the Arm’s Length Price andrelying on the Circular consciously thought it fitnot to determine the price or refer the matter tothe Transfer Pricing Officer. Thus, presentreassessment proceeding is nothing, but freshapplication of mind to the same set of facts andtherefore, mere a change of opinion does notconfer jurisdiction on the AO to initiateproceedings for reassessment without tangiblematerial available on record. v.Lastly, it was submitted that in the reasonsrecorded, it is stated that income ofRs.7,40,57,709/- has escaped assessment for theyear under consideration, however, in thereasons recorded, how and under what manner,the amount being arrived at by the AO that it hasescaped assessment has not been preciselyexplained and therefore, the basis of issuance ofthe impugned notice itself is vague and bad inlaw. recorded, it is stated that income ofRs.7,40,57,709/- has escaped assessment for theyear under consideration, however, in thereasons recorded, how and under what manner,the amount being arrived at by the AO that it hasescaped assessment has not been preciselyexplained and therefore, the basis of issuance ofthe impugned notice itself is vague and bad inlaw. 6. In view of the aforesaid contentions, learned SeniorCounsel for the writ applicant submitted that, theimpugned notice as well as the order of disposing off theobjections are without jurisdiction and therefore, thesame deserve to be quashed and set aside and therefore,he prays to allow the present writ application. Counsel for the writ applicant submitted that, theimpugned notice as well as the order of disposing off theobjections are without jurisdiction and therefore, thesame deserve to be quashed and set aside and therefore,he prays to allow the present writ application. 7. On the other hand, Mr. Manish Bhatt, learned SeniorCounsel assisted by Mrs. Mauna Bhatt, learned SeniorStanding Counsel appearing for the revenue, reiteratingthe stand adopted by the respondent in the Affidavit inReply as well as in order of disposing of the objections,submitted that the action taken by the AO is just, legaland proper and does not warrant any interference. It wasfurther submitted that assessment has been reopened onthe ground that the assessee Company had entered intovarious international transactions with its associatedenterprises and the average rate of sales to itsassociated enterprises was much less than the rate atwhich it sells to other unrelated parties and therefore, itis evident that the Company has exported goods to itsassociated enterprises at a lower price and therefore,after considering the available material on record, the AOformed a “reason to believe” that income has escapedassessment. Referring to the reasons recorded, it wassubmitted by learned Senior Counsel that at the relevantpoint of time, the then AO could not refer the matter tothe Transfer Pricing Officer, nor could he examine theissue because of non-submission of revised Accountant’sReport in Form No.3CEB and Transfer Pricing StudyReport. In these circumstances, it was contended that,the issue regarding transfer pricing was not adjudicatedduring the assessment proceedings and as such, noopinion on the issue being formed by the AO andtherefore, the principles of change of opinion would notapplicable to the facts of the present case. 8. In view of the aforesaid contentions made by the learnedSenior Counsel for the revenue, it is prayed that, thepresent writ application being meritless, deserves to bedismissed.Senior Counsel for the revenue, it is prayed that, thepresent writ application being meritless, deserves to bedismissed. 8. In view of the aforesaid contentions made by the learnedSenior Counsel for the revenue, it is prayed that, thepresent writ application being meritless, deserves to bedismissed.Senior Counsel for the revenue, it is prayed that, thepresent writ application being meritless, deserves to bedismissed. 9. Having heard learned counsel for the respective partiesand having gone through the materials on record, theonly question falls for our consideration is that, whetherthe revenue is justified in reopening the assessment forthe year under consideration?and having gone through the materials on record, theonly question falls for our consideration is that, whetherthe revenue is justified in reopening the assessment forthe year under consideration? 10. Before adverting to the rival contentions raised by therespective parties, it is relevant to refer to the provisionsof Section 147 of the Act, which provides that, if theassessing officer has reason to believe that any incomechargeable to tax has escaped assessment for anyassessment year, he may subject to the provisions ofSections 148 to 153 of the Act, assess or reassess suchincome. In view of the aforesaid provisions, to conferjurisdiction under Section 147 of the Act, the primarycondition to be satisfied is that, the AO must have reasonto believe that the income chargeable to tax has escapedassessment. respective parties, it is relevant to refer to the provisionsof Section 147 of the Act, which provides that, if theassessing officer has reason to believe that any incomechargeable to tax has escaped assessment for anyassessment year, he may subject to the provisions ofSections 148 to 153 of the Act, assess or reassess suchincome. In view of the aforesaid provisions, to conferjurisdiction under Section 147 of the Act, the primarycondition to be satisfied is that, the AO must have reasonto believe that the income chargeable to tax has escapedassessment. 11. In the facts of the present case, it appears that, theassessee Company had entered into various internationaltransactions with its associated enterprises. Any incomearising from international transaction shall be computedhaving regard to the Arm’s Length Price. Chapter X of theAct deals with the special provision relating to avoidanceof tax. In view of the issue raised by the assesseecompany, it is relevant to refer to Sections 92, 92C andassessee Company had entered into various internationaltransactions with its associated enterprises. Any incomearising from international transaction shall be computedhaving regard to the Arm’s Length Price. Chapter X of theAct deals with the special provision relating to avoidanceof tax. In view of the issue raised by the assesseecompany, it is relevant to refer to Sections 92, 92C and 92CA of the Act, which provide that, any income arisingfrom an international transaction shall be computedhaving regard to the Arm’s Length Price, which shall bedetermined by the methods as prescribed under Section92 C of the Act. Section 92CA refers to how and underwhat manner, the reference to Transfer Pricing Officercan be made. The section provides that, if the AOconsiders if necessary or expedient to do so, he may withthe previous approval of the authority refer thecomputation of Arm’s Length Price in relation to theinternational transaction made under Section 92C to theTransfer Pricing Officer. Sub-section 2C of Section 92CAempower the AO either to assess or reassess underSection 147 or pass an order enhancing the assessmentalready made or otherwise increasing the liability of theassessee under Section 154 for any assessment year,proceedings for which have been completed before the1[st] day of July, 2012. 12. In view of the statutory provisions and considering thefacts of the case, it is not in dispute that, on 23.07.2013,the original Form No.3CEB under Section 92E of the Actdetermining the Arm’s Length Price of the internationaltransactions entered into by the assessee with itsassociated enterprises had been submitted physically aswell as online with the respondent within the timeprescribed by the Act and thereafter, on 16.09.2013,return of income for the year A.Y. 2013-14 was filed andthe same was processed under Section 143(1) of the Actand the case was selected for scrutiny assessment underSection 143(2) of the Act vide Notice dated 04.09.2014. It is also not in dispute that, during the course ofproceedings, the AO had called for necessary informationby issuing notice under Section 92C read with Section142(1) of the Act dated 05.02.2016 for the A.Y. 2013-14and the same was complied with by the assessee vide itsletter dated 19.02.2016, whereby, the assessee hadfurnished a copy of the audit report in Form No.3CEBcontaining the complete details of internationaltransactions and also submitted Transfer pricing Studyreport and thereafter, on 18.03.2016, the revisedTransfer Pricing Study report and Accountant’s reportwere submitted and finally, the AO has framed theassessment vide its order dated 18.03.2016. 13. It is relevant to refer to the observations made by the AOin the assessment order. The relevant extracts of para 3reads as under:- in the assessment order. The relevant extracts of para 3reads as under:- “As per instruction No.3/2016 dated 10[th] March, 2016, whichstate in para 3.7 that for administering the transfer pricingregime in an efficient manner, it is clarified that though AOhas the power under Section 92C to determine the ALP ofinternational transactions or specified domestic transactions,determination of ALP should not be carried out at all by theAO in a case where reference is not made to the TPO.However, in such cases, the AO must record in the body ofthe assessment order that due to the Board’s instruction onthis matter, the transfer pricing issue has not been examinedat all. In accordance with the above instructions, the transferpricing issue has not been examined at all.” 14. In the facts of the present case, it is necessary to refer tothe Circular/instructions No.3/2016 dated 10.03.2016issued by Central Board of Direct Taxes, which providesguidelines for implementation of the Transfer Pricingprovisions. In the present case, relying para 3.7 of theinstructions, the AO did not refer the issue to the Transferthe Circular/instructions No.3/2016 dated 10.03.2016issued by Central Board of Direct Taxes, which providesguidelines for implementation of the Transfer Pricingprovisions. In the present case, relying para 3.7 of theinstructions, the AO did not refer the issue to the Transfer Pricing Officer as provided under Section 92CA of the Actto determine the Arm’s Length Price under Section 92C ofthe Act. A bare reading of Clause 3.7 of theCircular/instructions shows that, if reference is not madeto transfer Pricing Officer under Section 92C, then AOcannot determine the Arm’s Length Price and cannotexamine transfer price issue. In other words, the AO didnot exercise its discretion either to refer the issue to theTransfer Pricing Officer or decide the same from thematerial on record. Pricing Officer as provided under Section 92CA of the Actto determine the Arm’s Length Price under Section 92C ofthe Act. A bare reading of Clause 3.7 of theCircular/instructions shows that, if reference is not madeto transfer Pricing Officer under Section 92C, then AOcannot determine the Arm’s Length Price and cannotexamine transfer price issue. In other words, the AO didnot exercise its discretion either to refer the issue to theTransfer Pricing Officer or decide the same from thematerial on record. 15. In the aforesaid background facts, it appears that, beforecompletion of the scrutiny assessment, the originalAccountant’s report in Form No.3CEB, Transfer PricingStudy report and revised reports thereof were availableon record and it is evident that, the assessee hadsubmitted it in a prescribed time limit. Thus, all theinformation with regard to international transactionsentered into by the assessee with its associatedenterprises were placed on record at the time of scrutinyassessment proceedings. On perusal of the reasonsrecorded, it appears that the AO has recorded to theeffect that he could not refer the matter to the TransferPricing Officer nor could he examine the issue because ofdelayed submission of the revised reports. In our opinion,the observations recorded by the AO are factuallyincorrect and contrary to the material evidence onrecord. It is required to be noted that while framing theassessment order, it would not reflect that due to non-submission of revised Accountant’s report or FormNo.3CEB, AO could not determine the Arm’s Length Price or refer the issue to the Transfer Pricing Officer. Thus,we find substance in the contention raised by the learnedcounsel for the writ applicant that, the reasons recordedare factually incorrect and without any basis. It is theadmission on the part of the AO that, the reports asreferred in the reasons recorded were received by him on14.03.2016. If it is so, then the AO could have examinedthe revised reports to verify the sale transactions andaverage rate of sale, but, relying on the instructions, hedid not either himself examined the issue ofdetermination of Arm’s Length Price, nor referred toTransfer Pricing Officer. Thus, it was his consciousdecision not to examine the issue. In thesecircumstances, reference can be made to the case of Commissioner of Income Tax Vs. UshaInternational Ltd., [(2012) 348 ITR 485], wherein, afull bench of the Delhi High Court held that,reassessment proceedings will be invalid in case an issueor query is raised and answered by the assessee inoriginal assessment proceedings, but thereafter, the AOdoes not make any addition in the assessment order. Insuch situation, it should be accepted that the issue wasexamined, but the AO did not find any ground or reasonto make addition or reject the stand of the assessee andhe forms the opinion as a result, the reassessment will beinvalid because the AO had formed an opinion in theoriginal assessment, though he has not recorded hisreasons. 16. In a case of CIT Vs. Kelvinator of India Ltd., the ApexCourt while interpreting language of Section 147 of the 16. In a case of CIT Vs. Kelvinator of India Ltd., the ApexCourt while interpreting language of Section 147 of the Act, held that the assessing officer certainly has thepower to reassess for any assessment year subject to theprovisions of Sections 147 to 153 of the Act, however, theuse of this power is conditional upon the fact that, the AOhas some reason to believe that, the income has escapedassessment. The Apex Court has interpreted the use ofwords “reason to believe” and held that it has to beinterpreted schematically as the liberal interpretation ofthe word would have the consequence of conferringarbitrary powers on the assessing officer who may eveninitiate such reassessment proceedings mainly on hischange of opinion on the basis of same facts andcircumstances, which has already been considered byhim during the original assessment proceedings. In paras5, 6 and 7, the Apex Court has held as under:- “5. Where the Assessing Officer has reason to believe thatincome has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power tore-open is much wider. However, one needs to give aschematic interpretation to the words "reason to believe"failing which, we are afraid, Section 147 would give arbitrarypowers to the Assessing Officer to re-open assessments on thebasis of "mere change of opinion", which cannot be per sereason to re-open. 6.We must also keep in mind the conceptual differencebetween power to review and power to re-assess. TheAssessing Officer has no power to review; he has the power tore-assess. But re-assessment has to be based on fulfillment ofcertain pre-condition and if the concept of "change of opinion"is removed, as contended on behalf of the Department, then,in the garb of re-opening the assessment, review would takeplace. 7.One must treat the concept of "change of opinion" asan in-built test to check abuse of power by the AssessingOfficer. Hence, after 1st April, 1989, Assessing Officer haspower to re-open, provided there is "tangible material" to cometo the conclusion that there is escapement of income fromassessment. Reasons must have a live link with the formationof the belief.” 17. In light of the settled legal principle and considering thefacts of the present case, we are of the view that, theissuance of notice to reopen the assessment is nothing,but a change of opinion and mere a change of opinioncannot be the basis of reopening the completedassessment unless the AO found tangible material. Thus,Section 147 of the Act does not postulate conferment ofpower upon the AO to initiate reassessment proceedingson his change of opinion. In the present case, it is not thecase of the Revenue that after completion of theassessment under Section 143(3) of the Act, the AOfound any tangible material for reassessment of theproceedings. It is pertinent to note that, while recordingthe reasons, the AO did not explain the arithmeticalcalculation of Rs.7,40,57,709/-. facts of the present case, we are of the view that, theissuance of notice to reopen the assessment is nothing,but a change of opinion and mere a change of opinioncannot be the basis of reopening the completedassessment unless the AO found tangible material. Thus,Section 147 of the Act does not postulate conferment ofpower upon the AO to initiate reassessment proceedingson his change of opinion. In the present case, it is not thecase of the Revenue that after completion of theassessment under Section 143(3) of the Act, the AOfound any tangible material for reassessment of theproceedings. It is pertinent to note that, while recordingthe reasons, the AO did not explain the arithmeticalcalculation of Rs.7,40,57,709/-. 18. In view of the forgoing reasons, the reasons recorded forreassessment could not have led to formation of anybelief that the income has escaped assessment withinthe meaning of Section 147 of the Act. Therefore, theimpugned notice dated 31.03.2018 cannot sustainableand deserves to be quashed and set aside. reassessment could not have led to formation of anybelief that the income has escaped assessment withinthe meaning of Section 147 of the Act. Therefore, theimpugned notice dated 31.03.2018 cannot sustainableand deserves to be quashed and set aside. 19. Resultantly, present writ application is allowed and theimpugned Notice dated 31.03.2018 is hereby quashed.impugned Notice dated 31.03.2018 is hereby quashed. Sd/-(J. B. PARDIWALA, J) SUCHIT Sd/-(ILESH J. VORA,J)