Wp/2000/2022 Of Lehman Brothers Investments Pte Ltd. (In Creditors Voluntary Liquidation) v. Assistant Commissioner Of Income Tax (International Taxation), Circle -3(1)(2) And 2 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2000 OF 2022 WITHWRIT PETITION NO.2011 OF 2022 … Mr. J. D. Mistri, Senior Advocate, a/w Mr. Divesh Chawla i/b. Mr. Atul K.Jasani for the petitioner. Mr. Akhileshwar Sharma a/w Ms. Shilpa Goel for the respondents.… CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. RESERVED ON : 31ST JANUARY 2023 PRONOUNCED ON : 8TH MARCH 2023. [PER: KAMAL KHATA, J.] J U D G M E N T .These two writ petitions are filed by the same petitioner for twoAssessment Years (A.Y.) viz. 2014-15 and A.Y. 2015-16 and has acommon issue. Consequently, we shall dispose them of with a commonorder. For brevity we refer to the facts in W.P. No. 2000 of 2022 for A.Y.2015-16 as the same was preferred to be argued by the learned seniorcounsel for the petitioner. 2.The petition challenges the legality and validity of the impugnednotice dated 31st March 2021 issued under Section 148 of the Income Tax Act, 1961 (“the Act”), whereby the Assessment Officer (AO) soughtreopening of the assessment since he had ‘reason to believe’ that theincome chargeable to tax for A.Y. 2015-16 had escaped assessment 2/24 within the meaning of section 147 of the Act and the impugned reasonsdated 9th January 2022 and the impugned order dated 9th March 2022disposing of the objections raised by the petitioner. FACTS 3.The petitioner is an investment holding company incorporated inSingapore. The ultimate holding company of the petitioner, LehmanBrothers Holdings Inc. (“LBHI”) filed a petition under Chapter 11 of theU.S. Bankruptcy Code with the United States Bankruptcy Court for theSouthern District of New York on 15th September 2008. After LBHI’sfiling for bankruptcy, the petitioner was placed into Creditors’Voluntary Liquidation from 24th October 2008. The petitioner did notconduct any business activity and laid off the entire staff. Hence, thepetitioner had no business transaction during the A.Y. 2015-16. 4.The petitioner, inter alia, held 5,70,88,801 shares of LehmanBrothers Capital Private Limited (“LBCPL”) a private limited company ason 31st March 2014. During the year under consideration, this Courtby an order dated 5th September 2014, allowed the capital reduction of4,87,80,488 equity shares held by the petitioner in LBCPL inaccordance with Sections 100 to 103 of the Companies Act, 1956 onpayment of 1,00,00,00,000 valued at Rs.20.5 per equity share. 5.The petitioner submitted the return of income which provided thedetails related to capital gain transactions filed under Schedule C.G. -Capital Gains. The Computation of income was submitted with detailedworking method of arriving at the capital gain/loss including the detailsof dates of the purchase and sale of shares and the conversion ofamounts in foreign currency as well as the provisions of Companies Act,the Income tax Act and the order of this Court. The petitioner claimedthe capital gain in the sum of Rs.25,14,27,640/- u/s. 45 of the Act r.w.the first proviso to Section 48 of the Act after setting off loss for A.Y.2014-15 in the sum of Rs.19,59,94,085/- and paid taxes at 20% u/s.112(1)(i)(c)(ii) of the Act. 6.The petitioner filed written submissions on 24th August 2016against the notice issued under Section 143(2) of the Act dated 4thAugust 2016 along with the computation of income and Form 3CEB.The petitioner also submitted a response dated 5th September 2017 tothe notice issued under Section 142(1) of the Act dated 8th August 2017.In its response, the petitioner categorically mentioned that it had notcarried on any business activity since the liquidation/bankruptcyapplication and also mentioned about the capital reduction. The saidsubmission further highlighted as under: 6.The petitioner filed written submissions on 24th August 2016against the notice issued under Section 143(2) of the Act dated 4thAugust 2016 along with the computation of income and Form 3CEB.The petitioner also submitted a response dated 5th September 2017 tothe notice issued under Section 142(1) of the Act dated 8th August 2017.In its response, the petitioner categorically mentioned that it had notcarried on any business activity since the liquidation/bankruptcyapplication and also mentioned about the capital reduction. The saidsubmission further highlighted as under: “During A.Y. 2015-16, the proceeds received by the companypursuant to capital reduction by LBCPL includes deemeddividend under Section 2(22)(d) of Rs.26,599,305. TheCompany has considered entire proceeds received fromcapital reduction as sale consideration for the purpose ofcomputing capital gains.” 7.Thereafter on 22nd November 2018, a notice under Section 142(1)of the Act was issued requesting the petitioner to provide the High Courtorder granting capital reduction and financial statements highlightingthe capital reduction in the balance sheet. In response thereto, on 7thDecember 2018, the petitioner provided the High Court order passedunder Section 100 of the Companies Act, 1956 granting LBCPL tocancel the shares and consequently reduced capital. On 28th March2018, the Transfer Pricing Officer (“TPO”) to whom the capitalreduction transaction was referred on account of it being with anassociated enterprises, the capital reduction transaction was accepted atarm’s length. On 24th December 2018, the respondent passed anAssessment Order under Section 143(3) of the Act whereby it noted thatthe petitioner has no business operations/permanent establishment inIndia. It also noted that there was a capital reduction and the capitalgain/loss had been computed as per the provisions of the Act. 8.Mr. Mistri, the learned Senior Counsel for the petitioners5/24 submitted that the respondent had not complied with the jurisdictionalcondition which is a condition precedent for conducting thereassessment inasmuch as the respondent must show a failure on thepart of the petitioner to disclose truly and fully all material factsnecessary for the completion of his assessments, since their reassessmentwas conducted beyond a period of four years. According to him, all thefacts on the capital reduction and the computation of capital gain /lossunder Section 45 r.w.s. 48 of the Act were disclosed and there was nofailure to make a full and true disclosure. The details of capitalreduction along with the method of computing capital gain/ loss underSection 45 r.w.s. 48 of the Act were submitted during the originalassessment proceedings along with the return of income andcomputation of income. Moreover, specific queries were asked on thecapital reduction which was the only transaction during the years underconsideration to which specific reply had been provided by thepetitioner. He submitted that the order of the High Court on capitalreduction was also submitted and the petitioner had responded to all thequeries raised by the respondent in response to the notice issued underSections 143(2) / 142(1) of the Act. 9.The learned counsel for the petitioner submitted that the TPO hadnoted the transaction of capital reduction due to cancellation of shares 9.The learned counsel for the petitioner submitted that the TPO hadnoted the transaction of capital reduction due to cancellation of shares and held the same at Arm’s Length Price. He submitted that theAssessment Order under Section 143(3) of the Act explicitly mentionedthe capital reduction on cancellation of LBCPL and the capital gains/losshas been computed as per the provisions of the Act. The learned counselsubmitted that the petitioner had disclosed all primary facts requiredfor the purposes of assessment and consequently there was no failure todisclose fully and truly any material fact necessary for reassessmentafter four years. He submitted that neither the reasons for reopeningnor the order disposing of the objections alleged failure to disclose anymaterial facts. 10.In support of his submissions, he relied upon the followingjudgments; 1)Aventis Pharma Ltd. v/s. Assistant Commissionerof Income-tax 8(1), Mumbai.1 2)Hindustan Lever Ltd. v/s. R. B. Wadkar, Asstt.CIT2 He submitted that the impugned reasons did not disclose any newmaterial facts or information based on which the assessment was soughtto be reopened. He further submitted that the impugned reasons merely 1(2014) 368 ITR 498 (Bombay)2(2004) 268 ITR 332 (Bombay)2(2004) 268 ITR 332 (Bombay) relied upon the details which were already a part of the system / portalsubmitted during the original assessment, on account of their being noother transaction except the capital gain that the petitioner derived ondistinguishing the rights in the shares of LBPCL pursuant to the capitalreduction. In support of his contention that there was no new tangiblematerial, he placed reliance on the following decisions: 1)Clear Media (India) Private Limited v/s.Deputy Commissioner of Income Tax 6(1)(2)Mumbai & Ors.3 2)Jindal Photo Films Ltd. v/s. Deputy Commissioner of Income Tax4 11.The learned counsel urged that applying a different provision ofthe Act for the purposes of reopening the assessment, would tantamountto a change of opinion and relied upon the decision in support of hiscontentions in the case of Commissioner of Income Tax, Delhi v/s.5Kelvinator of India Ltd. 12.It would be worthwhile to consider Sections 45 & 48 of the Actwhich provides the mechanism of computing the capital gain therelevant extracts of which are as under: 3Writ Petition no.2031 of 2022 (Bombay) 4(1998) 234 ITR 170 (Delhi) 5(2010) 320 ITR 561 (S.C.) “Section 45: of the Act provides that any profits or gains arisingfrom the transfer of a capital asset effected in the previous yearwill be chargeable to income tax under the head ‘CapitalGains’. “Section 48: The income chargeable under the heard “CapitalGains” shall be computed, by deducting from the full value ofthe consideration received or accruing as a result of thetransfer of the capital asset the following amount, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of anyimprovement thereto; Provided that in the case of an assess, who is a non-resident,capital gains arising from the transfer of a capital asset beingshares in, or debentures of an Indian company shall becomputed by converting the cost of acquisition, expenditureincurred wholly and exclusively in connection with suchtransfer and the full value of the consideration received oraccruing as a result of the transfer of the capital asset into thesame foreign currency as was initially utilized in the purchaseof the shares or debentures, and the capital gains so computedin such foreign currency shall be reconverted into Indiancurrency, so, however, that the aforesaid manner ofcomputation of capital gains shall be applicable in respect ofcapital gains accruing or arising from every reinvestmentthereafter in, and sale of, share in, or debentures of, an Indiancompany; Provided further that where long-term capital gain arisesfrom the transfer of a long-term capital asset, other than capitalgain arising to a non-resident from the transfer of shares in, ordebentures of, an Indian company referred to in the firstproviso, the provisions of clause (ii) shall have effect as if for the words “cost of acquisition” and “cost of any improvement:”the words “indexed cost of acquisition” and “indexed cost of anyimprovement” had respectively been substituted: [Provided also that nothing contained in the first and secondprovisos shall apply to the capital gains arising from thetransfer of a long-term capital asset being an equity share in acompany or a unit of an equity oriented fund or a unit ofbusiness trust referred to in section 112A.] [Provided also that nothing contained in the second provisoshall apply to the long-term capital gain arising from thetransfer of a long-term capital asset, being a bond or debentureother than- (a) capital indexed bonds issued by the Government; or (b) Sovereign Gold Bond issued by the Reserve Bank of Indiaunder the Sovereign Gold Bond Scheme, 2015 Provided also that in case of an assessee being a non-resident,any gains arising on account of appreciation of rupee against aforeign currency at the time of redemption of rupeedenominated bond of an Indian company [held] by him, shallbe ignored for the purposes of computation of full value ofconsideration under this section:] [Provided also that where shares. Debentures or warrantsreferred to in the proviso to clause (iii) of section 47 aretransferred under a gift or in irrevocable trust, the marketvalue on the date of such transfer shall be deemed to be the fullvalue of consideration received or accruing as a result oftransfer for the purposes of this section:] [Provided also that no deduction shall be allowed in computingthe income chargeable under the head “Capital gains’ in respectof any sum paid on account of securities transaction tax underChapter VII of the Finance (No.2) Act, 2004 (23 of 2004).] 13.The learned counsel submitted that the word “shall” has been usedand accordingly, for the purpose of calculating capital gain, one has toapply Section 48 and calculate capital gain by applying the first orsecond proviso to Section 48 of the Act. 14.The learned counsel relied on the provisions of Section 112(1)(c)(iii) of the Act prevailing during A.Y. 2015-16. Relevant extract ofSection 112(1) of the Act, is reproduced below; “(1) Where the total income of an assessee includes any income,arising from the transfer of a long-term capital asset, which ischargeable under the head “Capital Gains”, the tax payable bythe assessee on the total income shall be the aggregate of, – (a) …….. (b) ……… (c) in the case of a non-resident (not being a company) or aforeign company, – (i) …… (ii) the amount of income-tax calculated on longterm capital gains [except where such gain arisesfromtransfer of capital asset referred to in sub-clause (iii)] atthe rate of twenty percent; and (iii) the amount of income-tax on long term capitalgains arising from the transfer of a capital asset, being unlistedsecurities, as calculated at the rate of ten per cent on the capitalgains in respect of such asset as computed without givingeffect to the first and second proviso to Section 48.” 15.As per explanation to Section 112 of the Act, the expression‘securities’ shall have the same meaning as assigned to it in Section 2(h)of the Securities Contracts (Regulation) Act, 1956 (‘SCRA’). As perSection 2(h) of SCRA, the term “securities” is defined as follows; “securities” include – (i) shares, scrips, stocks, bonds, debentures, debenture stockor other marketable securities of a like nature in or of anyincorporated company or other body corporate; (ia) derivative; (ib) units or any other instrument issued by any collectiveinvestment scheme to the investors in such schemes;investment scheme to the investors in such schemes; 15.As per explanation to Section 112 of the Act, the expression‘securities’ shall have the same meaning as assigned to it in Section 2(h)of the Securities Contracts (Regulation) Act, 1956 (‘SCRA’). As perSection 2(h) of SCRA, the term “securities” is defined as follows; “securities” include – (i) shares, scrips, stocks, bonds, debentures, debenture stockor other marketable securities of a like nature in or of anyincorporated company or other body corporate; (ia) derivative; (ib) units or any other instrument issued by any collectiveinvestment scheme to the investors in such schemes;investment scheme to the investors in such schemes; (ic) security receipt as defined in clause (zg) of Section 2 ofthe Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002; (id) units or any other such instrument issued to the investorsunder any mutual fund scheme;under any mutual fund scheme; (ii) Government securities; (iia) such other instruments as may be declared by the CentralGovernment to be securities; andGovernment to be securities; and (iii) rights or interest in securities.” 16.As noted above, for the shares of the company to qualify as“securities” as defined in Section 2(h) of SCRA, it should be marketable.Given that the shares of the private companies are not marketable innature, shares of private companies do not qualify as ‘securities’ as perSection 2(h) of the SCRA and consequently, does not get covered by Section 112(1)(c)(iii) of the Act. In this regard, reliance can be placedon the decision of the Bombay High Court in the case of Dahiben6Umedbhai Patel and others v/s. Norman James Hamilton and Ors.wherein it was held that, “It is thus clear that the shares of a private company do notpossess the character of liquidity, which means that thepurchaser of shares cannot be guaranteed that he will beregistered as a member of the company. Such shares cannot besold in the market or, in other words, they cannot be said to bemarketable and cannot, therefore, be said to fall within thedefinition of securities as a marketable security.” 17.In view of the above, the share of a private limited company is notcovered by the definition of securities, and thereby provision of Section112(1)(c)(iii) was not applicable. As the petitioner was not coveredunder Section 112(1)(c)(iii) of the Act, it filed a return of incomeshowing a capital gain of Rs.25,14,27,640/- and after setting off the lossfor the A.Y. 2014-15 (Rs.19,59,94,085), paid taxes at 20% underSection 112(1)(c)(ii) of the Act. The petitioner has paid a higher rate oftax under sub-clause (ii) at 20% compared to sub-clause (iii) at 10%.This results in a gain for the Income Tax Department. 18.The learned counsel for the petitioner further submitted that the Finance Act 2016 amended the provisions of Section 112(1)(c)(iii) to 6(1983) 85 Bom. L.R. 275: (1985) 57 Comp Cas 700 (Bom.) include the words “shares of a company not being a company in whichthe public are substantially interested” with effect from A.Y. 2017-18.The relevant extract of Section 112(1) pursuant to the amendment isreproduced as under: “(1) Where the total income of an assessee includes anyincome, arising from the transfer of a long term capital asset,which is chargeable under the heard “Capital Gains”, the taxpayable by the assessee on the total income shall be theaggregate of, – ……….(a) (b)………. (c) in the case of a non-resident (not being a company) or a foreign company, – ……(i) (ii)the amount of income-tax calculated on long term capital gains [except where such gain arises from transfer ofcapital asset referred to in sub-clause (iii)] at the rate of twenty percent; and include the words “shares of a company not being a company in whichthe public are substantially interested” with effect from A.Y. 2017-18.The relevant extract of Section 112(1) pursuant to the amendment isreproduced as under: “(1) Where the total income of an assessee includes anyincome, arising from the transfer of a long term capital asset,which is chargeable under the heard “Capital Gains”, the taxpayable by the assessee on the total income shall be theaggregate of, – ……….(a) (b)………. (c) in the case of a non-resident (not being a company) or a foreign company, – ……(i) (ii)the amount of income-tax calculated on long term capital gains [except where such gain arises from transfer ofcapital asset referred to in sub-clause (iii)] at the rate of twenty percent; and (iii)the amount of income-tax on long term capital gainsarising from the transfer of a capital asset, being unlisted securities for shares of a company not being a company in which the public are substantially interested, calculated at the rate of ten percent on the capital gains in respect of suchasset as computed without giving effect to the first and second proviso to Section 48.” 19.The learned counsel for the petitioner submitted that the Finance Act 2017 amended the provisions of Section 112(1)(c)(iii) to make the amendment made vide Finance Act 2016 (i.e. insertion of the words“shares of a company not being a company in which the public aresubstantially interested”) effective retrospectively from 1st April 2013.The amendment was a beneficial amendment passed on to the assessee.The said amendments to Section 112(1)(c)(iii) of the Act are simplifiedin table below:- 20.From the above, it can be noted that at the time of filing the returnof income for the A.Y. 2015-16, the petitioner was not covered bySection 112(1)(c)(iii) as it had transferred the shares of the privatelimited company. Accordingly, in the instant case, the assessment isbeing sought to be reopened in contravention of the law as it stoodduring the previous year 2014-15 and A.Y. 2015-16 in which thepetitioner filed its tax return. In this regard, the learned counsel for thepetitioner placed reliance on the decision in case of Godrej IndustriesLtd. v/s. B. S. Singh, Deputy Commissioner of Income-tax, Range 10(2)7which confirms that a retrospective amendment cannot be the basis forreopening of assessment. In any case, it may be noted that for the A.Y.2015-16, the four years period has expired on 31st March 2020, andabsence any failure to disclose facts by the assessee or any tangible newmaterial, the reopening of assessment proceedings by the respondent isbad in law. 21.Mr. Akhileshwar Sharma, the learned counsel for the respondents submitted that the notice under Section 148 was issued after theAssessing Officer had satisfied himself that there was an escapement of7(2015) 377 ITR 1 (Bombay) 21.Mr. Akhileshwar Sharma, the learned counsel for the respondents submitted that the notice under Section 148 was issued after theAssessing Officer had satisfied himself that there was an escapement of7(2015) 377 ITR 1 (Bombay) income and recorded the same in the reasons to believe and alsoobtained required approval from the Competent Authorities. Hesubmitted that the Assessing Officer had received information fromIncome Tax Officer (IT)-3(1)(2), Mumbai which was finalized in thelight of available material on record and the Assessing Officer came to aconclusion that the capital gain have been computed incorrectlyinasmuch as there was an erroneous brought forward and set off ofcapital loss. On this basis, he was satisfied that there was an escapementof income. He submitted that the Transfer Pricing Proceedings could notbe considered in view of the fact that it merely looks into the pricing ofthe international transaction and not the taxation under the relevantprovision of the Act. He further submitted that the issue of applicabilityof Section 112(1)(c) was not considered nor was it a part of any queriesor submission. He submitted that the petitioner had incorrectlycharacterized the transaction and consequently contended that it wasnot covered under Section 112(1)(c)(iii) and claimed the benefit ofcomputation under Section 48. 22. It is further submitted that the purpose of notice under Section142(i) is to gather information and response thereon from the assesseeon specific issues and is not meant to provide a reference for initiationof reopening proceedings. It is submitted that since the notice under 17/24 Section 142(1) dated 22nd October 2021 was issued in the course ofreopening proceedings initiated under Section 148 dated 31st March2021, whilst the reopening proceedings were in progress, the saidnotice under Section 142(1) was not bad in law. He submitted that theinformation received from the ITO (IT)-3(1)(2), Mumbai for A.Y. 2014-15, was tangible material inasmuch as it related to the computation ofcapital gain/loss on account of capital reduction. It is submitted thatsuch information had bearing on the case of the assessee for A.Y. 15-16not only in terms of the brought forward losses but also on the methodof computation of capital gain/loss. 23. The learned counsel submitted that the Assessment Order underSection 143(3) dated 24th December 2018 had no discussion withregard to the income taxable under Section 112(1) (c)(iii) of the Act andconsequently for want of any query or submission on the said subject,no opinion could be formed in the assessment proceedings underSection 143(3) of the Act. He consequently submitted since theapplicability of Section 112(1)(c)(iii) of the IT Act was not raised, therewas absence of full and true disclosure of facts by the petitioner. It wasdiscovered that the losses brought forward from the earlier years werealso claimed incorrectly by the petitioner. The learned counsel placedreliance on the full bench judgment of the Delhi High Court in the case 18/24 of Commissioner of Income-tax-VI, New Delhi v/s. Usha International8Ltd. in support of his contention. He also placed reliance on thejudgment in the case of Commissioner of Income-tax v/s. H.P. Sharma9and the decision of Kerala and Madras High Courts in the case of UnitedMercantile Co. Ltd. v/s. CIT10 and Muthukrishna Reddiar v/s. CIT11 andthe decision of the Delhi High Court in the case of Nawabganj SugarMills Co. Ltd. v/s. CIT12. The reliance is also placed on the decision of theApex Court in the case of Calcutta Discount Co. Ltd. v/s. ITO13 wherein itis held that: 18/24 of Commissioner of Income-tax-VI, New Delhi v/s. Usha International8Ltd. in support of his contention. He also placed reliance on thejudgment in the case of Commissioner of Income-tax v/s. H.P. Sharma9and the decision of Kerala and Madras High Courts in the case of UnitedMercantile Co. Ltd. v/s. CIT10 and Muthukrishna Reddiar v/s. CIT11 andthe decision of the Delhi High Court in the case of Nawabganj SugarMills Co. Ltd. v/s. CIT12. The reliance is also placed on the decision of theApex Court in the case of Calcutta Discount Co. Ltd. v/s. ITO13 wherein itis held that: “The words used are “omission or failure to disclose fullyand truly all material facts necessary for his assessmentfor that year.” It postulates a duty on every assessee todisclose fully and truly all material facts necessary for hisassessment. What facts are material and necessary forassessment will differ from case to case. In everyassessment proceeding, the assessing authority will, forthe purpose of computing or determining the proper taxdue from an assessee, require to know all the facts whichhelp him in coming to the correct conclusion.” 24.The learned counsel for the respondents also placed reliance on the judgment of the Apex Court in the case of Sri Krishna (P.) Ltd. v/s. 8(2012) 25 taxmann.com 200 Delhi 9(1980) 122 ITR 675 Delhi 10 (1967) 64 ITR 218 (Kerala) 11 (1973) 90 ITR 503 (Kerala) 12 (1980) 123 ITR 287 (Delhi) 13 41 ITR 191 ITO14 wherein it is held that, “every disclosure is not and cannot be treated to be a true andfull disclosure. A disclosure may be a false one or true one. Itmay be a full disclosure or it may not be. A partial disclosuremay very often be a misleading one. Full and true disclosure ofall material facts necessary for making assessment for that yearare required.” 25.The learned counsel for the respondents submitted that no returnwas filed in response to the notice within one month of its issuance. It issubmitted that submitting the earlier return does not fulfill theprocedural requirements as the notice under Section 143(2) cannot begenerated on the return filed earlier. He submitted that the sanctionobtained by the Commissioner is an internal administrative procedure ofthe department and sharing a copy thereof, is not required. Hesubmitted that Section 112(1)(c)(iii) is a special provision which willoverride the general provisions provided under Section 48.Consequently the capital gains will be chargeable at the rate of 10% ofthe unlisted equities with retrospective effect from 1st April 2013without giving effect to the first and second proviso of Section 48. It issubmitted that the general provisions must yield to the specialprovisions and in that regard reliance was placed on the judgment inthe case of State of Gujarat v/s. Patel Ramjibhai15. The learned counsel 14 (1996) 87 Taxman 315 15 AIR 1979 SC 1098 20/24 submitted that multiple remedies are available under the provisions ofthe Income Tax Act to the petitioner and that even if the addition isproposed, a draft order will be required to be passed and that could be amatter of appeal before the Dispute Resolution Panel before a demandgets finalized in the case. He accordingly submitted that the petitiondeserves to be dismissed. CONCLUSION: 14 (1996) 87 Taxman 315 15 AIR 1979 SC 1098 20/24 submitted that multiple remedies are available under the provisions ofthe Income Tax Act to the petitioner and that even if the addition isproposed, a draft order will be required to be passed and that could be amatter of appeal before the Dispute Resolution Panel before a demandgets finalized in the case. He accordingly submitted that the petitiondeserves to be dismissed. CONCLUSION: 26. We have heard the learned counsel at length. We are of the viewthat it is a clear cut case of change of opinion inasmuch as there is nonew material which is discovered by the concerned officer. Theapplication of another section of the IT Act on the facts andcircumstances of a case would only constitute a change of opinion andcan by no stretch of imagination be construed as new material by theRevenue. The entire emphasis on the petitioner not truly and fullydisclosing facts is baseless inasmuch as in the present case, there is onlyone transaction which was under consideration for the respondents.The entire transaction has been considered by the Assessing Officer andhas culminated into the order under Section 143(3) of the Income TaxAct dated 24th December 2018. As apparent from the reasons therewere no new tangible material in the hands of the Assessing Officer. Once the assessment is concluded, it is deemed to have been concludedwith application of mind by the Assessing Officer from all perspectiveslegal and factual. In this regard it would be fruitful to rely upon the FullBench decision of the Delhi High Court in the case of CIT v/s. Kevinator of India Ltd.16 which held that: “….We also cannot accept submission of Mr. Jolly to theeffect that only because in the assessment order, detailedreasons have not been recorded on analysis of the materials onthe record by itself may justify the Assessing Officer to initiate aproceeding under section 147 of the Act. The said submission isfallacious. An order of assessment can be passed either in termsof sub-section (1) of Section 143 or Sub-section (3) of Section143. When a regular order of assessment is passed in terms ofthe said sub-section (3) of section 143 a presumption can beraised that such an order has been passed on application ofmind.” effect that only because in the assessment order, detailedreasons have not been recorded on analysis of the materials onthe record by itself may justify the Assessing Officer to initiate aproceeding under section 147 of the Act. The said submission isfallacious. An order of assessment can be passed either in termsof sub-section (1) of Section 143 or Sub-section (3) of Section143. When a regular order of assessment is passed in terms ofthe said sub-section (3) of section 143 a presumption can beraised that such an order has been passed on application ofmind.” The reopening of the assessment based on a different method ofcomputation or application of the section is nothing else but a change ofopinion, which is impermissible in law. A similar situation was dealt with in the case of Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax17, where the Court, in the background of section 147 of theAct, observed: “……………….all that the Income-tax Officer has said is thathe was not right in allowing deduction under Section 80Ibecause he had allowed the deductions wrongly and, therefore,he was of the opinion that the income had escaped assessment. 16 [2002] 256 ITR 1. 17 [1998] 234 The reopening of the assessment based on a different method ofcomputation or application of the section is nothing else but a change ofopinion, which is impermissible in law. A similar situation was dealt with in the case of Jindal Photo Films Ltd. Vs. Deputy Commissioner of Income Tax17, where the Court, in the background of section 147 of theAct, observed: “……………….all that the Income-tax Officer has said is thathe was not right in allowing deduction under Section 80Ibecause he had allowed the deductions wrongly and, therefore,he was of the opinion that the income had escaped assessment. 16 [2002] 256 ITR 1. 17 [1998] 234 Though he has used the phrase "reason to believe" in his order,admittedly, between the date of the orders of assessment soughtto be reopened and the date of forming of opinion by theIncome-tax Officer nothing new has happened. There is nochange of law. No new material has come on record. Noinformation has been received. It is merely a fresh applicationof mind by the same Assessing Officer to the same set of facts.While passing the original orders of assessment the order datedFebruary 28, 1994, passed by the Commissioner of Income-tax(Appeals) was before the Assessing Officer. That order standstill today. What the Assessing Office has said about the order ofthe Commissioner of Income-tax (Appeals) while recordingreasons under Section 147 he could have said even in theoriginal orders of assessment. Thus, it is a case of mere changeof opinion which does not provide jurisdiction to the AssessingOfficer to initiate proceedings under Section 147 of the Act. It is also equally well settled that if a notice underSection 148 has been issued without the jurisdictionalfoundation under Section 147 being available to the AssessingOfficer, the notice and the subsequent proceedings will bewithout jurisdiction, liable to be struck down in exercise of writjurisdiction of this court. If "reason to believe" be available, thewrit court will not exercise its power of judicial review to gointo the sufficiency or adequacy of the material available.However, the present one is not a case of testing the sufficiencyof material available. It is a case of absence of material andhence the absence of jurisdiction in the Assessing Officer toinitiate the proceedings under Section 147/148 of the Act.” 27.In our view, the defense is misdirected and misconstrued and unsubstantiated. In our view, appropriate application of the law andcorrect advise to the concerned officer can save a lot of litigation andburden on the court as well as agony to the citizens. The case law referred by the respondents also is totally meaningless and out ofcontext and by no stretch of imagination applicable to the facts of thiscase and therefore, we do not propose to deal with each one of them.Suffice it to say that, it is misconstrued and misapplied, on the otherhand, the judgments relied upon by the petitioner are relevant andsupport the contentions’ so raised by the petitioner. 28.Be that as it may, we allow the petition and set aside theimpugned notice dated 31st March 2021, the reasons dated 9th January2022 and the impugned order dated 9th March 2022 and allconsequential actions/steps taken by the respondents in furtherancethereto. 29.Petition is disposed of. No orders as to costs. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)