ANMOL SPINTEX PRIVATE LIMITED THRU DIRECTOR NAISHADH INDRAKANT PARIKH V. THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 1(1)(1)

SCA/2796/2022

AI Insights

The case involves Anmol Spintx Private Limited, which challenged the notice and subsequent orders issued by the Assistant Commissioner of Income Tax for reopening the assessment for the Assessment Year 2014-2015. The reopening was based on the claim that the company had received share premium exceeding fair market value, which should be taxed under section 56(2)(viib) of the Income Tax Act. The petitioner argued that all relevant details were disclosed during the original assessment, and the reassessment was merely a change of opinion by the Assessing Officer. The court agreed with the petitioner, noting that the reassessment was beyond the permissible period and lacked new tangible material to justify reopening.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 672162 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 29-08-2022
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income tax v. Kelvinator of India Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M R BHATT; KARAN SANGHANI; MUNJAAL BHATT
• Assessee Lawyers: HIREN TRIVEDI
• Keywords: Income chargeable to tax escaped assessment; Reopening of assessment; Share premium; Tax Evasion
• Section: 147; 148; 143(3); 142(1); 143(2); 139(1); 11UA; 56(2)(viib); 144B; 11U

Judgement Text

"C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 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 and HONOURABLE MR. JUSTICE BHARGAV D. KARIA ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of 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. 1 MR 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.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 29/08/2022 ORAL JUDGMENT Page 1 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1.Heard learned advocate Mr. Hiren j. Trivedi for the petitioner and learned Senior Advocate Mr. M.R. Bhatt with learned advocate Mr. Karan Sanghani with learned advocate Mr. Munjaal Bhatt for M.R. Bhatt and Co. for the respondent. 2.Having regard to the controversy involved in the present case which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing. 3.Rule returnable forthwith. Learned advocate Mr. Karan Sanghani waives service of notice of rule on behalf of the respondent. 4.By this petition under Article 226 of the Constitution of India, the petitioner has Page 2 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 challenged the notice dated 26.03.2021 issued under section 148 of the Income Tax Act, 1961 (For short “the Act”) for reopening of the assessment proceedings for the Assessment Year 2014-2015 and order disposing objections raised by the petitioner company dated 22.11.2021. The petitioner has also challenged order dated 21.03.2022 passed under section 147 read with section 143(3) read with section 144B of the Act and notice of demand dated 21.03.2022. 5.Brief facts of the case are as under : 5.1) The petitioner is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in manufacturing business. 5.2) The petitioner company filed its return of income under section 139(1) of the Page 3 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 Act for the Assessment Year 2014-2015 on 29.09.2014 declaring total loss of Rs. (-)5,41,319/-. 5.3) Case of the petitioner was taken for scrutiny assessment under section 143(2) of the Act. The Assessing Officer issued notice under section 142(1) of the Act dated 09.11.2016 calling for details of share premium received along with details like PAN, address and copies of income tax return. 5.4) The petitioner vide letter dated 17.01.2016 supplied the necessary details as called for. 5.5) The Assessing Officer issued yet another notice dated 2.12.2016 calling for providing copy of CA certificate for market value of shares by applying Rule 11UA of the Income Tax Rules, 1962 (for short Page 4 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 “Rules,1962”) with regard to Rs. 2,76,00,000/- shares issued to Amazon Textile Pvt. Ltd and also asked the petitioner company to explain why provisions of section 56(2) of the Act should not be invoked. 5.6) The petitioner vide reply dated 8.12.2016 provided the CA certificate and gave explanation for non applicability of section 56(2)(viib) of the Act to the facts of the case of the petitioner. 5.7) The Assessing Officer passed the assessment order dated 09.12.2016 wherein no additions were proposed. 5.8) The respondent however, issued notice under section 148 of the Act dated 26.03.2021 for the Assessment Year 2014-2015 for reopening the assessment stating that income chargeable to tax has escaped Page 5 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 assessment within the meaning of section 147 of the Act and asked the petitioner to file return of income. 5.9) The petitioner therefore, filed the return of income on 19.04.2021 and requested for a copy of the reasons recorded by the Assessing Officer. Such reasons recorded on 22.03.2021 were provided to the petitioner by communication dated 12.05.2021. The reasons recorded by the Assessing Officer for reopening the assessment under section 147 of the Act read as under : : “Reasons for reopening the assessment in the case of M/s. ANMOL SPINTEX PVT LTD.for A.Y.2014-15 u/s 147 of the I.T. Act. Brief facts of the case: The original return of income was filed by the assessee on 28.09.2014 declaring total income of Rs. (-)5,41,319/-. Assessment u/s. 143(3) was completed on 10.12.2016 by determining total income at of Rs. (-)5,41,319/-. 2. Brief details of information Page 6 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 received: In this case, during the course of the assessment proceedings the case of Amazon Textiles Pvt Ltd. (PAN AABCB6914E) for A.Y.2014-15, it is seen that the Amazon Textiles Pvt Ltd. has purchased shares of Rs.34,86,90,000/- from the assessee on more than fair market value. On perusal of the case records of the assessee, it is seen that during the year under consideration, the assessee has received share premium of Rs.34,86,90,000/-. The assessee-company has claimed to have complied with the rule 11UA of the I.T. Rules. Further, the assessee-company has declared the nominal income of Rs.2,56,200/- as per Return of income for AY 2013-14. Thus, the financial results of the assessee-company had been adversely affected. Therefore, the assessee has received share premium amounting to Rs.34,86,90,000/- which is required to be taxed under the provisions of section 56(2)(viib) of the Act. 3. Analysis of information received: As per information, during the course of the assessment proceedings in the case of Amazon Textiles Pvt Ltd. (PAN AABCB6914E) for A.Y.2014- 15, it is seen that the Amazon Textiles Pvt Ltd. has purchased shares of Rs.34,86,90,000/- from the assessee on more than fair market value. On perusal of the case records of the assessee, it is seen that during the year under Page 7 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 consideration, the assessee has received share premium of Rs.34,86,90,000/-. The assessee-company has claimed to have complied with the rule 11UA of the I.T. Rules. Further, the assessee-company has declared the nominal income of Rs.2,56,200/- as per Return of income for AY 2013-14. Thus, the financial results of the assessee-company had been adversely affected. Therefore, the assessee has received share premium amounting to Rs.34,86,90,000/- which is required to be taxed under the provisions of section 56(2)(viib) of the Act. 4. Enquiries made by the AO as sequel to information collected/ received: In this case, specific information has been received clearly outlining the systematic evasion of taxes by the assessee. The facts as enumerated above have been found out on examination on the case records of the assessee and are self explanatory. Therefore, no further enquiry is required in this case. On the basis of the same there are reasons to believe that the income chargeable to tax has escaped assessment. 5. Findings of the AO: After analysis of the information with the facts available on record, it can be concluded that the Amazon Textiles Pvt Ltd. has purchased shares of Rs.34,86,90,000/- from the assessee Page 8 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 on more than fair market value. On perusal of the case. records of the assessee, it is seen that during the year under consideration, the assessee has received share premium of Rs.34,86,90,000/-. The assessee- company has claimed to have complied with the rule 11UA of the I.T. Rules. Further, the assessee-company has a declared the nominal income of Rs.2,56,200/- as per the Return of Income for A.Y 2013-14. Thus, the financial results of the assessee- company had been adversely affected. Therefore, the assessee has received share premium amounting to Rs. 34,86,90,000/- which is required to be taxed under the provisions of section 56(2)(vilb) of the Act. Therefore, an amount of Rs.34,86,90,000/- has escaped assessment and the same is required to be brought to tax. 6. Basis of forming reason to believe and details of escapement of income: In this regard, it is stated that the information was not in the possession of the undersigned earlier. The said information/scheme of tax evasion could be unearthed only after receiving the information. Although, during the course of assessment proceedings, the assessee submitted, P&L account, Balance sheet and other details, the scheme of tax evasion was embedded in annual report, audited P&L A/c, balance sheet and books of account Page 9 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 in such a manner that it could not be detected by the AO and could be detected only receiving the information. It can be reasonably concluded that there is failure on the part of assessee to disclose fully and truly all necessary facts during the assessment proceedings. For aforesaid reasons, it is not a case of change of opinion by the AO. It is evident from the above facts as mentioned in the para 3 & 5, that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration. On the basis of the above, I have reason to believe that income of the assessee to the extent of Rs.34,86,90,000/- has escaped assessment for the year under consideration. Therefore, I am satisfied that it is a fit case for initiating proceedings u/s 147 of the Act. 7. Paragraph will include escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India: NA 8. Applicability of the provisions of section 147/151 to the facts of the case: In this case a return of income was filed for the year under consideration and regular assessment Page 10 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 u/s. 143(3) of the Act on 10.12.2016 Since, 4 years from the end of the relevant year has expired in this case, the requirement to initiate proceedings u/s. 147 are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraph 4, 5 and 6). In this regard, it is also pertinent to mention here that above referred details have not been called for by the AO and thus are not been examined by the AO nor such details are furnished by the assessee. It was only after receiving the information that this scheme of tax evasion could be unearthed. It is pertinent to mention here that the aforesaid information was not in the possession of the undersigned earlier. I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment proceedings and have noted that the assessee has not fully and truly disclosed the following material facts necessary for assessment for the year under consideration: Page 11 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 In the AY 2014-15, there is an escapement of income chargeable to tax aggregating to Rs.34,86,90,000/-. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for assessment for the year under consideration thereby necessitating reopening u/s. 147 of the Act. It is true that the assessee has filed a copy of annual report and audited Profit & Loss A/c and Balance Sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all the material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of account, annual report, audited P&L A/c and Balance Sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. It is evident from the above discussion that in this case, the issues under consideration were Page 12 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 never examined by the AO during the course of regular assessment. This fact is corroborated from the contents of notices issued by the AO u/s 143(2)/142(1) and order sheet entries recorded during the assessment proceedings. It is important to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/C, Balance sheet and books of accounts in such a manner that it would require due diligence by the AO to extract these information. For afore stated reasons, it is not a case of change of opinion by the AO. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue the notice u/s. 148 is being requested from Principal Commissioner of Income tax as per the provisions of section 151 of the Act.” 5.10) The petitioner company raised its detailed objections to the reasons recorded vide letter dated 27.05.2021. 5.11) The Assessing Officer rejected such Page 13 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 objections vide order dated 22.11.2021. Thereafter, assessment proceedings continued and notice under section 142(1) of the Act dated 22.11.2021 was issued. However, as such notice is not being reflected on the online portal, the petitioner company has not filed any response to such notice. 5.12) It appears that thereafter the petitioner approached this Court and was protected vide order dated 14.02.2022 wherein the reassessment proceedings were stayed. 5.13) Thereafter, assessment order dated 21.03.2022 came to be passed by the Assessing Officer making total addition of Rs.27,90,000/- under section 56(2)(viib) of the 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 Page 14 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 respondent, the petitioner has preferred this petition. 6.Learned advocate Mr. Hiren J. Trivedi for the petitioner submitted that only reason for reopening of assessment under section 147 of the Act is that as per the Assessing Officer, the assessee company has issued shares and received share premium i.e. amount in excess of fair market value of shares amounting to Rs. 34,86,90,000/- which is required to be taxed under the provisions of section 56(2) (viib) of the Act. It was submitted that the assessee company had already been assessed and order section 143(3) of the Act was passed on 9.12.2016. At the time of filing the return of income as well as during the course of assessment proceedings, the assessee company had filed the financial statement of the company which shows that the company has issued equity shares during the Page 15 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 year under consideration at premium. It was therefore, submitted that all necessary materials pertaining to the issue for which the case of the company has been reopened was already available on record and in fact during the assessment proceedings, the assessee had submitted various explanations as well as documentary evidences which included certain details with respect to the issue of 2,76,00,000 shares which the assessee company had already supplied to the Assessing Officer. It was submitted that after consideration of all these materials, the order under section 143(3) of the Act accepting the return filed by the assessee came to be passed. 6.1) It was submitted that during the original assessment proceedings the petitioner had provided copy of audited financial statement, copy of Form No.2 with Page 16 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 respect to allotment of shares, acknowledgment of return of income filed by the shareholder and copy of share application money on account appearing in the books of account of petitioner along with copy of bank statement as called for by the Assessing Officer. It was further submitted that the petitioner company also provided the CA certificate for market value of shares by applying Rule 11UA/11U of the Rules,1962 as called for by the Assessing Officer. It was submitted that since the shares were issued at fair value, the petitioner company has not received any excess payment and thus provisions of section 56(2)(viib) of the Act are not applicable to the case of the petitioner which fact was brought to the notice of the Assessing Officer. 6.2) Learned advocate Mr. Trivedi submitted that after examining the issue Page 17 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 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 new material has been brought on record. 6.3) Learned advocate Mr. Trivedi further submitted that reopening of assessment is beyond the applicable limit of period of limitation of four years as per section 147 read with section 149 of the Act. It was submitted that during the course of original assessment proceedings, the petitioner company duly submitted each and every detail called for and such details were verified by the Assessing officer and therefore, reassessment proceedings beyond a period of four years cannot be permitted. Page 18 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 6.4) Learned advocate Mr. Trivedi for the petitioner submitted that the reasons recorded and the order disposing of the objection fails to disclose the quantum of income which the Assessing Officer thinks is in excess and is liable to be taxed under section 56(2)(viib) of the Act. It was further submitted that the Assessing Officer has treated the face value of shares as zero and proposed to treat the entire amount of consideration for issue of shares as income under section 56(2)(viib) of the Act which is without application of mind. 7.On the other hand learned Senior Advocate Mr. M.R. Bhatt for the Revenue submitted that the petition is filed at a pre-mature stage inasmuch as only a notice under section 148 read with section 147 of the Act for the Assessment year 2014-2014 has been issued and Page 19 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 in the event the petitioner is aggrieved by the reassessment proceedings, alternative efficacious remedy is available by way of an appeal before the CIT(Appeal) and thereafter before the Tribunal as per the provisions of the Act. 7.1) Learned Senior Advocate Mr. Bhatt submitted that the case was reopened on the basis of information that during the year under consideration, Amazon Textiles Pvt. Ltd. purchased shares of Rs. 34,86,90,000/- from the petitioner on more than fair market value and therefore, it was apparent that the petitioner has received share premium of Rs., 34,86,90,000/-. It was further submitted that the petitioner has declared the nominal income of Rs.2,56,200/- as per the return of income for the Assessment Year 2013-2014 and thus the share premium amounting to Rs.24,30,50,000/- does not commensurate with Page 20 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 the financial status of the petitioner and therefore, the share premium amounting to Rs.24,30,50,000/- has escaped assessment and is required to be taxed under the provisions of section 56(2)(viib) of the Act. 7.2) Learned Senior Advocate Mr. Bhatt submitted that petitioner failed to submit valuation report under Rule 11UA based on the audited balance sheet and therefore, there is clear failure on part of the petitioner to fully and truly disclose material facts necessary for assessment. It was therefore, submitted that there is escapement of income in view of the aforesaid facts which give jurisdiction to the Assessing Officer to reopen the assessment. 8.Considering the submissions made by the learned advocates on both the sides, it appears that the impugned notice under Page 21 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 section 148 of the Act, 1961 is issued only on the ground that the assessee has received share premium of amounting to Rs.34,86,90,000/- which is required to be taxed under the provisions of section 56(viib) of the Act. 9.During the original assessment proceedings the petitioner had provided copy of audited financial statement, copy of Form no.2 with respect to allotment of shares, acknowledgment of return of income filed by the shareholder and copy of share application money on account appearing in the books of account of the petitioner along with copy of bank statement. 10. The petitioner had also provided financial statement showing that the company had issued equity shares during the year under consideration at premium. The Assessing Page 22 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 Officer had specifically inquired about certain details with regard to the issue of 2,76,00,000 shares. The assessee had given explanation that the company had issued 2,76,00,000 shares during the year at face value of Rs.10/- per share and at premium of Rs.2.5/- per share. The petitioner also provided the CA certificate for market value of shares by applying Rule 11UA/11U of the Rules,1962 with regard to shares issued to Amazon Textile Pvt. Ltd. All other details proving the identity, creditworthiness and genuineness of the shareholders have also been provided to the Assessing Officer. Thus it is apparent that the petitioner provided all the details of shares issued to Amazon Textile Pvt. Ltd. 11. The Assessing Officer finalised the regular assessment after examining the issue threadbare and did not make any addition Page 23 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 under section 56(2)(viib) of the Act. Thus, the present reopening of assessment is based upon mere change of opinion as there is no fresh tangible material to show escapement of income due to failure on part of the petitioner to disclose fully and truly any material fact necessary for assessment. On bare perusal of the notice for reopening assessment, it appears that reopening is not based on any fresh tangible material but is based upon the material already on record. 12. It is therefore, apparent that there is change of opinion by the Assessing Officer to reopen the assessment for the Assessment Year 2014-2015, more particularly, when the issue of share premium required to be taxed was already considered during the assessment proceedings under section 143(3) of the Act, 1961. The Assessing Officer cannot have any jurisdiction to issue the notice under Page 24 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 section 148 of the Act, 1961 for reopening the assessment for the year under consideration more particularly, when the assessment is sought to be reopened beyond a period of four years as held by the Supreme Court 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 for determination in this batch of civil appeals is, whether the concept of \"change of opinion\" stands obliterated with effect from 1st April, 1989, i.e., after substitution of Section 147 of the Income Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1987? xxx 6. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re- open the assessment. Therefore, post- Page 25 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words \"reason to believe\" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of \"mere change of opinion\", which cannot be per se reason to re- open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain 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 take place. One must treat the concept of \"change of opinion\" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is \"tangible material\" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words \"reason to believe\" but also inserted the word \"opinion\" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words \"reason to believe\", Parliament re-introduced the said expression and deleted the word \"opinion\" on the ground that it would vest arbitrary powers in the Page 26 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 Assessing Officer. We quote herein below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: \"7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same.\" 13. In view of foregoing reasons, considering the facts of the case impugned notice under section 148 of the Act, 1961 dated 26.03.2021 is not tenable in law and is Page 27 of 28 C/SCA/2796/2022 JUDGMENT DATED: 29/08/2022 accordingly quashed and set aside and accordingly, the order dated 22.11.2021 disposing of the objections raised by the petitioner against reopening of assessment is also quashed and set aside. Simultaneously, impugned order dated 21.03.2022 passed under section 147 read with section 143(3) read with section 144B of the Act and notice of demand of even date are quashed and set aside. 14. Rule is made absolute to the aforesaid extent. No order as to costs. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 28 of 28 "