M/S AWLESH KUMAR SINGH V. UNION OF INDIA AND ANOTHER

WTAX/378/2022

AI Insights

The case involves M/S Awlesh Kumar Singh, the petitioner, who challenged the notices and reassessment order issued by the Income Tax Department for the Assessment Year 2017-18. The petitioner had initially provided all required details during the regular assessment, which were accepted by the assessing officer. However, subsequent notices for reassessment were issued based on information suggesting large cash deposits during the demonetization period, which were treated as undisclosed income. The petitioner argued that the reassessment was without jurisdiction and based on a mere change of opinion. The court agreed, noting that the reassessment was initiated on the same facts previously considered, constituting a change of opinion, and lacked a valid 'reason to believe' that income had escaped assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 739442 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 05-05-2022
• Assessment Year: misc
• Other Referred Cases: State of Uttar Pradesh & Others vs. Aryaverth Chawal Udyog & Others, The Commissioner of Sales-Tax U.P. vs. M/s. Bhagwan Industries (P) Ltd., Lucknow, Sheo Nath Singh vs. Appellate Assistant CIT, Union Of India And Others vs M/S. Rai Singh Dev Singh Bist & others, ITO vs. Lakhmani Mewal Das, M/s. S. Ganga Saran and Sons (P) Ltd. Calcutta vs. ITO and others, Income Tax Officer, Ward No.62 vs. TechSpan India (P.) Ltd. and another, Radha Krishna Industries vs. State of H.P.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A S G I; PRAVEEN KUMAR; SHEETLA PRASAD GOUND
• Assessee Lawyers: KRISHNA MOHAN SINGH; ALOKE KUMAR
• Keywords: Certiorari; Certiorari; Demonetization; Income Tax; Jurisdiction; Notice; Reassessment; Unexplained cash deposit
• Section: 147; 148; 142(1); 143(2); 133(6); 144B

Judgement Text

"Court No. - 3 AFR Case :- WRIT TAX No. - 378 of 2022 Petitioner :- M/S Awlesh Kumar Singh Respondent :- Union Of India And Another Counsel for Petitioner :- Krishna Mohan Singh,Aloke Kumar Counsel for Respondent :- A.S.G.I.,Praveen Kumar,Sheetla Prasad Gound Hon'ble Surya Prakash Kesarwani,J. Hon'ble Jayant Banerji,J. 1. Heard Sri Aloke Kumar, learned counsel for the petitioner and Sri Praveen Kumar, learned Senior Standing Counsel for the Income Tax Department. 2. This writ petition has been filed praying for the following relief:- \"(i) Issue a suitable writ, order or direction in the nature of certiorari quashing the notice dated 31.03.2021 and 22.11.2021(contained as Annexure 2 and 4 to the writ petition) issued by respondent n.2 for reassessment under Section 148 and 143(2) read with Section 147 of the Act for the assessment year 2017-18. (i-a) Issue a suit writ, order or direction in the nature of certiorari quashing the order dated 30/03.2022 (contained as Annexure No.8 to the writ petition) passed by the respondent no. 3 under section 147 read with section 144B of the Income Tax Act, 1961 for the assessment year 2017-18\" Facts 3. Briefly stated facts of the present case are that the petitioner derives income from civil contract work. For the Assessment Year 2017-18, the petitioner filed a return of income on 21.03.2018 along with audit report dated 02.11.2017. The case of the petitioner was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as \"the Act, 1961\") was issued on 13.08.2018 which was followed by notices under Section 142(1) of the Act, 1961. A show cause notice dated 07.12.2019 was also issued to the petitioner and the petitioner submitted entire details as required by the assessing officer. 4. Vide notice dated 23.11.2019 under Section 142(1) of the Act, 1961 issued during the course of regular assessment proceedings, the assessing officer required the petitioner to furnish reply on several points and also required him to furnish entire details of all the accounts maintained with the Bank/Post Office/Financial Institutions and the cash deposited by him in the Bank during the demonetization period. Every details with regard to cash deposit were also required to be furnished. The petitioner furnished the entire details which were examined by the assessing authority. After thorough scrutiny of the case, the assessment order under Section 143(3) of the Income Tax Act, 1961 was passed on 25.12.2019 by the assessing officer, assessing the petitioner's total income at Rs. 44,74,620/-. He made an addition of Rs. 2,00,000/-. 5. Thereafter, notice dated 31.03.2021 under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18 was issued by the assessing officer to the petitioner. The assessing officer recorded \"reason to believe\" as under:- \" As per the information received from the Investigation Wing under category of High Risk CRIU/VRU Information on Insight Portal of he Department, the assessee has deposited cash in aggregating sum of Rs. 4,97,24,000/- during demonetization period which is being treated as undisclosed income during the previous year related to the assessment year under consideration\". 6. Aggrieved with the aforesaid notice for reassessment under Section 148 of the Income Tax Act, 1961, the petitioner has filed the present writ petition on 07.02.2022 which was subsequently amended. The reliefs sought in the present writ petition have been quoted above. 7. In paragraph 8 of the counter affidavit dated 25.04.2022, the respondent no.2 has stated as under:- (8) That in the present case, since there was information that the assessee has undertaken huge financial transactions, much beyond the taxable limit, considering all the details and materials available on record, the case was selected for reassessment under P2 Section 147/148 of Income Tax Act, 1961 as per CBDT Circular F.No. 225/40/2921/ITA-II dated 04.03.2021 which prescribes for guidelines regarding categories of cases to be considered as 'potential cases\" for taking action under Section 148 of the Act by the jurisdictional assessing officer. The present case is covered under Clause-1(iii) (a) of the aforesaid circular. For the kind perusal of this Hon'ble Court, a true photostat copy of the circular dated 04.03.2021 is being filed herewith and marked as Annexure CA-2 to the present affidavit. 8. In paragraph 8 of the counter affidavit, the respondent no.2 has referred and relied upon the Circular of CBDT dated 04.03.2021, which is reproduced below. F. No. 225/40/2021/ITA-II Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Ndw Delhi, the 4th March, 2021. To All. Pr. Chief Commissioner of Income Tax/Chief Commissioners of Income Tax. Madam/Sir, Subject:- Instructions regarding selection of cases for issue of notice under section 148 of the Income Tax Act, 1961-regarding. 1. The Central Board of Direct Taxes (Board), in exercise of its power under section 119 of the Income Tax Act, 1961 (Act), with an objective of streamlining the process of selection of cases for issue of notice under section 148 of the Act, hereby directs that the following categories of cases be considered as 'potential cases' for taking action under section 148 of the Act by 31.03.2021 for the A.Y. 2013-14 to A.Y. 2017-18 by the jurisdiction Assessing Officer (JAO): i. Cases where there are Audit Objection (Revenue/Internal) which require section under section 148 of the Act; ii.Cases of information from any other Government Agency/Law Enforcement Agency which require action under section 148 of the Act; iii. Potential cases including:- (a) Reports of Directorate of Income -tax (Investigation), P3 (b) Reports of Directorate of Intelligence & Criminal Investigation. (c) Cases from Non-Filer Management System (NMS) & other cases as flagged by the Directorateof Income -tax (System) as per risk profiling; iv. Cases where information arising out of field survey section, regarding action under Section 148 of the Act. v. Cases of information received from any Income -Tax authority regarding action under Section 148 of the Act with the approval of the Chief Commissioner of Income Tax Concerned. 2. No other category of cases, except the above, shall be considered for taking action under section 148 of the Act by the JAO. 3. It is clarified that action under Section 148 of the Act shall be taken by the Assessing Officer in respect of the above categories of cases after forming a reasonable belief that income chargeable to tax has escaped assessment and reasons to believe shall be recorded and required sanction as per section 151 of the Act shall be obtained before issuing notice under section 148 of the Act. 4. These instructions shall not be applicable to the Central charges and International Taxation charges for which separate instructions are being issued. 5. Issues with the approval of the Chairman, CBDT. (Rajarajeswari R)” Submissions 9. Learned counsel for the petitioner submits that there was no basis or material before the assessing authority for recording 'reasons to believe' and consequently proceeding under Section 148 of the Income Tax Act, was itself without jurisdiction. 10. Learned counsel for the respondents submits that notice under section 148 of the Income Tax Act, 1961 was issued on the basis of Circular dated 04.03.2021 inasmuch as, the petitioner's case was considered as 'potential case' for taking action under section 148 of the Act,1961 by the assessing authority and averments in this regard has been made in paragraph 8 of the counter affidavit. He further submits that the petitioner has not submitted any objection to the 'reasons to believe' recorded by the assessing authority, instead he directly filed the present writ petition. Since P4 the petitioner has not submitted any objection to \"reasons to believe\" recorded by assessing authority, therefore, writ petition is not maintainable. Discussion & Findings 11. We have carefully considered the submissions of learned counsels for the parties. 12. In the impugned reassessment order dated 30.03.2022, the respondent no.3 has recorded conclusion, as under:- “Considering the facts of the case, the submission/documentary evidences filed by the assessee in response to show cause, were found not verifiable and acceptable to justify the genuineness of transactions. Notice u/s 133(6) of the I.T. Act, dated 09.02.2021 issued for same amount of Rs. 1,05,00,000/- from department. In notice u/s 133(6), it is seen that in notice 133(6), details have been sought regarding source of cash deposits in SBN Notes, amounting to Rs. 1,05,00,000/- in bank accounts during the period 08.11.2016 to 31.03.2017. Period mention in notice u/s 133(6) is specific, not for period 01.04.2016 to 31.03.2017 (for F.Y. 2016-17). Once again, it has stated that the submission/documentary evidences filed by the assessee, were found not verifiable and acceptable to justify the genuineness of transactions. Subject to the above remarks, the amount of Rs. 38,83,000/- is added as undisclosed income and the assessment is completed u/s147 r.w.s. 144B of IT Act, 1961 after adding Rs. 38,83,000/- as undisclosed income.” 13. The first question that needs to be considered in the present writ petition is as to whether “reason to believe” recorded by the assessing officer was totally unfounded and whether it was based on “change of opinion”. Reason to Believe-Meaning, Scope and Consequence:- 14. In the case of State of Uttar Pradesh & Others vs. Aryaverth Chawal Udyog & Others reported in (2015) 17 SCC 324 (paragraphs 28 to 30), the Hon'ble Supreme Court has held as under: P5 \"28. This Court has consistently held that such material on which the assessing Authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing Authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by assessing Authority on such “reason to believe” as arbitrary and bad in law. In case of the same material being present before the assessing Authority during both, the assessment proceedings and the issuance of notice for re- assessment proceedings, it cannot be said by the assessing Authority that “reason to believe” for initiating reassessment is an error discovered in the earlier view taken by it during original assessment proceedings. (See: Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan, (1980) 4 SCC 71). 29. The standard of reason exercised by the assessing Authority is laid down as that of an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a “reason to believe” that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Ltd. v. CCT,(2007) 15 SCC 435; A.L.A. Firm v. CIT, (1991) 2 SCC 558). If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to “change of opinion”. If an assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. Thus, reason to believe cannot be said to be the subjective satisfaction of the assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. 30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the “change of opinion” and the material present before the assessing Authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion (CIT v. Dinesh Chandra H. Shah, (1972) 3 SCC 231; CIT v. Nawab Mir Barkat Ali Khan Bahadur, (1975) 4 SCC 360).\" (emphasis supplied) 15. In the case of The Commissioner of Sales-Tax U.P. vs. M/s. Bhagwan Industries (P) Ltd., Lucknow, AIR 1973 SC 370 (Paras 9 & 10), Hon’ble Supreme Court has held as under: P6 “9. The controversy between the parties has centered on the point as to whether the assessing authority in the present case had reason to believe that any part of the turnover of the respondent had escaped assessment to tax for the assessment year 1957-58. Question in the circumstances arises as to what is the import of the words \"reason to believe\", as used in the section. In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in the section. To put it differently, if there are, in fact, some reasonable grounds for the assessing authority to believe that the whole or any part of the turnover of a dealer has escaped assessment, it can take action under the section. Reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court or this Court, for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. What can be challenged is the existence of the belief but not the sufficiency of reasons for the belief. At the same time, it is necessary to observe that the belief must be held in good faith and should not be a mere pretence. 10. It may also be mentioned that at the stage of the issue of notice the consideration which has to weigh is whether there is some relevant material giving rise to prima facie inference that some turnover has escaped assessment. The question as to whether that material in sufficient for making assessment or re-assessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary.” (Emphasis supplied) 16. A Division Bench of this Court, while dealing with the validity of the re-assessment notice under Section 148 in Writ Tax No.874 of 2010 (M/S Parmarth Steel And Alloys Pvt. Ltd. vs. State of U.P. and Others, decided on 28.03.2022, held as under (Para 17) : “17. It is settled principles of law that proceedings under Section 21 of the Act, 1948 can be initiated if the material on which the Assessing Authority bases its opinion, is not arbitrary, irrational, vague, distant or irrelevant. There must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in Section 21 of the Act, 1948. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the P7 formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. The question as to whether that material in sufficient for making assessment or re-assessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary. 17. In the case of Sheo Nath Singh vs. Appellate Assistant CIT, (1972) 3 SCC 234 (Para-10), Hon’ble Supreme Court while considering the similar provisions of Section 34 (1-A) of the Indian Income Tax Act, 1922, held as under:- “…………….. There can be no manner of doubt that the words \"reason to believe\" suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court.” 18. In the case of Union Of India And Others vs M/S. Rai Singh Dev Singh Bist & others, AIR 1974 SC 478 : (1973) 3 SCC 581 (para-5), Hon’ble Supreme Court held as under:- “…………….. before an Income-tax Officer can be said to have had reason to believe that some income had escaped assessment, he should have some relevant material before him from which he could have drawn the inference that income has escaped assessment. His vague feeling that there might have been some escape of income from assessment is not sufficient… …………..” 19. In the case of ITO vs. Lakhmani Mewal Das, (1976) 3 SCC 757 (para-11 and 12), Hon’ble Supreme Court has held as under:- “11. As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer P8 on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The fact that the words \"definite information\" which were there in section 34 of the Act of 1922 at one time before its amendment in 1948 are not there in section 147 of the Act of 1961 would not lead to the conclusion that action cannot be taken for reopening assessment even if the information is wholly vague, indefinite, farfetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. 12. The powers of the Income-tax Officer to reopen assessment though wide are not plenary. The words of the statute are \"reason to believe\" and not \"reason to suspect\". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi- judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter's failure or omission to disclose fully and truly all material facts was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned Judges in the High Court, in our opinion, were not in error in holding that the said material could not have led to the formation of the belief that the income of the assessee respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs.” 20. In the case of M/s. S. Ganga Saran and Sons (P) Ltd. Calcutta vs. ITO and others, (1981) 3 SCC 143 (Para-6), Hon’ble Supreme Court held as under:- “6. It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the Income Tax Officer would be without jurisdiction. The important words under section 147 (a) are \"has reason to believe\" and these words are stronger than the words \"is satisfied\". The belief entertained by the Income Tax Officer must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the P9 Income Tax Officer in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under section 147 (a). It there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Income Tax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to he struck down as invalid.” 21. In the case of Income Tax Officer, Ward No.62 vs. TechSpan India (P.) Ltd. and another, (2018) 6 SCC 685 (Paras 14 to 18), Hon’ble Supreme Court held as under: “14. The language of Section 147 makes it clear that the assessing officer certainly has the power to re-assess any income which escaped assessment for any assessment year subject to the provisions of Sections 148 to 153. However, the use of this power is conditional upon the fact that the assessing officer has some reason to believe that the income has escaped assessment. The use of the words ‘reason to believe’ in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such re-assessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15. Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. 16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words “change of opinion” implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. 17. It is well settled and held by this court in a catena of judgments and it would be sufficient to refer Commissioner of Income Tax, Delhi vs. P10 Kelvinator of India Ltd. (2010) 320 ITR 561(SC) wherein this Court has held as under: (SCC p.725, para 5-7) “5….where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4- 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words \"reason to believe\"….. 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 reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain precondition 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. 7. 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 1-4-1989, Assessing Officer has power to reopen, 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.” 18. Before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings.” 22. In the case of Radha Krishna Industries vs. State of H.P., (2021) 6 SCC 771, Hon’ble Supreme Court reiterated the law laid down in its earlier judgments in the case of Kelvinator of India Limited (supra) and TechSpan India (P.) Ltd. (supra) and held that the power to reopen an assessment must be conditioned on the existence of “tangible material” and that “reasons must have a live link with the formation of the belief”. 23. The law laid down in the judgment referred above, leaves no manner of doubt that:- (a) The assessing officer under Section 147 of the Act, 1961 has the power to re-assess any income which escaped assessment to tax for any assessment year subject to the provisions of Sections 148 to 153. The power to reassess under Section 147 of the Act, 1961 has been incorporated so as to empower the Assessing Authorities to re-assess any income on the ground which escaped his knowledge. P11 (b) The words \"reason to believe\" suggest that the belief must be bona fide and must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. His vague feeling that there might have been some escapement of income from assessment is not sufficient. The reasons for the formation of the belief must be based on tangile material and must be based on a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular assessment year. In other words, such material on which the assessing Authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. If the grounds for formation of “reason to believe” are of an extraneous character, the same would not warrant initiation of proceedings under Section 147 of the Act, 1961. (c) If, there are, in fact, some reasonable grounds for the assessing authority to believe that the whole or any part of income of the assessee has escaped assessment, it can take action under Section 147 of the Act, 1961. If the grounds taken for initiating reassessment proceedings under Section 147 of the Act, 1961 are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. What can be challenged is the existence of the belief but not the sufficiency of reasons for the belief. The belief must be held in good faith and should not be a mere pretence. Change of Opinion (f) Reassessment of income under Section 147 of the Act, 1961 cannot be made on change of opinion. The words “change of opinion” implies formulation of opinion and then a change thereof. If the Assessing Officer has earlier made assessment for the same Assessment Year expressing an opinion of a matter either expressly or by necessary implication then on the same matter, a reassessment proceedings for the alleged escapement of income from assessment to tax, cannot be initiated as it would be a case of “change of opinion”. If the assessment order is non-speaking, cryptic or perfunctory in nature, then it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. If a conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to “change of opinion”. If the assessing Authority forms an opinion during the original assessment proceedings on P12 the basis of material facts and subsequently finds it to be erroneous; it is not a valid reason under the law for re-assessment. 24. Coming to the facts of the present case, we find that during the course of regular assessment proceedings, the assessing officer had required all details of the cash deposited by the petitioner in the bank during the Assessment Year 2017-18, which were furnished by the petitioner-assessee. The assessing officer required various other details by notice dated 23.11.2019 under Section 142(1) of the Act, 1961 which were also furnished by the petitioner and thereafter, the regular assessment order under section 143(3) of the Act, 1961 dated 25.12.2019 was passed. The explanation submitted by the petitioner regarding cash deposits in bank during Assessment Year 2017-18, was accepted by the assessing officer. 25. After the assessing officer had earlier made assessment for the same assessment year and accepted the explanation of the petitioner regarding cash deposits in bank, reassessment proceedings for the alleged escapement of the income from assessment to tax on the ground of cash deposits in bank which were earlier considered by the assessing officer in regular assessment proceedings, would amount to “change of opinion”. Since the assessing officer, during the course of the regular assessment proceedings, consciously applied his mind to the cash deposits in bank by the petitioner, then initiation of the reassessment proceedings on the same set of facts would tantamount to “change of opinion”. Therefore, the assessing officer could not assume jurisdiction to initiate reassessment proceeding in the facts and circumstances of the present case. 26. Apart from above, “reason to believe” recorded by the assessing officer was neither bonafide nor based upon reasonable ground. It was based on vague feeling that there might have been some escapement of income from assessment. Therefore, reason to believe recorded by the Assessing Officer could not give jurisdiction to the assessing officer to issue notice under section 148 of the Act, 1961. The stand taken by the respondents in the aforequoted para 8 of the counter affidavit dated 25.04.2022 reveals that P13 the case of the petitioner was selected for reassessment under Section 147/148 of the Act, 1961 on the basis of CBDT Circular dated 04.03.2021 being “potential case” for taking action under Section 148 of the Act, 1961. The assessing officer has blindly applied the aforesaid Circular of the CBDT, without looking into the facts of the present case and in complete ignorance of the direction of the CBDT in paragraph 3 of the said Circular. In paragraph 3 of aforesaid Circular the CBDT has clarified that action under Section 148 of the Act shall be taken by the assessing Officer in respect of the specified categories of cases after forming a reasonable belief that income chargeable to tax has escaped assessment. Thus “reason to believe” recorded by the Assessing Officer for issuing the impugned notice under section 148 of the Act, 1961 blindly applying the Circular of CBDT dated 04.03.2021 and without forming reasonable belief that income chargeable to tax has escaped assessment, cannot authorise the Assessing Officer to assume jurisdiction to issue notice to the petitioner under Section 148 of the Act, 1961. Therefore, the impugned notice under Section 148 of the Act, 1961 issued by the respondents to the petitioner was itself without jurisdiction. 27. Even conclusion drawn in the reassessment order dated 30.03.2022 as aforequoted, clearly indicates that there was no material before the Assessing Officer to hold that the cash deposited by the petitioner in Bank during the Assessment Year in question has escaped assessment to tax, inasmuch as , the Assessing Officer has abruptly and without recording any reason has held Rs. 38,83,000/- as undisclosed income for Assessment Year 2017-18. There is no whisper in the impugned reassessment order as to how the Assessing Officer has arrived at the aforesaid amount as undisclosed income and that how the aforesaid amount represents undisclosed income of the petitioner/assessee. Thus the reassessment proceeding initiated by the Assessing Officer against the petitioner for the Assessment Year 2017-18 was not only without jurisdiction but also it was abuse of power and the impugned reassessment order was passed arbitrarily and unauthorisedly. P14 28. For all the reasons aforestated, the impugned notice dated 31.03.2021 and 22.11.2021 under Section 148 and 143 (2) read with Section 147 of the Act, 1961 for the Assessment Year 2017-18 and the reassessment order dated 30.03.2022 under Section 147 read with Section 144B of the Act, 1961 for the Assessment Year 2017-18 cannot be sustained and are hereby quashed. 29. The writ petition is allowed with cost of Rs. 5000/- which shall be deposited by the respondents with the High Court Legal Services Committee, High Court, Allahabad within four weeks from today. Order Date :- 5.5.2022 T.S. P15 Digitally signed by TRIBHUWAN SINGH Date: 2022.05.16 10:53:20 IST Reason: Location: High Court of Judicature at Allahabad "