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TMI Blog2024 (2) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... d a final assessment order came to be passed on 02 January 2014 whereby the Assessing Officer4 computed the total taxable income at INR 20,71,04,18,575/-. 2. Undisputedly, 31 March 2016 constituted the last date by which a reassessment action for AY 2009-10 could have been initiated in terms of the timelines provided in Section 149. It is the case of the writ petitioner that the notice under Section 148, however, came to be issued only on 01 April 2016. It is in the aforesaid backdrop that one of the principal grounds on which the reassessment exercise is assailed is of the same being barred by limitation as prescribed. According to the writ petitioner, the aforenoted challenge is no longer res integra and stands conclusively answered by this Court in Suman Jeet Agarwal v. ITO 2022 SCC OnLine Del 3141. 3. We are in the present case concerned with a reassessment exercise which was governed by the erstwhile statutory regime and the respondents thus appear to have followed the procedure as it existed prior to Finance Act, 2021. A copy of the reasons on the basis of which the AO had formed the opinion that income liable to tax had escaped assessment was thus provided separately on 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment orders of earlier years in view of the following new issues raised in the assessment order for AY 2010-11 and to take remedial measures if deemed fit. (i) Non deduction of tax at source amounting to Rs. 195 crore on payments to M/s Suzuki Motor Corporation (ii) Taxation of share transactions as business income amounting to Rs. 129 crore (iii) Disallowance of claim u/s 35(2AB) amounting to Rs. 247 crore (iv) Disallowance of provision for warranty amounting to Rs. 21 crore. 4.4 The above mentioned issues have not been examined in the assessment order for A.Y. 2009-10. Reason for belief 5. In view of the above, 1 have reasons to believe that the above mentioned issues have not been examined in the assessment order of A.Y. 2009-10. Sd/- (Sanyam Joshi) Deputy Commissioner of Income Tax Circle 16(1), Delhi" 5. As is manifest from the above, the respondent had essentially flagged four issues which had been identified in the course of the assessment undertaken for AY 2010-11. The four principal issues which were cited were the following: a. The petitioner constituted a Permanent Establishment [PE] of Suzuki Motor Corporation [SMC] and thus being liable to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment that since generation of impugned notices on the Income Tax Business Application portal on March 31, 2021, is undisputed, the singular act of generation of notice by the jurisdictional Assessing Officer satisfies the requirement of "issued" for the purpose of section 149 of the Act of 1961 and despatch of the notice on March 31, 2021 is not a mandatory requirement. 25.3. The Department contends that since each of the impugned notices bear a document identification number, its generation as on March 31, 2021, is beyond doubt. It is further contended that since, on the Income Tax Business Application portal, after generation of notice the jurisdictional Assessing Officer is left with no power to amend, alter, cancel or ante-date the notice, the said act of generation conclusively establishes that the notice has been issued. 25.4. The petitioners as noted above have opposed this contention of the Department as being contrary to settled law interpreting the expression "issued", "shall be issued" and the dictionary meaning of the phrase "issue". It is contended that under the Act of 1961, a notice is held to be "issued" on the date of its due despatch and not on the date t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the controversy of the validity of a notice with reference to sections 148 and 149 of the Act of 1961. In the said case, the notice under section 148 of the Act of 1961, was despatched by registered post on March 31, 1970, but the same was received by the assessee on April 3, 1970 ; and therefore, the Gujarat High Court after observing that the expression "issued" and "served" in sections 148 and 149 have the same meaning, held that the notice was time barred. In appeal, the Supreme Court after taking note that the notice was despatched by registered post on March 31, 1970, set aside the judgment of the High Court. The Supreme Court held that the service of notice is not a condition precedent for satisfying the condition of "issued". The date of despatch of the notice was taken into consideration by the Supreme Court as the relevant date for determining that the notice has been validly issued for the purpose of section 149 of the Act of 1961. The date of notice is discernible from the judgment of High Court. 25.7. The contention of the Department that since the impugned notices were generated and digitally signed on March 31, 2021, the same should be considered as the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied) The Gujarat High Court categorically held that it is on the date of despatch of the section 148 notice that the same will be held to be issued for the purpose of section 149 of the Act of 1961. 25.8. The Madras High Court in Smt. Parveen Amin Bhathara (supra), after approving the dicta of Kanubhai M. Patel (supra) and considering section 282 of the Act of 1961 and rule 127 of the Income-tax Rules, held as under (page 205 of 446 ITR) : "In the present case, the respondent reopened the assessment of the appellant for the assessment year 2011-12, through notice dated March 31, 2018 under section 148 of the Act. Admittedly, the limitation period of six years for reopening the assessment, came to an end on March 31, 2018. The main plank of contention of the learned counsel for the appellant is that the notice under section 148 of the Act dated March 31, 2018 has been received by the appellant through e-mail only on April 18, 2018, i. e., after the expiry of six years from the end of the assessment year under consideration and hence, the same is clearly barred by limitation, whereas the Department contended that mere signing of notice by the respondent on March 31, 2018 amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice therein though dated March 31, 2021, was issued through e-mail on April 6, 2021, the same was time barred and therefore liable to be quashed. The court at paragraphs 29 and 30 held as under (page 54 of 444 ITR) : "Thus, considering the provisions of sections 282 and 282A of the Act, 1961 and the provisions of section 13 of the Act, 2000 and meaning of the word 'issue" we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the despatch of an electronic record occurs when it enters into computer resources outside the control of the originator. Thus, the point of time when a digitally signed notice in the form of electronic record is entered in computer resources outside the control of the originator, i. e., the assessing authority that shall be the date and time of issuance of notice under section 148 read with section 149 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Department has not disputed the correctness of the law settled by the Supreme Court in the case of R. K. Upadhyaya (supra) in which the court was concerned with issuance of the section 148 notice in paper form and concluded that, since the date of despatch was within the prescribed period of limitation, the notice was validly issued for the purpose of section 149 of the Act of 1961, and held that the date of service of notice was not relevant. In fact, the Department has relied upon the said judgment. The said judgment squarely applies to the notice classified as category "E". The amendments to the Act of 1961 including section 282A was to enable the Income-tax authority to issue notice either in paper form or electronic form and were made to provide an adequate legal framework for paperless assessment. Similarly, setting up of the digital platform of Income Tax Business Application portal and the e-filing portal is for facilitating assessment proceedings electronically. The said amendments or the use of Income Tax Business Application portal by the Department for issuing notice in no manner mitigates against or dispense with the legal requirement of the Department to ensure d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (page 653 of 445 ITR) : "Coming to the facts of the case, it is stated that notice under section 148 of the Act of 1961 is said to have been issued on March 31, 2021 for the assessment year 2013-14, followed by consequential notices. It is the case of the petitioner that the notice is said to have been issued vide e-mail at 6.42 p. m., but was served on April 1, 2021 at 2 am and, therefore, the unamended provisions of section 148 of the Act of 1961 would not be applicable to the case. . ." We do not find that this judgment takes the case of the Department any further as the section 148 notice in the case was duly despatched on March 31, 2021. 25.17. The Department has not cited any judgment which would support its contention that mere drawing up of notice and signing it (pending despatch) amounts to issuance. The counsel for the respondent placed heavy reliance on the judgment of the Supreme Court in M. M. Rubber and Co. (supra). In the said case as well, the apex court was concerned with the issue of limitation while determining if the impugned order therein had been passed within time. However, the provision under consideration was section 35E(3) of the Central Excises an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No. 3 (F No. System/Income Tax Business Application/Instruction/ Assessment/ 177/16-17/), dated February 3, 2017, also illustrates the same distinction : "Details of the Authority/party from whom information is requisitioned can be entered along with date for compliance and the notice can then be generated and issued." 25.19. The counsel for the Department have also sought to argue that generation of a notice with document identification number on Income Tax Business Application screen conclusively indicates that the notice has been irrevocably issued. The submission of the respondent is not borne out from the applicable circular regarding document identification number issued by Central Board of Direct Taxes and is therefore a mere ipse dixit of the counsel. 25.20. As per Circular No. 19 of 2019 (F. No. 225/95/2019-ITA.II), dated August 14, 2019 ([2019] 416 ITR (St.) 140 ) issued by the Central Board of Direct Taxes, the document identification number was introduced to maintain a proper audit of trail of communications issued by the Income-tax authority. The said circular does not state that the generation of document identification number would automatically constitute i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined that the said notice though generated and signed on March 31, 2021 was issued through e-mail by the Income Tax Business Application servers on April 6, 2021. It has been brought to this court's attention that the jurisdictional Assessing Officer is now self-determined that the same shall be governed by the judgment of the Supreme Court in Ashish Agarwal (supra) and the jurisdictional Assessing Officer has accordingly proceeded to treat the notice dated March 31, 2021 as notice under section 148A (b) . The aforesaid acts of the jurisdictional Assessing Officer belie the submissions of the counsel for the Department that the generation of the notice on the Income Tax Business Application screen constitutes issuance. It further substantiates the contention of the petitioners that the date and time of issue of the e-mails by the Income Tax Business Application servers are readily available with the Department and therefore there is no disputed issue of facts. 25.23. We, therefore, answer question No. (I) in the negative against the Department and hold that the impugned notices dated March 31, 2021, which were despatched on April 1, 2021, or thereafter, would not mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices falling under category "A" We therefore hold that the impugned notices falling under category "A" shall be held to be dated as on the date digital signature certificate was affixed. Since the date of affixation of digital signature certificate on the impugned notices is April 1, 2021 and thereafter they were sent and delivered through the Income Tax Business Application portal on or after April 1, 2021, the impugned notices falling under category "A" can only be said to have been issued on or after April 1, 2021. Illustratively, in W. P. (C) No. 1759 of 2022 the notice even though dated March 31, 2021 was digitally signed on April 1, 2021 and thereafter was sent and delivered through Income Tax Business Application portal on April 15, 2021, in this case, the date of the impugned notice is April 1, 2021 (i. e., the date on which it was digitally signed) and it was issued through e-mail on April 15, 2021. Finding for notices falling under category "E" 25.26. With respect to the impugned notices which have been classified as category "E", the date of despatch through speed post is determined as the date of issuance following the judgment of the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote on business activities and history alongwith the details regarding godowns, branch offices and sister concerns of the company and the method of accounting followed by you. In case of manufacturing activity : a) Explain the process of manufacturing activity with a flow chart b) Furnish the quantative details of by product generated as a result of manufacturing activity. Also furnish the manner of disposal and income generated on the same. c) The manufacturing activity must be resulting in certain quantities of generated scrap. Furnish the statement showing the details of scraps generated indicating the quantity and sale thereof. xxx xxx xxx 13. Details of loans and advances given alongwith the interest details. This should include details of Directors with complete addresses to whom company have given loan alongwith the rate of interest being charged by it. xxx xxx xxx 25. Furnish detail of making TDS during the previous year as under: 26. Furnish monthwise sales and purchases, Furnish the quantity wise and valuewise details of purchases and sales exceeding Rs.10 lakhs alongwith the name and address of the person from whom purchases / sales have been made. xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Directors of the company is placed in Anneuxre-1 xxx xxx xxx Query No. 24: Furnish the list of key management personnel (KMP) as described in AS-18 "Those persons who have authority and responsibility for planning, directing and controlling activities of the reporting enterprises". The key management personnel of the company for the financial year 2009-10 are specified in clause 25 of the notes to accounts in the Annual report of the company which has been submitted to your records vide our submission dated 16.12.2010. The information is reproduced below for your convenient reference: Mr. Shinzo Nakanishi Mr. Hirofumi Nagao Mr. Tsuneo Ohashi Mr. Keiichi Asai Mr. Syuji Oishi Query No. 25: Furnish detail of making TDS during the previous year as per given format. With reference to the above state query, we state that the company has an efficient system of recording and analyzing the transactions liable for TDS provisions under the Income Tax Act. The Tax auditor has verified the same and reported on the matter as stated under clause 17(f) and clause 27(b) of the Tax Audit report. The company has been regular in filing all the TDS returns related to all fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tax Administration (Seal) Notice Regarding Agreement upon Mutual Consultation With respect to mutual consultation relating to the taxation issue for the finding of permanent establishment in India, which you company applied on February 143,2001, the compet3ent authorities of Japan and India have reached an agreement on April 5, 2001 and I shall provide notice of such agreement as follows. Suzuki Motor Corporation has no permanent establishment in India at all under Article 5 of the Tax Treaty between Japan and India" 13. Similar was the position which according to the writ petitioner would obtain in respect of share transactions and whether they would constitute business income. Mr. Vohra specifically drew our attention to the notice dated 22 October 2010 issued under Section 143(2) and where the following queries had been raised: "20) Complete details regarding the unrealized forex gain/loss. xxx xxx xxx 47. Details with supporting evidence in respect of short term capital gain / loss and long term capital gain / loss." 14. Responding to the aforesaid notice, the petitioner is stated to have provided the following information with respect to short term ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2011 filed by assessee. Copy of original and revised return of income has already been submitted before your honor with submission dated 09.02.2011. xxx xxx xxx The above expenditures have been duly certified by the statutory auditors of the company vide their certificate dated 25th August 2009 a copy of which is enclosed in Page 32 of this submission for your perusal. The expenditure on R&D have been duly certified by the Tax auditors in Enclosure-IV, read with clause l5(a) of the Tax audit report. A copy of the Tax audit report has already been submitted to you during the course of this assessment proceeding. Further, the R&D expenditure claim has been duly approved by the Secretary, DSIR of the Ministry of Science and Technology of the Government of lndia vide their letter in form 3CL no. TU/IV- 15/(194)/35(2AB)/3CL/578/2010 dated 18th August, 2010-A copy of this approval letter is enclosed in Pages 29 to 31 of this submission for your kind perusal. In light of the above details, it can be seen that the expenditure claimed by the assessee company has been duly certified by it's statutory auditors and tax auditors and reviewed and duly approved by the Secretary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration and formed part of the original assessment record would clearly establish that all material facts had not only been duly disclosed but had also been specifically examined by the AO in the course of that assessment. It was submitted that in the absence of an allegation of the petitioner having failed to make a full and true disclosure, the reassessment action is liable to be quashed by this Court. 21. Mr. Vohra further submitted that there was no independent application of mind by the AO and who appears to have been constrained to issue notice under Section 148 prompted solely by the communication of the ACIT and the assessment order passed for AY 2010-11. According to learned senior counsel, a concluded assessment cannot possibly be reopened on the basis of a different opinion that the AO may arrive at while assessing a subsequent AY. According to learned senior counsel, Courts have consistently held that reassessment cannot be commenced merely by relying upon a subsequent assessment order unless the AO is independently satisfied that new facts have come to light and which may tend to taint the disclosures made as false, untrue or even misleading. 22. Refuting those su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... critical significance. 26. The petitioners had contended that the notice was in fact dispatched on 01 April 2016. From the response which has been filed by the respondents in these proceedings, we find that there has been an abject failure to controvert the aforenoted submission. The assertion of the writ petitioner that the notice was in fact dispatched on 01 April 2016 would thus have to be accepted. Undisputedly, the last date for commencement of reassessment action for AY 2009-10 was 31 March 2016. The notice impugned before us, as we have found, came to be issued thereafter. The reassessment action is thus liable to be struck down on this short ground alone. 27. Regard must also be had to the fact that we are in this particular case not concerned with a notice which may have been issued after 01 April 2021 and in which case, we would have had to examine the challenge raised on this score bearing in mind the directions framed by the Supreme Court in Union of India v. Ashish Agarwal (2023) 1 SCC 617 and in light of the law as enunciated in Union of India v. Rajeev Bansal 2024 SCC OnLine SC 2693. This writ petition, in that sense, is not really concerned with Taxation and Othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the respondents, on the other hand, had contended that the law does not bar an AO from taking into consideration subsequent facts which may come to light in the course of an assessment which may have been undertaken. According to Mr. Chandra, an assessment for a subsequent year may result in new material or evidence coming to light and which may tend to shroud the case set up by an assessee or even lead to the disclosures being viewed as false or incorrect. According to learned counsel, merely because those facts are gathered subsequently, would not deprive the AO of the power to reopen an assessment made. The submission of the respondents essentially was that since the new facts and material were never in the possession of the AO when the original assessment was undertaken, it would be wholly incorrect for the writ petitioners to aver that the reassessment was based on a change of opinion. 32. In order to evaluate the correctness of the rival submission so addressed, we deem it apposite to advert to the lucid enunciation of the power to reassess which appears in the judgment of the Full Bench of our Court in CIT v. Usha International Ltd. 2012 SCC OnLine Del 4995. The sco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are belied and untrue do not get protection and cover under the principle of "change of opinion". Factual information or material which was incorrect or was not available with the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression "material facts" means those facts which if taken into account would have an adverse effect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. The question of concealment is not relevant and is not a precondition which confers jurisdiction to reopen the assessment." 34. The Full Bench then proceeded to rule on contingencies where although facts may have existed on the assessment record, the AO had omitted to draw an appropriate inference. Dealing with such a situation, it pertinently observed as under: "17. Correct material facts can be ascertained from the assessment records also and it is not necessary that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC OnLine Del 441. It held that the decision in Kelvinator cannot possibly be construed as having laid down a principle that even if the AO had not examined a particular subject matter or failed to express an opinion, it must be presumed that such an opinion had in fact been formed. This clarification was rendered in the context of an argument which appears to have been addressed to the effect that as long as material existed on the record, it should be presumed that the AO had duly scrutinized the same and agreed with the stand as taken by the assessee. This becomes apparent from a reading of paragraphs 22 to 25 of the report and which are extracted hereunder: "22. In the last paragraph quoted above, the Full Bench rejected the submission that reassessment proceedings would be justified if the assessment order is silent or does not record reasons or analysis of material on record. This, the Revenue had propounded, would show non-application of mind by the Assessing Officer. It was held that the said submission was fallacious. The Full Bench explained that when an assessment order was passed under section 143 (3), a presumption could be raised that the order was passed after a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso is not applicable, the said precondition is not applicable. This additional requirement is not to be satisfied when reassessment proceedings are initiated within four years of the end of the assessment year. The sequitur is that when the proviso does not apply, the reassessment proceedings cannot be declared invalid on the ground that the full and true disclosure of material facts was made. In such cases, reassessment proceedings can be declared invalid when there is a change of opinion. As a matter of abundant caution we clarify that failure to state true and correct facts can vitiate and make the principle of change of opinion inapplicable. This does not require reference to and the proviso is not invoked. The difference is this ; when the proviso applies the condition stated therein must be satisfied and in other cases it is not a prerequisite or condition precedent but the defence/plea of change of opinion shall not be available and will be rejected. 25. Thus, if a subject-matter, entry or claim/deduction is not examined by an Assessing Officer, it cannot be presumed that he must have examined the claim/deduction or the entry, and, therefore, it is the case of "change o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he has committed an error in consequence of which income has escaped assessment it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT (1959) 35 ITR 1 (SC), CIT v. A. Raman and Co. (1968) 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT (1971) 82 ITR 831 (SC), and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT (1976) 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law." 35. In A. L. A. Firm (supra), the Supreme Court specifically dealt with propositions (2) and (4) quoted in paragraph 34 above and thereafter elucidated and explained that there was no difference between the observations of the Supreme Court in Kalyanji Maviji (1976) 102 ITR 287 (SC) and Indian and Eastern Newspaper Society case (1979) 119 ITR 996 (SC), as far as proposition (4) is concerned. It was held that (page 297 of 189 ITR): "We have pointed out earlier that Kalyanji Maviji's case (1976) 102 ITR 287 (SC) outlin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that the decision subsequently come across by him was already there would not affect the position because the information that such facts or decision existed comes to him only much later. What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Maviji's case (1976) 102 ITR 287 (SC). The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the Income-tax Officer initiates reassessment proceedings in the light of 'information' obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the Income-tax Officer, having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct-matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of change of opinion and the reassessment proceedings will be barred. 37. We are conscious of the fact that the aforesaid observations have been made in the context of section 147(b) with reference to the term "information" and conceptually there is difference in scope and ambit of reopening provisions incorporated with effect from April 1, 1989. However, it was observed by the Supreme Court in Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) that the amended provisions are wider. What is important and relevant is that the principle of "change of opinion" was equally applicable under the unamended provisions. The Supreme Court was, therefore, conscious of the said principle, when the observations mentioned above in A. L. A. Firm (1991) 189 ITR 285 were made. 38. It will be appropriate to reproduce the succeeding passage from A. L. A. Firm (1991) 189 ITR 285 (page 299): "We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement placed before the Income-tax Officer at the time of the original assessment, it is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order or queries raised by the Assessing Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction, etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case." 37. From the guiding principles which came to be expounded by the Full Bench in Usha International, the following position would emerge. A Court would, while examining a challenge to the invocation of Section 148, and where it be asserted that it essentially amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kelvinator were explained by the Full Bench as being liable to be read as pertaining to the principle of change of opinion only. It was thus observed that it would be wholly incorrect to hold that the AO should be presumed to have formed an opinion even if it had failed to examine a particular item of income or expenditure. It thus laid emphasis on the distinction that must be assumed to exist between a change of opinion and a case where no opinion at all may have been formed by the AO on a particular issue. 41. The Court in Usha International also affirmed the right to reopen in case the said decision be based on fresh material that may come to the fore. It was thus observed that while it would be open to the AO to base its opinion to reopen on material and facts that may come to its notice subsequently, the same would have to be assessed subject to the caveat that material did not originally exist and the AO was thus powerless to have examined the issues emanating therefrom. The Court in Usha International then also dealt with situations where a query raised and the information elicited may itself be demonstrative of an issue having been examined by the AO and consequently precl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material disclosed in these complaints clearly shows that the assessee is guilty of creating a network of shell companies with a view to transfer its untaxed income in India to entities abroad and then bring it back to India thereby avoiding taxation. We make it clear that we are not going into this aspect of the matter because those complaints have not seen the light of the day either before the High Court or this court and, therefore, it would be unfair to the assessee if we rely upon such material which the assessee has not been confronted with. 26. Even before the assessment order was passed on August 3, 2012, the Assessing Officer was aware of the entities which had subscribed to the convertible bonds. This is apparent from the communication dated April 8, 2011. The case of the Revenue is that the assessee did not disclose the amount subscribed by each of the entities and furthermore the management structure of these companies. We are not in agreement with this submission of the Revenue. It is apparent from the records of the case that the Revenue was aware of the entities which subscribed to the convertible bonds. It has been urged that these are bogus companies, but we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent heads of income and expenditure involved, the remittances made to SMC as well as the issue of short and long term capital gains. The petitioner has also demonstrated that appropriate disclosures were made with respect to placement of representatives of SMC in India. This, therefore, clearly appears to be a case where the AO, though conscious and cognizant, chose not to make any additions, draw any adverse inference or doubt the stand which was taken by the writ petitioner. 46. Let us then examine whether the material disclosed was subsequently found to be false, misleading or incomplete on the basis of fresh information that may have come to the fore in a subsequent assessment proceeding. The discussion on this aspect, however, must be prefaced with the observation that it is not the case of the respondent that what was disclosed by the petitioner in the earlier assessment had been found to be incorrect or wrong. It is also not their case that the material and information that came to light in the subsequent AY casts a doubt on the correctness or credibility of the responses which were submitted. It is these aspects which convince us to hold that the "four new issues" neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PE is a fact specific issue and which must be answered in the context of what may have existed in a particular AY coupled with the satisfaction of the AO that there has been no change in the set of fundamental facts which would be germane for determination. This becomes evident from a reading of the following passages of our decision in Grid Solutions OY: "18. Indisputably, there is no principle akin to that of res judicata which can be recognized to be applicable to taxing disputes. Though this principle is well settled, we deem it appropriate to refer to the following enunciation of the well-settled legal position in National Petroleum Construction Co. v. Dy. CIT where the Supreme Court had held as follows:- "37. The High Court rightly held that the question of whether the appellant had permanent establishment, could not possibly be undertaken in an enquiry for issuance of certificate under section 197 of the Income-tax Act, having regard to the time-frame permissible in law for deciding an application, more so, when regular assessment had been completed in respect of the immediate preceding year and the appellant found to be taxable under the Income-tax Act at 10 per cent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of the enquiry, cannot undertake an exhaustive exercise to determine this issue conclusively. We find force in the submissions of Mr. Raghvendra Kumar Singh that the question as to whether the petitioner has constituted a permanent establishment, cannot possibly be undertaken in the enquiry having regard to the time frame permissible under law for deciding the application under section 197 of the Act. The reasons shown to us also take note of the fact that in the immediate preceding years, i.e., the assessment year 2016-2017 and the assessment year 2017-2018, for which regular assessment has been completed, the petitioner has been held to have a permanent establishment (PE) in India, and its total income from the contracts with the Oil and Natural Gas Corporation have been held to be taxable under the Income-tax Act. Section 44BB of the Act is applied, and 10 per cent. of the contractual receipts were considered as business profits. The rate of tax being 40 per cent., a certificate was, accordingly, issued at 4 per cent. For the other assessment years as well, assessment has been completed and appeal is pending before the appellate authorities. The petitioner, obvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue arose whether the assessee is a charitable trust, and this position had not been contested by the Income-tax Department from the assessment year 1937-1938 to the assessment year 1963-1964. In these circumstances, the court held as under (headnote of 193 ITR 321): "Where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year." 27. In the present case, there cannot be any dispute that existence of permanent establishment is required to be determined by law for each year separately on the basis of the scope, extent, nature and duration of activities in each year. In this regard, the contracts in question, i.e., R-series contracts dated February 7, 2018 and LEWPP series contracts dated September 30, 2016 would have to be taken into consideration. Concededly, this court in its decision dated May 9, 2017 did not have the occasion to consider the R-series contract dated February 7, 2018. The court only considered the contract dated September 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid principle is also based upon the rules of certainty and consistency that a decision taken after due application of mind should be followed consistently as this lead to certainty, unless there are valid and good reasons for deviating and not accepting the earlier decision." 21. The Court also takes note of the succinct enunciation of this legal principle in Dwarkadas Kesardeo Morarka v. Commissioner of Income Tax, Central where the Supreme Court had held as under:- "7. The conclusion of the Tribunal was amply supported by evidence. It cannot be said that because in the previous years the shares were held to be stock-in-trade, they must be similarly treated for Assessment Year 1949-1950. In the matter of assessment of income tax, each year's assessment is complete and the decision arrived at in a previous year on materials before the taxing authorities cannot be regarded as binding in the assessment for the subsequent years. The Tribunal is not shown to have omitted to consider the material facts. The decision of the Tribunal was on a question of fact and no question of law arose which could be directed to be referred under Section 66(2) of the Income Tax Act." 22. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer, based on what was noticed in the course of the survey, cannot be extrapolated to other years. The purported belief of the Assessing Officer, on this aspect of the matter, was not a belief at all but was merely a suspicion. Such suspicion cannot take the place of a belief and that too a belief which is based on reasons." 24. While and as our Court explained in Galileo it may be permissible for an AO to take cognizance of a "fundamental aspect pervading through different assessment years has been found as a fact in one way or the other....", the said precept could have been legitimately invoked provided the AO were satisfied or had come to record its prima facie opinion that the facts which prevailed and obtained in AY 2013-2014 upto AY 2017-2018 were identical to those which had been found in the course of the two surveys which had been undertaken in 2007 and 2019. However, no such finding has either been returned nor conclusion recorded in the "reason to believe" drawn by the AO. 25. The reliance placed by Mr. Bhatia on Raymond Wollen Mills is equally misplaced since the phrase "assumptions of facts" is clearly being misconstrued and read out of context. Lea ..... 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