JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned Senior Advocate Mr.Tushar Hemani with learned advocate Ms.Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Mr.Karan G. Sanghani for the respondent No.1. 2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr.Karan Sanghani waives service of notice of rule for and on behalf of the respondent No.1. 3. Having regard to the controversy arising in this petition in narrow compass, with the consent of the learned advocates for the parties, the same is taken up for hearing. 4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and validity of assumption of jurisdiction by the respondent-authority to issue notice dated 31st March, 2021 for re-opening under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) for Assessment Year 2015-16. 5. Brief facts of the case are as under : 5.1. The petitioner was engaged in the business of construction in the previous year relevant to the assessment year 2014-15. The petitioner filed return of income on 30th September, 2014 declaring total income at Rs.NIL due to loss. The petitioner follows percentage completion method for recognising the revenue which is disclosed in the Note 3 of Significant Accounting Policies forming part of the Audited Annual Accounts. 5.2. The case of the petitioner was taken up for scrutiny and notice was issued on 20th July, 2016 under Section 142(1)/143(2) of the Act calling upon the petitioner to furnish various details including the details of sales, purchases, inventory, etc. Considering the details and information’s submitted by the petitioner, the Assessment Order dated 09.12.2016 under Section 143(3) of the Act was passed without making any addition. 5.3. Thereafter, the petitioner received the impugned notice dated 31st March, 2021 for re-opening and on request of the petitioner, the reasons were provided on 13th August, 2021 which read as under : “2. Brief details of information collected/ received by the AO: On verification of the computation of income and the annual financial statements (Balance Sheet & Profit and Loss account) for the year under consideration, it is revealed that the assessee had booked/sold residential flats to the customers by receiving advances/deposits and thereby the amount was shown as liability and in asset side some amount was shown as Inventory/construction/Work in progress. This transpires that the assessee had received substantial revenue against expenditure made in the work in progress. However, no matching income for the receipt of amount on percentage completion method as per the provisions of Section AS-7, was offered for taxation. The revenue is recognised every year on basis of percentage of works completed as certified by civil engineer/architect. However, the assessee has not followed the percentage completing method and not offered the true income. (ii) in this case during the verification of Income-tax case records of the assessee for A.Y.2014-15, it was observed that the assessee had made investment of Rs.1,11,97,054/- in partnership firms as capital in South Beach Investment LLC, which is tax exempt in the hands of the assessee u/s. 10(2A). Therefore, the expenditure relatable to the exempt investment was required to be disallowed, which, in the instant case, comes to Rs.55,985/- (1,11,97,054 0.5%). Failure to do so has resulted into underassessment of income of Rs.55,985/-. Therefore, the same is required to be taxed as per the provisions of the Act. (iii) The assessee has written off land cost to the tune of Rs. 10,01,06,563/- Rs.2,09,44,620/-(+)Rs.6,93,27,479/(+) Rs.53,67,045/-) for the year 2012-13, 2013-14 & 2014-15. However, no details available with case records how these values arrived and written off. Thus, method of accounting of land cost is not correct. (iv) The assessee has claimed direct expense of Rs.1,62,52,702/- and after claiming other direct and indirect expenses, net loss declared of Rs.91,22,206/- and carried forward to the next year. Thus, method of accounting of direct expenses is not correct.” 5.4. The petitioner filed the detailed objections by letter dated 09.09.2021 contending inter-alia that the petitioner has followed the works completed method in accordance with Section 145(2) of the Act, Accounting Standard 1 and Accounting Standard 2 which is mentioned in the Notes to Account of the Audited Financial Statement. It was also contended that the petitioner has not claimed any exempted income and therefore, the dis-allowance under Section 14A of the Act pertaining to the interest proposed to be added on the investment made in LLC outside India would not arise. It was also contended that the land cost written off as well as the direct expenses and working of the closing stock in trade are duly explained and details were provided during the course of the regular assessment. 5.5. It was also contended that the land cost written off as well as the direct expenses and working of the closing stock in trade are duly explained and details were provided during the course of the regular assessment. 5.5. The respondent however, by order dated 24th March, 2022 disposed of the objections. 6.1. Learned Senior Advocate Mr.Tushar Hemani for the petitioner submitted that the impugned notice is issued beyond a period of four years and the Assessment Order was passed under Section 143(3) of the Act after taking into consideration all the details called for and there is no failure on part of the petitioner to disclose fully and truly all material facts for the assessment. It was therefore submitted that as per provisio to Section 147 of the Act, the respondent- Assessing Officer would not have any jurisdiction to re-open the assessment. 6.2. It was further submitted that the proposed re-opening is nothing but mere change of opinion on part of the respondents because the petitioner has provided all the details which are required during the regular course of assessment pertaining to the issues which are raised in the reasons recorded for reopening of the assessment. Reliance was placed on the letter dated 30th June, 2016 (point No.2) relevant to the point Nos.12, 13, 14, and 15 of the notice dated 20th July, 2016, letter dated 3rd October, 2016 and other submissions made during the course of the regular assessment. 6.3. It was therefore submitted that there is no escapement of income chargeable to tax even on merits as no addition is called for. 6.4. It was submitted that on bare perusal of the reasons recorded, it is apparent that there is no allegation made by the respondent against the assessee for not disclosing fully and truly all material facts during the course of the Assessment Proceedings. It was therefore submitted that the impugned notice is liable to be quashed and set aside on ground of mere change of opinion. 7.1. On the other hand, learned Senior Standing Counsel Mr.Karan Sanghani for the respondent No.1 submitted that the respondent- Assessing Officer after taking into consideration the relevant material available on the record has formed the prima-facie reason to believe to re-open the assessment for the year under consideration. 7.2. 7.1. On the other hand, learned Senior Standing Counsel Mr.Karan Sanghani for the respondent No.1 submitted that the respondent- Assessing Officer after taking into consideration the relevant material available on the record has formed the prima-facie reason to believe to re-open the assessment for the year under consideration. 7.2. It was further submitted that the assessee has made an investment of Rs.1,11,97,054/- in partnership firm as capital gain in South Beach Investment LLC which is as exempt in the hands of the assessee under Section 10(2A) of the Act and therefore, the Assessing Officer has rightly calculated the amount of Rs.55,985/- being the underassessment of income which is required to be taxed as per the provisions of the Act. 7.3. It was further submitted that the assessee has not provided any detail with regard to the valuation of the land cost which is written off and as such, the method of accounting of the land cost was not correct and the same aspect was not undergone during the course of the regular assessment. 7.4. It was therefore submitted that no interference is called for in the impugned notice. Reliance was also placed on the decision of the Hon’ble Supreme Court in case of the Raymond Woolen Mills Ltd. Versus ITO reported in 236 ITR 34 Supreme Court as well as the decision of the Apex Court in case of ACIT Versus Rajesh Jhaveri Stock Brokers Private Limited reported in (2007) 291 ITR 500 (SC) in support of his submissions. 8. Considering the submissions made by learned advocates for the respective parties as well as the material placed on record, it is apparent that the reasons recorded by the respondent-Assessing Officer are based upon the material available on record and there is no fresh material which is relied upon to arrive at a prima-facie reasonable belief that the income has escaped the assessment. On perusal of the reasons recorded, it is apparent that there is no failure on part of the petitioner to disclose fully and truly all the material facts for the assessment. 9. On perusal of the reasons recorded, it is apparent that there is no failure on part of the petitioner to disclose fully and truly all the material facts for the assessment. 9. Considering the show-cause notice issued during the regular assessment and the replies filed by the petitioner as well as the details provided, it is apparent that the issues which are raised in the reasons recorded for reopening of the assessment are duly covered in the details provided by the petitioner along with the Significant Accounting Policies referred to in the Audited Accounts. 10. In view of the above undisputed facts of all the details being provided during the course of the regular assessment and on perusal of the reasons recorded, we are of the opinion that the impugned notice was issued only on mere change of opinion which is not permissible as per the settled legal position as held by the Hon’ble Supreme Court in case of Commissioner of Income Tax versus Kelvinator of India Limited reported in (2010) 320 ITR 561 (SC) wherein, it is held as under : “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 reopen the assessment. Therefore, post-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. 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 reassessment 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 reopening 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 Assessing Officer. We quote hereinbelow 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'. 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." For the afore-stated reasons, we see no merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs.” 11. In view of the above conspectus of law, the impugned notice dated 31st March, 2021 is hereby quashed and set aside and accordingly, the petition succeeds. Rule is made absolute to the aforesaid extent. No orders as to cost.