Dr. D.Y Chandrachud, J.:— Rule. With the consent of counsel, rule is made returnable forthwith. By consent of counsel for both the parties, the petition is taken up for hearing and final disposal.

2. A notice was issued on July 18, 2008, under section 148 of the Income-tax Act, 1961 (“Act”) for reopening an assessment for the assessment year 2004–05. An order has been passed on November 30, 2009, disposing of the objections filed by the petitioner to the reopening of the assessment. Both the notice and the order have been challenged. The petitioner filed its return of income for the assessment year 2004–05 on October 29, 2004, and declared a loss of Rs. 52.87 crores. While computing this loss, the petitioner claimed a deduction of bad debts amounting to Rs. 12,00,43,394. The petitioner also computed a book loss in the amount of Rs. 42,14,40,497 under section 115JB. The return of income was revised on March 31, 2006, so as to declare a loss of Rs. 53.20 crores. The return was selected for scrutiny assessment by a notice under section 143(2). The Assessing Officer issued two questionnaires during the course of the assessment proceedings, one of them being on September 29, 2006. A specific query was raised in regard to the allowability of the bad debts claimed by the petitioner under section 36(1)(vii) read with section 36(2) and on the computation of book profits under section 115JB. The petitioner responded to the queries by its letters dated December 6, 8, 14 and 27, 2006. The Assessing Officer passed an order of assessment on December 29, 2006, by which the claim in respect of bad debts was disallowed to the extent of Rs. 5.54 crores. The Assessing Officer, however, allowed the claim to the extent of Rs. 6.46 crores. After recomputing the book profits, the Assessing Officer assessed the income of the petitioner under section 115JB at Rs. 41.95 crores. While recomputing the book profits, the Assessing Officer rejected the exclusion on the profit of the sale of undertaking and fixed assets but accepted the computation in relation to other items. The petitioner thereupon preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) by an order dated June 26, 2008, allowed relief to the petitioner in respect of the bad debts but confirmed the disallowance in respect of book profits under section 115JB. As a result of the order passed by the Commissioner of Income-tax (Appeals), the entire claim on account of bad debts in the amount of Rs. 12 crores came to be allowed under section 36(1)(vii). Cross-appeals filed by the petitioner and by the Revenue are pending before the Tribunal.

3. On July 16, 2008, a notice under section 148 was issued to the petitioner by the Assessing Officer. The basis on which the assessment is sought to be reopened is set out in the reasons supplied to the petitioner on June 25, 2009. For the purposes of convenience, it would be appropriate to extract the reasons as provided, which are as follows:

“It is seen that the assessee has claimed bad debts and advances amounting to Rs. 12,00,43,394. During assessment proceedings, the assessee's claim of Rs. 5,54,19,503 was disallowed and the balance claim of Rs. 6.46.23.891 was allowed to the assessee.

3. It is further no, ticed that the assessee has not debited any amount on account of write off of debts/advances to the profit and loss account as in schedule 17 of the balance-sheet, the sundry irrecoverable balances written off is shown at nil. Moreover, the assessee has claimed bad debts written off by way of debiting provision for doubtful debts and advances. Further, while computing the book profit under section 114JB the assessee has not considered the following provisions made in the books of account.

Rs. 1. Provision for doubtful debts 13,46,95,323 2. Provision for doubtful advances 3,65,54,281 3. Provisions for doubtful debts Being intercorporate deposits subsidiaries 19,72,712 4. Provisions for diminution in value of investments 15,72,000 17,47,94,316

3. Thus, this has resulted in escapement of income of Rs. 23,94,18,207/(Rs. 6,46,23,891 + Rs. 17,47,94,816) within the meaning of section 147 of the Income-tax Act, 1961.

4. Hence, I have reason to believe that there is escapement ot income of Rs. 36,21,500 and accordingly it is a fit case for reopening under section 147 of the Income-tax Act, 1961, within the time limit of four years from the end of the relevant assessment year. Hence, the assessment for the assessment year 2004–05 is hereby reopened.”

4. The petitioner filed objections to the reopening of the assessment on November 13, 2009. The objections have been disposed of by an order dated November 30, 2009.

5. From the reasons which have been furnished to the petitioner while reopening the assessment and the order that has been passed disposing of the objections, the basis on which the assessment is sought to be reopened pertains to two items. The first relates to the write off of bad debts in the amount of Rs. 6.46 crores. The second relates to the computation of book profits under section 115JB. In so far as the write off of the bad debts is concerned, the Assessing Officer has stated that the petitioner had not debited any amount on account of write off of debts/advances to the profit and loss account and that in schedule 17 of the balance-sheet, the sundry irrecoverable balances written off are shown at nil. While disposing of the objections of the petitioner, the Assessing Officer has again reiterated that the assessee has not debited an amount of Rs. 6.46 crores in the profit and loss account and that consequently the assessee would not be entitled to allowance of bad debts under section 36(2). In so far as the computation of book profits is concerned, the Assessing Officer has stated that the assessee had not considered the following provisions, namely, those relating to doubtful debts and advances and for the diminution in value of investments in the books of account. These are the two grounds on which the Assessing Officer has come to the conclusion that the income chargeable to tax had escaped assessment so as to warrant an exercise of the power to reopen the assessment under section 147 of the Act.

6. Counsel appearing on behalf of the petitioner has challenged the basis on which the assessment is sought to be reopened under both the heads noted earlier. In so far as the claim for bad debts is concerned, it was urged on behalf of the petitioner that during the course of the assessment proceedings, a detailed inquiry was made by the Assessing Officer. During the course of inquiry, the petitioner clarified by its letter dated December 14, 2000, that the write off had been made out of debtors provided in the books of account for the assessment years 2002–03 and 2003–04 and earlier years which income had been added back to the income and offered to tax in the respective assessment years. Since in the earlier assessment years, these amounts had been added back to the income and offered for taxation, a claim had been made during the assessment year in question as an allowable expense since the debts were not realizable and had been written off in the books of account. A list of the debts written off was provided to the Assessing Officer. Apart from this, during the course of assessment proceedings, the petitioner furnished a further clarification to the Assessing Officer on December 27, 2006. On the basis of the material provided, the Assessing Officer allowed the claim for bad debts to the extent of Rs. 6.46 crores but made a disallowance to the extent of Rs. 5.54 crores. In appeal, the Commissioner of Income-tax (Appeals) held that the entire claim was justified. Counsel submitted that the reasons which have been furnished by the Revenue for reopening the assessment are extraneous to the provisions of section 36(1)(vii) since the statute does not require that the write off of debts/advances be reflected in the profit and loss account for the assessment year in which the claim for deduction is made. In the present case, it was submitted that a debit was made to the profit and loss account in the initial year against which a credit was reflected in the provision for doubtful debts. No claim was made, however, for a deduction in the year in which a provision for doubtful debts was made by virtue of the Explanation to section 36(1)(vii). However, in the subsequent year when the debts in question were treated as having become bad and irrecoverable, the provision for doubtful debts was duly debited against a corresponding credit to the debtors' accounts. In any event, it was submitted that the reopening of the assessment was not warranted since the Assessing Officer had specifically applied his mind to the issue during the course of the assessment proceedings. Moreover, the assessment is sought to be reopened on a basis which is not contemplated by section 36(1)(vii).

7. In so far as the computation of book profits under section 115JB is concerned, counsel appearing on behalf of the petitioner submitted that on the basis of the law as it then stood a provision for doubtful debts and advances and for diminution in the value of investments did not fall within the purview of clause (c) to Explanation (1) to section 115JB. This, it was submitted, was the law which held the field in view of the judgment of this court in CIT v. Echjay Forgings P. Ltd., [2001] 251 ITR 15 (Bom) and the judgments of the Delhi High Court in CIT v. Eicher Ltd., [2006] 287 ITR 170, CJT v. HCL Comnet Systems and Services Ltd., [2007] 292 ITR 299. As a matter of fact, it was submitted that the Supreme Court in the appeal which arose out of the judgment of the Delhi High Court in HCL Comnet [2007] 292 ITR 299 held that the provision for doubtful debts and advances could not be regarded as a provision for a liability other than an ascertained liability within the meaning of clause (c) of the Explanation (1) to section 115JA. Consequently, the order of the Assessing Officer was consistent with the judgments of this court and the Delhi High Court. The order of assessment is also in accord with the law as declared by the Supreme Court, though subsequently. As a matter of fact, Parliament stepped in after the judgment of the Supreme Court and amended the provisions of the Explanation to section 115JB so as to specifically include the amount or amounts set aside as provision for diminution in value of asset as clause (i) to Explanation (1), by the Finance Act of 2009. Though the amendment by the Finance Act of 2009 was with retrospective effect from April 1, 2001, the amendment was brought about after the notice was issued by the Assessing Officer, seeking to reopen the assessment. The validity of the notice of the Assessing Officer seeking to reopen the assessment would have to be determined on the law as it prevailed on the date of the notice having regard to the judgment of the Supreme Court in CIT v. Max India Ltd., [2007] 295 ITR 282 : [2008] 166 Taxman 188.

8. On the other hand, it was urged by counsel on behalf of the Revenue 9 that (i) Whether the bad debts had as a matter of fact been written off by the assessee was not clear during the course of assessment proceedings. Counsel submitted that the assessee had in schedule 17 to the annual accounts for the assessment year 2003–04 reflected a nil provision for bad debts for the year ending March 31, 2004. Consequently, it was submitted that since the assessee had not written off the bad debts in the profit and loss account for the year ending on March 31, 2004, and had in fact shown nil debts under the head of bad debts in schedule 17 dealing with the operating expenses, the assessee would not be entitled to a deduction under section 36(1)(vii). On the second aspect of the matter, namely, the computation of book profits under section 115JB, the submission of counsel for the Revenue was that the issue was not raised during the course of the assessment proceedings. Consequently, it was submitted that the Assessing Officer was not precluded from reopening the assessment under section 147. Counsel submitted that the judgment of the Supreme Court in Max India Ltd., [2007] 295 ITR 282 on which reliance has been placed must be confined to section 80HHC of the Income-tax Act, 1961.

9. For convenience of exposition, it would be appropriate to take both the 10 grounds, which have been furnished for reopening the assessment separately.

(A) The claim for bad debts:

10. During the course of the assessment proceedings, the assessee claimed a deduction of bad debts in the amount of Rs. 12 crores. The computation of total income for the assessment year 2004–05 reflects, inter alia, income under the head of profits and gains of business or profession to which is added a provision for doubtful debts in the amount of Rs. 13.46 crores. A separate provision was made for doubtful advances, doubtful debts by way of intercorporate deposits to subsidiaries and for diminution in the value of investments. A deduction was thereupon specifically claimed on account of bad debts written off by debiting the provision for doubtful debts and advances to the extent of Rs. 12 crores. During the course of the assessment proceedings, the Assessing Officer specifically applied his mind to the claim of the assessee for a deduction on account of bad debts. Two letters were addressed by the assessee to the Assessing Officer on December 14, 2006, and December 27, 2006. By these letters, the assessee clarified that the write off had been made out of debtors provided for in the books of account for the assessment years 2002–03 and 2003–04 and earlier years which had been added back to the income and offered to tax in the respective assessment years. However, the management confirmed that the debts were not realizable and were hence to be written off in the books. Party-wise details of debts written off were furnished to the Assessing Officer. The assessee clarified that since in the earlier years the amount had been added back to the income and offered for taxation, the claim is an allowable expense in the current year. The assessee also recorded that it had produced debtors' accounts for verification. A list of debtors whose debts had gone unpaid due to closure of the business of the debtor, bankruptcy of the debtor or cessation of the business relationship between the assessee and the debtor was furnished. The assessee clarified that in respect of some of the debtors, there was an ongoing business relationship and efforts were being made to recover the debt; on recovery of the amount, it would be credited to the profit and loss account. On this basis the Assessing Officer initially allowed the claim for bad debts to the extent of Rs. 6.46 crores. In appeal, the Commissioner of Income-tax (Appeals), however, held that there was no justification to make a disallowance to the extent of Rs. 5.54 crores since as a matter of business expediency, the assessee was justified in effecting;a write off. Consequently, the entire amount was allowed under section 36(1)(vii).

11. Section 36(1) provides that the deductions provided for in its succeeding clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28. Clause (vii) postulates that subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year is allowable as a deduction. The Explanation to clause (vii), which was inserted by the Finance Act of 2001, provides that for the purposes of the clause, any bad debt or part thereof written off as irrecoverable in the accounts of the assessee shall not include any provision for bad and doubtful debts made in the accounts of the assessee. Consequent upon the Explanation, the write off on account of bad debts has not been effected in those years in which a provision for bad and doubtful debts has been made in the accounts of the assessee. In the present case, the narration of facts would show that during the course of the assessment proceedings, the Assessing Officer brought his mind to bear upon the question as to whether the assessee is entitled to claim a deduction under section 36(1)(vii), with respect to bad debts, details of which were furnished to the Assessing Officer, pursuant to which an assessment order came to be passed under section 143(3). The reason which weighed with the Assessing Officer to reopen the assessment is that the assessee has not debited any amount towards the write off of debts/advances to the profit and loss account. Such a requirement is not contained in section 36(1)(vii). In fact, it would also be necessary to notice at this stage that as a result of the order that was passed by the Commissioner of Income-tax (Appeals), the assessee has been allowed a deduction in the amount of Rs. 12,00,43,394 which comprises of an amount of Rs. 6.46 crores, which was allowed by the Assessing Officer and the amount of Rs. 5.54 crores which came to be allowed in the order of the Commissioner of Income-tax (Appeals). The reopening of the assessment is sought to be effected only in respect of the deduction of an amount of Rs. 6.46 crores that was granted by the Assessing Officer and not in respect of the additional amount which was allowed by the order of the Commissioner of Income-tax (Appeals). The learned counsel appearing on behalf of the Revenue submitted during the course of hearing that the Assessing Officer was perhaps not aware of the order passed by the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) was passed on June 26, 2008, whereas the notice for reopening the assessment was issued on July 16, 2008.

12. We are conscious of the circumstance that in the present case the reopening of assessment is sought to be effected within a period of four years of the expiry of the relevant assessment year. However, it is now a well settled position of law that a mere change of opinion would not justify the Assessing Officer in seeking a recourse to the powers under sections 147 and 148 and there must be tangible material before the Assessing Officer to prove that income chargeable to tax has escaped assessment. The principle that there must be tangible material on the basis of which an assessment is sought to be reopened even within a period of four years is now established in view of the judgment of the Supreme Court in Commissioner Of Income Tax, Delhi v. Kelvinator Of India Limited, [2010] 320 ITR 561. The Supreme Court has held thus (page 564):

“Therefore, post April 1, 1989, power to reopen 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 reopen assessments on the basis of ‘mere change of opinion’, which cannot be per se reason to reopen. 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 fulfilment 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 reopening the assessment, review would take place. One must treat the concept of ‘change of opinion’ as an inbuilt test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, the Assessing Officer has power to reopen, provided there is ‘tangible material’ to come to the conclusion that there is escapement of income from assessment.”

13. In the present case, there was an absence of tangible material on the basis of which the assessment could have been reopened. The reason which weighed with the Assessing Officer is extraneous to the basis on which the deduction can legitimately be claimed under section 36(1)(vii). This is a case of a mere change of opinion without any tangible material. The reopening of the assessment on this ground is hence unsustainable.

(B) Computation of book profits:

14. The Assessing Officer has while reopening the assessment stated that in the process of computing the book profits under section 115JB the assessee had not considered the following provisions made in the books of account, namely (i) provisions for doubtful debts; (ii) provisions for doubtful advances; (iii) provisions for doubtful debts being intercorporate deposits to subsidiaries; and (iv) provisions for diminution in the value of investments. While disposing of the objection of the assessee, the Assessing Officer has also noted that at the initial stage when the computation of income under the provisions of section 115JB was made, the Assessing Officer had not formed any opinion nor had he called for details with regard to the provisions made under the heads noted above and while not adding the same to the total income. The issue which falls for determination is, as to whether the reasons which have been furnished by the Assessing Officer were germane to the provisions made for book profits in section 115JB.

15. For the purposes of section 115JB, Explanation (1) provides that “book profit” means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by the clauses that immediately follow. sub-section (2) of section 115jb provides that every assessee, being a company, shall, for the purposes of the section, prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956. Now, it is a settled principle of law that for the computation of book profits under section 115JB, the Assessing Officer has to accept the authenticity of the accounts maintained in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956, which are certified by the auditors and passed by the company in its general meeting. The Assessing Officer does not have jurisdiction to go beyond the net profits as shown in the profit and loss account, save and except to the extent which is provided for in the Explanation. The Assessing Officer can increase the net profits as reflected in the profit and loss account prepared under Parts II and III of Schedule VI to the Companies Act, 1956, only to the extent that is permissible in the Explanation noted above. Apollo Tyres Ltd. v. Commissioner Of Income Tax, Kochi., [2002] 255 ITR 273 (SC) and CIT v. HCL Comnet Systems and Services Ltd., [2008] 305 ITR 409 (SC). Clause (c) of Explanation (1) deals with “the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities”.

16. In response to the notice for reopening of the assessment, the assessee, in the course of its objections pointed out that the view of the Assessing Officer was consistent with the law laid down by this court in CIT v. Ech-jay Forgings P. Ltd., [2001] 251 ITR 15 (Bom) and the judgments of the Delhi High Court in CIT v. Eicher Ltd., [2006] 287 ITR 170 (Delhi) and CIT v. HCL Comnet Systems and Services Ltd., [2007] 292 ITR 299 (Delhi). The hon'ble Mr. Justice S.H Kapadia (as he then was), speaking for a Division Bench of this court, noted that under clause (c) of the Explanation to section 115JB, unless a provision is made for ascertained liabilities, the provision has to be included in the book profits for the purpose of taxation under section 115J. The Delhi High Court had held in Eicher and in HCL, [2007] 292 ITR 299 (Delhi) that under Explanation (c) the increase shall be of the amount or amounts set aside for meeting liabilities other than ascertained liabilities. The Delhi High Court held that ascertained liabilities are not to be included in the book profits as defined in that section. In our view, the basic question which would arise is as to whether a provision made for doubtful debts or advances can be regarded at all as a provision made for meeting liabilities in the first place. In order that clause (c) should apply, there must be a provision; the provision must be for meeting a liability and the liability in question must be other than an ascertained liability.

17. The Supreme Court had occasion to consider the interpretation of clause (c) to Explanation in its judgment in CIT v. HCL Comnet Systems and Services Ltd., [2008] 305 ITR 409. The judgment of the Supreme Court arose in appeal from the judgment of the Delhi High Court to which a reference has been made earlier. The hon'ble Mr. Justice S.H Kapadia, speaking for a Bench of the Supreme Court, held that a debt which is payable by the assessee must be distinguished from a debt which is receivable by the assessee. A provision for bad and doubtful debts is made to cover up the probable diminution in the value of the asset, namely, a debt which is an amount receivable by the assessee. Such a provision, the Supreme Court held, cannot be regarded as a provision for a liability because even if a debt is not recoverable, no liability could be fastened upon the assessee. The Supreme Court held thus (page 414):

“The assessee's case would, therefore, fall within the ambit of item (c) only if the amount is set aside as provision; the provision is made for meeting a liability; and the provision should be for other than an ascertained liability, i.e, it should be for an unascertained liability. In other words, all the ingredients should be satisfied to attract item (c) of the Explanation to section 115JA. In our view, item (c) is not attracted. There are two types of ‘debt’. A.debt payable by the assessee is different from a debt receivable by the assessee. A debt is payable by the assessee where the assessee has to pay the amount to others whereas the debt receivable by the assessee is an amount which the assessee has to receive from others. In the present case, the ‘debt’ under consideration is a ‘debt receivable’ by the assessee. The provision for bad and doubtful debts, therefore, is made to cover up the probable diminution in the value of the asset, i.e, debt which is an amount receivable by the assessee. Therefore, such a provision cannot be said to be a provision for a liability, because even if a debt is not recoverable no liability could be fastened upon the assessee. In the present case, the debt is the amount receivable by the assessee and not any liability payable by the assessee and, therefore, any provision made towards irrecoverability of the debt cannot be said to be a provision for liability. Therefore, in our view, item (c) of the Explanation is not attracted to the facts of the present case”.

18. In the present case also, the debts written off were those receivable by the assessee. These are not liabilities and did not fall within clause (c) to Explanation (1) as explained by the Supreme Court.

19. Subsequent to the decision of the Supreme Court in HCL, [2008] 305 ITR 409 (SC), Parliament stepped in to amend Explanation (1) to section 115JB by the Finance Act of 2009. As a result of the amendment, clause (i) came to be inserted in Explanation (1) so as to provide for the amount or amounts set aside as provision for diminution in the value of an asset. Though the amendment was made with retrospective effect from April 1, 2001, it was enacted into law after the Assessing Officer had exercised the power to reopen the assessment in the present case by his notice dated July 16, 2008. Consequently, on the date on which the Assessing Officer exercised his jurisdiction under section 148, the amendment which was brought in subsequently by the Finance Act of 2009 was not in existence.

20. A legislative amendment, though made with retrospective effect has been held not to justify a recourse to the revisional power of the Commissioner under section 263 of the Income-tax Act in CIT v. Max India Ltd., [2007] 295 ITR 282 (SC). The counsel for the Revenue sought to distinguish the judgment in Max India, [2007] 295 ITR 282 (SC) on the ground that it dealt with section 80HHC and one of the grounds which weighed with the Supreme Court was that the section had been amended several times. The judgment of the Supreme Court cannot be distinguished for the reasons as suggested by the counsel for the Revenue. The principle which has been laid down in the judgment of the Supreme Court cannot be confined to section 80HHC. In that case, the revisional authority had sought to exercise its revisional jurisdiction under section 263. The exercise of power was challenged, firstly, on the ground that two views on the interpretation of the provision were possible and, hence, recourse to section 263 was not permissible. Moreover, the second ground which appears to have been urged was that the retrospective amendment to the statutory provision in question would not have a bearing on the correctness of the recourse to section 263 since on the date on which the power was exercised by the Commissioner, the legislative amendment had not been brought into force. The judgment of the Supreme Court notes, firstly, that on the date on which the Commissioner passed his order, two views on the word “profit” under section 80HHC were possible and the provision itself had been amended on several occasions. The second ground which weighed with the Supreme Court was that the subsequent amendment in 2005 of the provisions of section 80HHC, even though retrospective, would not attract the provisions of section 263, particularly when the court would have to take into account the position of law as it stood on the date when the Commissioner passed his order in purported exercise of his powers under section 263. In the present case, the principle of law which has been laid down by the Supreme Court in Max India, [2007] 295 ITR 282 would be attracted. On the date on which the Assessing Officer purported to exercise his power to reopen the assessment under section 147, the legislative amendment by the insertion of clause (i) to Explanation (1) to section 115JB had not been brought into force on the statute book. Obviously, therefore, the subsequent amendment could not have been and is not a ground which has been taken by the Assessing Officer, while reopening the assessment. The validity of the notice issued by the Assessing Officer in seeking to reopen the assessment must be determined with reference to the reasons which are found in support of the reopening of the assessment. These reasons cannot be allowed to be supplemented on a basis which was not present to the mind of the officer and could not have been so present on the date on which the power to reopen the assessment was exercised. We, therefore, hold that the principle laid down by the Supreme Court in Max India, [2007] 295 ITR 282 would be attracted to the present case. Consequently, it is evident that the order of the Assessing Officer with reference to the computation of book profits under section 115JB was at the least a probable view and as a matter of fact the correct view to take in view of the decision of the Supreme Court in HCL, [2008] 305 ITR 409. It is well settled that the law laid down by the Supreme Court is declaratory of the position as it always stood. In any event, as we have noted, the view of the Assessing Officer was supported by the interpretation placed even contemporaneously in the judgment of this court in Echjay Forgings, [2001] 251 ITR 15 (Bom) and in the judgments of the Delhi High Court in Eicher, [2006] 287 ITR 170 and HCL, [2007] 292 ITR 299. In the circumstances, there was no warrant for reopening the assessment in exercise of the power conferred under section 147.

21. For all these reasons, we are of the view that the petitioner would be entitled to succeed in these proceedings. Rule is made absolute by setting aside the notice dated July 16, 2008, and the order rejecting the objections of the petitioner dated November 30, 2009. There shall be no order as to costs.