Income Tax Act, 1961 – s.147 – Scope of – Held: s.147 empowers the Assessing authority 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 – In the instant case, assessee declared its income from two sources, namely software development and human resource development but claimed expenses commonly for both – Notice was issued to show cause as to why the expenses claimed with regard to the allocation of common expenses between the two heads did not reveal any basis of such allocation – The notice which was issued in the original assessment proceedings under s.143 show that the point on which the re-assessment proceedings were initiated, was well considered in the original proceedings – In fact, the very basis of issuing the show cause notice was that the assessee was not maintaining any separate books of account for the said two categories and the details filed did not reveal proportional allocation of common expenses be made to these categories – Even the said show cause notice suggested how proportional allocation should be done – All these things led to an unavoidable conclusion that the question as to how and to what extent deduction should be allowed under s.10A was well considered in the original assessment proceedings itself – Hence, initiation of the re-assessment proceedings under s.147 by issuing a notice under s.148 merely because of the fact that now the Assessing Officer is of the view that the deduction under s.10A was allowed in excess, was based on nothing but a change of opinion on the same facts and circumstances which were already in his knowledge even during the original assessment proceedings – High Court was right in setting aside the show cause notice as well as the re-assessment order. Income Tax Act, 1961 – s.147 – Reassessment proceedings – Held: The use of the words ‘reason to believe’ in s.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. Words and Phrases – ‘change of opinion’ – Meaning of – Held: The word 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.