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DTPA - J | 2017-18 | Volume 3 | August 2018

? Reopening on ground that earlier inference was or elicit answers, it cannot be stated that merely
erroneous or on the basis of a change of opinion. because the Assessing Officer did not reject such a
claim in the final order of assessment, he should be
It must be shown that some opinion was formed on the
basis of the material at the original assessment stage. If deemed to have expressed an opinion with respect to
initially no opinion was formed it could not be said that such a claim. As long as there is some tangible material
there was a change of opinion. to support the belief that income chargeable to tax has
escaped assessment, reopening is permissible. Such
However merely because the case of the assessee was tangible material need not be “new” or be alien to the
accepted as correct in the original assessment for the record – Gujarat Power Corporation Ltd. vs. ACIT in
relevant assessment year, it does not preclude the Special Leave Application no. 29792 of 2007,
Income Tax Officer to reopen the assessment of an subsequent to the decision of the Supreme Court in
earlier year on the basis of his findings of fact made on Kelvinator of India (supra) a reopening based on an
the basis of fresh material in the course of assessment audit objection was found to be a case of mere change
of a subsequent assessment year. [Ess Ess Kay of opinion in CIT vs. Lucas TVS Ltd [249 ITR 306 (SC)]
Engineering Co. Pvt Ltd vs. CIT [2001] 247 ITR 818 where the audit party took an interpretation which was
(SC]] However in a case where there has been no different from the one taken from the Assessing Officer
assessment u/s. 143(3) but has been made only u/s. which also was a possible view. In a case where the
143(1), there can be no question of a change of opinion audit party merely brought out a factual error committed
since no opinion was at all formed in the first place. by the Assessing Officer it was however held that it was
ACIT vs. Rajesh Jhaveri Stock Brokers Pvt Ltd not a case of change of opinion in CIT vs. P.V.S.
[2007] 291 ITR 500 (SC). Beedies Pvt Ltd [(1999) 237 ITR 13 (SC)].
In CIT vs. Kelvinator of India [320 ITR 561 (SC)], the 14. Number of Reassessments
Supreme Court held that the Assessing Officer has
power to re-open, provided there is “tangible material” There is no restriction on the number of times section
to come to the conclusion that there is escapement of 147 may be invoked. What is relevant for a
income from assessment. Reasons must have a live reassessment is a finding that the income in the original
link with the formation of the belief. This is supported by assessment or the return has been taken at a figure
Circular No.549 dated 31.10.1989 which clarified that lower than what is rightly assessable.
the words “reason to believe” did not mean a change of However where a return has been filed within the time
opinion. The Supreme Court in this case was approving allowed in response to an invalid notice of
the decision of the Full Bench of the Delhi High Court in reassessment, a second notice of reassessment
the case of the same assessee in CIT vs. Kelvinator of treating such return as invalid is not valid.
India [256 ITR 1 (Del)] where The Court held that when Further all original proceedings must have been
a regular order of assessment is passed in terms of terminated before reassessment proceeding can be
section 143 (3) of the Act, a presumption can be raised validly initiated.
that such an order has been passed on application of
mind. It was held that if it be held that an order which has This would be true even if the earlier proceedings which
been passed purportedly without application of mind were pending at the time of issue of the reassessment
would itself confer jurisdiction upon the Assessing notice are declared invalid.
Officer to reopen the proceeding without anything Where reassessment proceedings were initiated but
further, the same would amount to giving premium to an were dropped there can be an issue of fresh notice after
authority exercising quasi-judicial function to take the earlier notice can be said to have been concluded as
benefit of its own wrong. It was held that section 147 of a result of dropping of proceedings. [Kohinoor
the Act does not postulate conferment of power upon Enterprises vs. ITO [(1996) 89 Taxman 587 (MP)].
the Assessing Officer to initiate reassessment
proceedings upon a mere change of opinion In a Where the original was pending proceeding initiated for
subsequent decision, however, it was held that if in the reassessment are invalid [CIT vs. Rajendra G. Shah
original assessment, the Assessing Officer did not [(2001) 247 ITR 772 (Bom)].
examine the claim of the assessee, did not raise queries

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