2000 (9) TMI 59 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 147(b) of the Income-tax Act, 1961.
2. Validity of cancelling the assessment and withdrawing relief under section 84.
3. Consideration of whether there was a mere change of opinion by the Income-tax Officer.

Analysis:
1. The court was tasked with interpreting section 147(b) of the Income-tax Act, 1961, based on a reference made by the Income-tax Appellate Tribunal. The question referred was whether the Tribunal was legally correct in cancelling the assessment made under section 147(b) and withdrawing the relief of Rs. 2,97,868 under section 84 that was wrongly allowed in the original assessment.

2. The case involved a public limited company engaged in the manufacture of paper and packing material. The original assessment for the relevant assessment year was completed by the Income-tax Officer, allowing relief under section 84 of the Act. Subsequently, the assessment was reopened by the successor-Income-tax Officer under section 147(b) on the grounds that relief under section 84 had been wrongly allowed due to an overlooked loss in a specific area. The assessee objected to the reassessment, arguing that relief under section 84 was correctly granted in the original assessment based on all relevant facts presented.

3. The Appellate Assistant Commissioner allowed the assessee's appeal, stating that there was a mere change of opinion by the Income-tax Officer, and initiating proceedings under section 147(b) was unjustified. The Revenue then appealed to the Tribunal, contending that the successor-Income-tax Officer was entitled to instruct himself on the correct interpretation of section 84. The Tribunal agreed with the Appellate Assistant Commissioner, ruling that it was indeed a case of a mere change of opinion, making the reassessment under section 147(b) improper.

4. In its analysis, the High Court referred to the principle established in Jindal Photo Films Ltd. v. Deputy CIT, emphasizing that a mere change of opinion is insufficient to invoke the provisions of section 147(b) of the Act. The court upheld the Tribunal's decision, concluding that the reassessment was indeed based on a mere change of opinion by the successor-Income-tax Officer. Consequently, the court answered the referred question in the affirmative, favoring the assessee and ruling against the Revenue.

5. Ultimately, the court disposed of the reference, affirming the Tribunal's decision regarding the cancellation of the assessment and withdrawal of relief under section 84, based on the grounds of a mere change of opinion by the Income-tax Officer.