1998 (3) TMI 181 - AT - Income Tax

Summary

Issues:
Validity of re-assessment proceedings under section 147 of the Income Tax Act based on amended provisions introduced by the Direct Tax Laws (Amendment) Act, 1987.

Detailed Analysis:

1. Jurisdiction under Amended Act:
The appeal challenged the validity of re-assessment proceedings initiated under section 147 of the Income Tax Act based on the amended provisions introduced by the Direct Tax Laws (Amendment) Act, 1987. The Revenue argued that the Assessing Officer was entitled to commence proceedings under section 147 and that the action taken was valid under the amended provisions effective from April 1, 1989. The Authorized Representative heavily relied on the order of the CIT(A) and emphasized that the amended provisions were not applicable in this case, as the return was originally filed in 1987. The argument centered on whether the Assessing Officer had the legal jurisdiction to initiate the re-assessment proceedings under the amended provisions.

2. Applicability of Amended Section 147:
The CIT(A) deemed the proceedings initiated as invalid, citing the applicability of sections 147(a) and 147(b) of the Act, which were deleted by the amendment effective from April 1, 1989. The case involved an assessment year falling before the amendment date, and the original assessment was completed in 1989. The argument focused on whether the amended provisions applied retrospectively and covered cases where income was deemed to have escaped assessment or was under-assessed. The discussion included the impact of the amendment on procedural actions only.

3. Validity of Re-Assessment Action:
The Assessing Officer's action in re-assessment was challenged on the grounds of being a mere change of opinion. The Authorized Representative argued that the only addition made in the re-assessment was based on an enlarged disallowance of guest house expenses. The CIT(A) considered this a mere change of opinion and annulled the reopening of the assessment. The issue revolved around whether the action taken by the Assessing Officer in the re-assessment was valid or constituted a mere change of opinion.

4. Conclusion:
After a thorough review of the arguments and materials, the Tribunal upheld the CIT(A)'s decision, dismissing the appeal filed by the Revenue. The Tribunal concluded that the Assessing Officer had legal jurisdiction under the amended provisions of section 147 but found that the re-assessment was indeed a case of a mere change of opinion. Consequently, the action of the CIT(A) annulling the reopening of the assessment was upheld, emphasizing the importance of not disturbing final assessments unless expressly provided in the Act.