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Validity of re-opening assessment under section 147(b) of the Income Tax Act. Detailed Analysis: The appeal was by the revenue against the order of the learned CIT(Appeals) canceling the re-opened assessment completed under section 143(3), read with 148 dated 30-3-1992. The main contention was whether the re-opening of the assessment under section 147(b) was valid. The Assessing Officer re-opened the assessment based on payments exceeding Rs. 2,500 made in cash, which were disallowable under section 40A(3), read with rule 6DD(j) of the Income-tax Act. The revenue argued that the income escaped assessment, justifying the re-opening, while the assessee contended that all necessary materials were disclosed during the original assessment, and the re-opening was merely a change of opinion based on existing information. The key issue revolved around the interpretation of section 147(b) of the Income Tax Act, which allows re-opening assessments if the Assessing Officer has reason to believe that income has escaped assessment due to the omission or failure of the assessee or based on new information in his possession. The Assessing Officer re-opened the assessment based on the cash payments exceeding Rs. 2,500, which were already disclosed in the audit reports filed by the assessee along with the original return. The order sheet indicated that the re-opening was solely based on information already available during the original assessment, leading to the conclusion that it was a change of opinion rather than a valid reason for re-assessment under section 147(b). The legal principles laid down by the Apex Court were crucial in determining the validity of the re-opening. The court emphasized that a mere change of opinion by the Assessing Officer, without new information or material facts, does not justify re-opening an assessment. The court also highlighted that errors discovered on reconsideration of the same material from the original assessment do not empower the Assessing Officer to re-open assessments. The decision of the Apex Court supported the assessee's position that the re-opening of the assessment in this case was not warranted under section 147(b). Ultimately, the tribunal confirmed the order of the learned CIT(Appeals), dismissing the revenue's appeal and rendering the cross-objection filed by the assessee irrelevant. The judgment underscored the importance of valid reasons and new information for re-opening assessments under section 147(b) of the Income Tax Act, emphasizing that a mere change of opinion based on existing material does not meet the legal threshold for re-assessment.
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