1998 (10) TMI 100 - AT - Income Tax

Summary

Issues:
1. Validity of proceedings under section 147 of the Income-tax Act, 1961.
2. Interpretation of the judgment of the Hon'ble Supreme Court in relation to the changes in section 147 post-amendment.

Issue 1: Validity of proceedings under section 147:
The appeal by the revenue challenges the order of the CIT (Appeals) concerning the validity of the intimation of proceedings under section 147 of the Income-tax Act, 1961. The case involves the incorrect calculation of deduction under section 80M from dividend income, leading to a notice under section 148 issued subsequently. The Assessing Officer passed an order under section 143(3) read with section 147, which was contested by the assessee as a bad law. The assessee argued that the successor Assessing Officer's decision to reopen the assessment was a change of opinion, not supported by new information, and thus lacked legal basis. The CIT (Appeals) agreed with the assessee, emphasizing that all material facts were disclosed during the initial assessment, and the subsequent officer's differing opinion did not justify the reassessment under section 147. The revenue challenged this decision before the Tribunal.

Issue 2: Interpretation of the Supreme Court judgment post-amendment:
The Departmental Representative argued that the Supreme Court's decision in Calcutta Discount Co. Ltd.'s case, relied upon by the CIT (Appeals), was rendered before the amendment of section 147. Post-amendment, the Assessing Officer's power to reopen assessments was significantly broadened. The Representative highlighted the change in wording from "for reasons to be recorded by him in writing, is of the opinion" to the current absolute power of the Assessing Officer to reopen if income has escaped assessment. The Tribunal noted the pre-amendment judgment's context and emphasized that the amended section 147 requires a reasonable belief by the Assessing Officer, not solely based on the assessee's failure to disclose material facts. The Tribunal held that the Assessing Officer was justified in reopening the assessment based on the expanded scope post-amendment and remanded the case to the CIT (Appeals) for a decision on the merits.

In conclusion, the Tribunal allowed the revenue's appeal for statistical purposes, emphasizing the Assessing Officer's authority to reopen assessments under the amended section 147 based on a reasonable belief of income escaping assessment, irrespective of a change of opinion by successor officers.