2005 (3) TMI 30 - HC - Income Tax

Reassessment - Whether Tribunal was justified in law in holding that the Income-tax Officer assumed jurisdiction under section 147(b) of the Act merely on a change of opinion? - This is nothing but a mere change of opinion which is not permissible for reopening an assessment. It was not the case of the Income-tax Officer that the information was not available at any point of time. Consequently, the Income-tax Officer had seen the material on record and he would have found it difficult to reopen the assessment under section 147(b) of the Act on the same material. We are of the view that on the above facts and position in law, there is no reason to differ with the view taken by the Income-tax Appellate Tribunal. Accordingly, we answer the reference in the affirmative, in favour of the asses-see and against the Revenue

Summary

Issues:
Reopening of assessment under section 147(b) of the Income-tax Act based on a change of opinion.

Analysis:
The case involved a dispute regarding the reopening of the assessment by the Income-tax Officer under section 147(b) of the Income-tax Act based on a change of opinion. The assessee contended that there was no fresh information available to justify the reassessment. The Income-tax Officer reopened the assessment based on information received from the Inspecting Assistant Commissioner regarding the taxability of a certain amount. The Commissioner of Income-tax (Appeals) upheld the reopening, stating that the directions from an external source constituted information for reassessment.

In the subsequent appeal, the assessee successfully argued that the reassessment was invalid as it was solely based on a change of opinion by the Income-tax Officer. The Income-tax Appellate Tribunal found that the Officer had not received any new information but had reevaluated existing facts to reach a different conclusion, which amounted to a mere change of opinion. The Tribunal also emphasized that the directions from the Inspecting Assistant Commissioner did not constitute valid information for reopening the assessment.

The High Court referred to a Full Bench decision in CIT v. Kelvinator of India Ltd., which established that a mere change of opinion by the Income-tax Officer is insufficient to trigger the provisions of section 147 of the Act. The Court highlighted that the Assessing Officer cannot initiate reassessment proceedings solely based on a change of opinion without new information. It was noted that the Inspecting Assistant Commissioner's directions were not a legal source and did not qualify as information for reassessment under section 147(b) of the Act.

Ultimately, the High Court concurred with the Income-tax Appellate Tribunal's decision, affirming that the Income-tax Officer had assumed jurisdiction under section 147(b) of the Act solely on a change of opinion, which was impermissible. The Court ruled in favor of the assessee, emphasizing that reassessment cannot be initiated based on a mere change of opinion without new information, thereby upholding the Tribunal's decision and rejecting the Revenue's contentions.