Issues Involved: 1. Jurisdiction of the Assessing Officer to issue notice u/s 148. 2. Validity of reopening assessment based on a change of opinion. 3. Interpretation of "escaped assessment" u/s 147.
Issue-wise Summary:
1. Jurisdiction of the Assessing Officer to issue notice u/s 148: The petitioners challenged the notices dated March 29, 1996, issued by the Assistant Commissioner of Income-tax, proposing to reopen the completed assessment for the assessment year 1991-92. The respondent argued that the notice was issued after recording reasons, which are reflected in the order sheet, and that the computation of capital gains was shown by the assessee in the return for the assessment year 1993-94. The court held that the Assessing Officer had a reason to believe that the income chargeable to tax had escaped assessment and thus had the jurisdiction to issue the notice u/s 148.
2. Validity of reopening assessment based on a change of opinion: The petitioner contended that the notice was issued on a mere change of opinion and that all relevant details were placed on record during the original assessment. The court held that if the Assessing Officer discovers or finds that the taxable income has escaped assessment, it would amount to having a reason to believe that such income had escaped assessment. The court emphasized that the word "assessment" means the ascertainment of the amount of taxable income and of the tax payable thereon. If the Assessing Officer had overlooked something during the original assessment, there can be no question of a mere change of opinion when the income is actually taxed as it ought to have been under the law.
3. Interpretation of "escaped assessment" u/s 147: The court interpreted the term "escaped assessment" to cover cases where an error of fact or law is discovered later, justifying the belief that income had escaped assessment. The court noted that the provisions of section 147 require that the Assessing Officer should have a reason to believe that any income chargeable to tax has escaped assessment. The court held that the Assessing Officer's belief is an administrative decision and does not determine anything at the initial stage. The court concluded that the initiation of proceedings u/s 147 cannot be assailed on the ground that it was without jurisdiction, and the proper remedy for the assessee would be to go up in appeal under the provisions of the Act.
Conclusion: The court found no merit in the petitions and rejected them, discharging the rule with no order as to costs. The court emphasized that the Assessing Officer has the jurisdiction to reopen assessments within four years if there is a reason to believe that income has escaped assessment, and such actions cannot be challenged on the ground of mere change of opinion.
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