Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (2) TMI 37 - HC - Income TaxReopening of assessment u/s 147 - change of opinion - "Reason to believe" based on mere change of opinion - erroneous exercise of jurisdiction and the change of opinion - whether the Division Bench of this Court in the case of Rinku Chakraborthy [2011 (1) TMI 1160 - KARNATAKA HIGH COURT] has laid down the correct law wherein held that there is no change of opinion before reopening assessment? HELD THAT:- AO has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the assessing officer - after 1-4- 1989, assessing officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 - Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the assessing officer. As decided in M/S. KELVINATOR OF INDIA LIMITED [2010 (1) TMI 11 - SUPREME COURT] when a power under Section 147 is to be exercised, concept of change of opinion must be treated as an inbuilt test to check abuse of power of the Assessing Officer. Further, it is held that after 1st April 1989, the Assessing Officer has power to reopen provided there is a tangible material to come to the conclusion that there is escapement of income from assessment. The Apex Court held that mere change of opinion on consideration of the same material is no ground to invoke Section 147 of the said Act. The decision in the case of Rinku Chakraborthy (supra) is based only on what is held in Clause (2) of paragraph 13 of the decision in the case of Kalyanji Mavji and Company [1975 (12) TMI 2 - SUPREME COURT]. Subsequently, a larger Bench of three Hon'ble Judges in the case of M/s. Indian and Eastern Newspaper Society [1975 (12) TMI 2 - SUPREME COURT] has clearly held that oversight, inadvertence or mistake of the Assessing Officer or error discovered by him on the reconsideration of the same material does not give him power to reopen a concluded assessment. It was expressly held that the decision in the case of Kalyanji Mavji and Company (supra), on this aspect does not lay down the correct law. The decision in the case of Rinku Chakraborthy (supra) is based solely on the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra) and in particular what is held in Clause (2) of paragraph 13. The said part is held as not a good law by a subsequent decision of the Apex Court in the case of M/s. Indian and Eastern Newspaper Society (supra). Therefore, in the light of law laid down in the case of M/s. Indian and Eastern Newspaper Society (supra), the first question will have to be answered in the negative by holding that the decision in the case of Rinku Chakraborthy does not lay down correct position law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra). "Reason to believe" in the context of Section 147 of the Income Tax cannot be based on mere change of opinion of the Assessing Officer, the third question will have to be answered in the negative.
|