2000 (2) TMI 86 - HC - Income Tax

Reassessment under s.148 upheld: omission of relevant material prima facie permits reopening under amended s.147, petitions dismissed

Gruh Finance Ltd. Versus Joint Commissioner Of Income-tax (Assessment)

HC held reassessment notices issued under s.148 were valid and petitions challenging them were dismissed. The court found the impugned action was not a ... Reassessment - change of opinion - invoked the extraordinary, plenary, equitable and discretionary jurisdiction of the High Court under article 226 of the Constitution of India - Whether the exercise of powers by the respondent authority, for reassessment and resultant notices under section 148 of the Income-tax Act, 1961, to the petitioners, at this stage, prima facie, could be said to be based on 'change of opinion' Or on new opinion on finding out mistake upon the existing material or could it be said that there is total lack of jurisdiction ? - HELD THAT:- We are extremely unable to uphold the contention raised on behalf of the petitioner that the respondent authority has no jurisdiction to issue the impugned notices under section 148 of the Income-tax Act, 1961, as it involved only a mere 'change of opinion'. The expressions 'reason to believe' and 'change of opinion' are concerned, we are of the view that though the material was available on record, at the time of first assessment, when no conscious consideration of the material is made and a mistake has been committed take has been committed, it would not, in any case, create an embargo or a ban on the competent officer to exercise powers under the amended section 147 of the Income-tax Act, 1961, as prima facie, there could not be 'change of opinion' in that factual scenario. It has also not been shown to us on behalf of an assessee. If conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making assessment and again a different or divergent view is sought, it would tantamount to 'change of opinion', whereas, in the case of existing material, no conscious attempt has been made, it would tantamount to mistake in not considering the relevant point or proposition and it would not be a 'change of opinion'. As in the present case, prima facie upon information, the Department noticed that depreciation was claimed and approved in respect of a machinery which was not at all in existence and that aspect was not consciously considered, at the time of first assessment, as otherwise there was no question of granting depreciation, thereon, claimed by the assessee. In the result, these petitions are dismissed. Issues involved:The judgment involves the issue of jurisdiction under article 226 of the Constitution of India regarding reassessment and resultant notices u/s 148 of the Income-tax Act, 1961, based on 'change of opinion' or new opinion on finding out a mistake upon existing material.Jurisdiction and Reassessment:The petitioners argued that the impugned notice for reassessment was without jurisdiction, as reassessment cannot be made based on a 'change of opinion' when all relevant facts were considered by the Assessing Officer previously. However, the Revenue contended that a bogus claim for depreciation on non-existent machinery was made by the assessee, justifying the reassessment.Legal Interpretation:The court noted that a mere change of opinion does not empower the Assessing Officer to conduct reassessment, but the power to assess within four years is applicable even if all relevant facts were disclosed initially, in case of a mistake. The court analyzed the reasons for issuing the notice u/s 148, highlighting the claim of depreciation on non-existent machinery.Reason to Believe and Change of Opinion:The court discussed the distinction between 'reason to believe' and 'change of opinion,' emphasizing that if a mistake is detected on an issue not previously considered, it does not constitute a mere change of opinion. The case law and observations from previous judgments were considered to determine the validity of the reassessment in the present case.Final Decision:The court concluded that the authority had jurisdiction to issue the notices u/s 148 based on the information received regarding the bogus claim of depreciation. The petitions were dismissed, emphasizing that the observations made at the interim stage should not influence the final decision based on the merits and materials presented during the reassessment process. No costs were awarded in the judgment.