1984 (3) TMI 13 - HC - Income Tax

Invalid reassessment under Income-tax Act: change of opinion. Tribunal rules in favor of assessee.

The High Court held that the reassessment was not valid under s. 147(b) of the Income-tax Act, 1961, as it was deemed a change of opinion. The Appellate ... Reassessment under the Income-tax Act, 1961 - Notice under section 148 - Escaped assessment - Change of opinion - Audit note as basis for reassessmentReassessment under the Income-tax Act, 1961 - Change of opinion - Audit note as basis for reassessment - Notice under section 148 - Validity of proceedings initiated under section 147(b) (notice under section 148) for assessment year 1971-72 where reassessment was prompted by an internal audit note alleging escaped customs drawbacks - HELD THAT: - The Court examined whether the ITO validly reopened the assessment for AY 1971-72 by serving a notice under section 148 on the basis of an internal audit party note asserting that customs drawbacks had escaped assessment. Applying the principle in Indian and Eastern Newspaper Society v. CIT and the Division Bench decision in CWT v. Smt. Savitri Devi, the Court held that where the assessee has disclosed the relevant information in the original return and the reassessment is prompted only by an audit note leading to a mere change of opinion by the assessing officer, proceedings under section 147(b) cannot be validly initiated. The Appellate Assistant Commissioner found that the assessee had disclosed the information and that the reassessment amounted to a change of opinion; the Appellate Tribunal upheld that finding. The High Court agreed with those conclusions and held the reassessment invalid on that basis.Proceedings under section 147(b) (notice under section 148) for AY 1971-72 were invalid as the reassessment amounted to a mere change of opinion based on an audit note; the appellate orders annulling the reassessment were maintained.Final Conclusion: The reference is answered against the Revenue and in favour of the assessee: the reassessment for AY 1971-72 initiated on the basis of the audit note was a mere change of opinion and therefore not validly initiated; no order as to costs. The High Court held that the reassessment based on an audit note was a mere change of opinion and not valid under s. 147(b) of the Income-tax Act, 1961. The Appellate Tribunal upheld the decision of the Appellate Assistant Commissioner. The court referred to relevant case law and ruled in favor of the assessee.