Reassessment based on mere change of opinion is invalid; development rebate denial also failed for lack of evidentiary support.

Reopening under section 147(b) requires fresh information coming into the Income-tax Officer's possession after the original assessment; a mere change of opinion on the same material does not confer jurisdiction. On the facts stated, the reassessment was therefore invalid and without jurisdiction. The Tribunal's denial of development rebate on conversion materials and related machinery also failed because its factual finding lacked evidentiary support, and the earlier decision did not create a universal rule for such items. The record did not establish that the statutory conditions for denying the rebate were met, so the assessee's claim was upheld.

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Issues: (i) Whether the reopening of the assessments under section 147(b) of the Income-tax Act, 1961 was valid in law. (ii) Whether the assessee was entitled to development rebate on the conversion materials and related machinery items, and whether there was material to support the Tribunal's finding on that point.

Issue (i): Whether the reopening of the assessments under section 147(b) of the Income-tax Act, 1961 was valid in law.

Analysis: Reopening under section 147(b) requires the Income-tax Officer to have reason to believe that income escaped assessment in consequence of information in his possession, and that information must arise subsequent to the original assessment. On the facts, the Income-tax Officer merely revisited the same materials and changed his earlier view that development rebate had been rightly allowed. The order did not disclose any fresh external information, and the alleged audit note could not be treated as a sufficient basis on the record as presented. A mere change of opinion does not confer jurisdiction to reopen an assessment.

Conclusion: The reopening was invalid and the reassessment proceedings were without jurisdiction, in favour of the assessee.

Issue (ii): Whether the assessee was entitled to development rebate on the conversion materials and related machinery items, and whether there was material to support the Tribunal's finding on that point.

Analysis: The Tribunal's finding that the items were the same as those considered in the casablanca conversion system case was unsupported by material. The earlier decision did not lay down a universal rule that all such conversion materials or component parts qualify or disqualify for development rebate; it turned on the specific facts found there. In the present case, no adequate factual finding established that the items installed in the relevant years answered the statutory description of machinery so as to deny the rebate, and the record did not justify treating the development rebate as wrongly allowed on that basis.

Conclusion: The Tribunal's finding lacked evidentiary support, and the assessee succeeded on the development rebate issue, in favour of the assessee.

Final Conclusion: The reference was answered entirely in favour of the assessee, with the reassessment set aside and the revenue's challenge to the development rebate rejected.

Ratio Decidendi: Reassessment under section 147(b) cannot be sustained on a mere change of opinion without fresh information arising after the original assessment, and a factual finding denying development rebate must be supported by evidence showing that the statutory conditions for the allowance are not met.

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