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Issues: (i) Whether the earlier decision holding that reopening could be justified on the basis of oversight, inadvertence, or mistake in the original assessment lays down the correct law; (ii) Whether, in the context of reassessment under the Income-tax Act, the expression "reason to believe" can be founded on a mere change of opinion of the Assessing Officer.
Issue (i): Whether the earlier decision holding that reopening could be justified on the basis of oversight, inadvertence, or mistake in the original assessment lays down the correct law.
Analysis: The earlier view was traced to the principles stated under Section 34(1)(b) of the Income-tax Act, 1922. The later larger Bench authority held that an error discovered on reconsideration of the same material does not authorise reopening of a concluded assessment. The principle that an assessed taxpayer should not benefit from the officer's mistake was not accepted as a sufficient basis to confer reassessment power under the later statutory regime.
Conclusion: The earlier decision does not lay down the correct law to the extent it treats oversight, inadvertence, or mistake in the original assessment as sufficient for reopening on the same material.
Issue (ii): Whether, in the context of reassessment under the Income-tax Act, the expression "reason to believe" can be founded on a mere change of opinion of the Assessing Officer.
Analysis: Under Section 147 of the Income-tax Act, 1961, reassessment requires tangible material and a live link between the material and the formation of belief that income has escaped assessment. The concept of change of opinion operates as an in-built check against abuse of reassessment power. A mere reappraisal of the same material cannot justify reopening, because that would amount to review rather than reassessment. The earlier observations suggesting a wider reopening power were held not to state the correct law, and the later Supreme Court authority reaffirmed that mere change of opinion is impermissible.
Conclusion: No. "Reason to believe" cannot be based on a mere change of opinion of the Assessing Officer.
Final Conclusion: The reference was answered by reaffirming that reassessment under Section 147 of the Income-tax Act, 1961 cannot rest on reconsideration of the same material, and the matter was sent back for decision of the appeal on merits in light of those answers.
Ratio Decidendi: Reassessment under Section 147 of the Income-tax Act, 1961 requires tangible material showing escapement of income, and reopening on a mere change of opinion or reconsideration of the same material is impermissible.
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