1984 (8) TMI 176 - AT - Income Tax

Tribunal Invalidates Reassessments Due to Change of Opinion

The Tribunal held that reassessments based on a change of opinion without substantial new information were not valid in law. It emphasized the consistent ... - Issues:Reopening of assessment under section 147(b) | Valuation of closing stock | Jurisdiction of the assessing officer | Method of accounting for valuing closing stock | Validity of reassessments | Change of opinion as a ground for reassessmentAnalysis:The judgment consolidated and disposed of multiple appeals by the assessee concerning the valuation of closing stock for the assessment years 1977-78 and 1978-79. The Income Tax Officer (ITO) had reopened the assessments under section 147(b) due to alleged under-valuation of closing stock of silver wares and gold jewelry. The Assessing Officer (AO) added the amounts to the income for those years, which was upheld by the Appellate Authority Commissioner (AAC).The counsel for the assessee contended that the AO had no jurisdiction to reopen the assessment, as there was no fresh information justifying the reassessment. The assessee had consistently followed the 'last in first out method' for valuing closing stock, and the AO's claim of deviation from the weighted average rate method was disputed. It was argued that the reassessments were merely a change of opinion without any new material.The departmental representative supported the AO's actions, stating that new information came to light during the assessment proceedings for another year. However, the Tribunal found the contentions of the assessee to be valid and forceful. It noted that the AO had not provided any basis for concluding that the assessee deviated from the valuation method. The Tribunal held that reassessments based on a change of opinion without substantial new information were not valid in law.The Tribunal emphasized that the method of valuing closing stock had been consistently followed by the assessee and accepted by the department in the past. It concluded that the reassessments were not justified, as there was no factual basis for claiming income escapement due to the alleged deviation in valuation method. Therefore, the orders of the AAC and the ITO were set aside, and the appeals by the assessee were allowed.