Change of opinion bars reassessment where foreign remittances were already examined on disclosed material in the original assessment.
Reassessment cannot be used to review foreign-remittance deductions already examined in the original assessment on the same disclosed material, without new tangible material indicating escaped income; reopening on that basis is invalid as a change of opinion. A pending appeal concerning tax-deduction default proceedings does not bar a reassessment disallowance, because those proceedings concern tax collection while disallowance concerns income computation. The same expenditure cannot be disallowed twice, requiring verification of alleged arithmetical errors, including tax-deducted amounts and expense reversals. Claimed carry-forward losses also require verification against assessment records before determination.
Issues: (i) Whether a pending appeal against an order under section 201 barred reassessment disallowance under the third proviso to section 147; (ii) Whether reopening after examination of foreign remittances in the original assessment constituted a Change of Opinion; (iii) Whether alleged arithmetical errors causing Double Disallowance required admission and verification; (iv) Whether the claimed Carry-Forward of Losses required verification.
Issue (i): Whether a pending appeal against an order under section 201 barred reassessment disallowance under the third proviso to section 147.
Analysis: Proceedings under section 201 concern recovery of tax not deducted and treatment of the payer as an assessee in default within the tax-collection framework. A disallowance under section 40(a)(i), however, concerns computation of the assessee's total income. The two proceedings therefore concern distinct subject matters.
Conclusion: The third proviso to section 147 did not bar the reassessment disallowance; this issue was decided against the assessee.
Issue (ii): Whether reopening after examination of foreign remittances in the original assessment constituted a Change of Opinion.
Analysis: The original assessment record showed specific requisitions for details of foreign remittances, services received, and tax deducted at source, followed by transaction-wise replies and supporting Forms 15CA and 15CB. No disallowance was made after those details were examined. The recorded reasons for reopening relied on the same information subsequently received from the International Taxation Officer, without identifying any new fact or any inaccurate or incomplete disclosure. Reassessment on that basis amounted to an impermissible review of the earlier assessment.
Conclusion: The reopening was founded solely on a Change of Opinion and was invalid; the reassessment order was quashed in favour of the assessee.
Issue (iii): Whether alleged arithmetical errors causing Double Disallowance required admission and verification.
Analysis: The additional grounds identified possible computational errors, including amounts on which tax had been deducted and expense reversals that were allegedly included in the disallowance. The Act does not permit the same expenditure to be disallowed twice, and the claims required verification from the assessee's records.
Conclusion: The additional grounds were admitted, and verification and correction of any established error were directed in favour of the assessee.
Issue (iv): Whether the claimed Carry-Forward of Losses required verification.
Analysis: The discrepancy between the loss claimed as available for carry-forward and the amount reflected in the reassessment computation could be resolved only by verification of the records.
Conclusion: The claim for carry-forward of loss was allowed to the limited extent of verification and determination by the Assessing Officer, in favour of the assessee.
Final Conclusion: The reassessment and the consequential disallowance could not survive because the issue had already been examined in the original assessment; the identified computational claims are to be verified in accordance with the directions.
Ratio Decidendi: Reassessment cannot be used to review an issue already examined in the original assessment on the same disclosed material, in the absence of new tangible material establishing escapement of income.