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In a recent case of CIT vs.
Kelvinator of India Ltd. 256 Delhi High Court held that
when a regular order of assessment is passed in terms of section 143 (3) of the
Act, a presumption can be raised that such an order has been passed on
application of mind. It was held that if it be held that an order which has been
passed purportedly without application of mind would itself confer jurisdiction
upon the Assessing Officer to reopen the proceeding without anything further,
the same would amount to giving premium to an authority exercising
quasi-judicial function to take benefit of its own wrong. It was held that
section 147 of the Act does not postulate conferment of power upon the Assessing
Officer to initiate reassessment proceedings upon a mere change of opinion. On
appeal the Apex has dismissed this judgment and held that prior to Direct Tax
Laws (Amendment) Act, 1987, re-opening could be done under above two conditions
and fulfillment of the said conditions alone conferred jurisdiction on the
Assessing Officer to make a back assessment, but in section 147 of the Act [with
effect from 1st April, 1989], they are given a go-by and only one condition has
remained, viz., that where the Assessing Officer has reason to believe that
income has escaped assessment, confers jurisdiction to re-open the assessment.
Therefore, post-1st April, 1989, power to re-open is much wider. However, one
needs to give a schematic interpretation to the words "reason to believe"
failing which, we are afraid, Section 147 would give arbitrary powers to the
Assessing Officer to re-open assessments on the basis of "mere change of
opinion", which cannot be per se reason to re-open. We must also keep in mind
the conceptual difference between power to review and power to re- assess. The
Assessing Officer has no power to review; he has the power to re-assess. But re-
assessment has to be based on fulfillment of certain pre-condition and if the
concept of "change of opinion" is removed, as contended on behalf of the
Department, then, in the garb of re-opening the assessment, review would take
place. One must treat the concept of "change of opinion" as an in-built test to
check abuse of power by the Assessing Officer. Hence, after 1st April, 1989,
Assessing Officer has power to re-open, provided there is "tangible material" to
come to the conclusion that there is escapement of income from assessment.
Reasons must have a live link with the formation of the belief.
Full text of the judgment can be had from site
following the link below :-
2010-ITS-57-SC-Commissioner of Income Tax, Delhi ...Appellant(s) Versus M/s.
Kelvinator of India Limited ...Respondent(s) Dt.18-01-2010
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