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Mere Change Of Opinion Of Assessing Officer Not A Ground For Reassessment

The Supreme Court in ITO vs M/s TechSpan India Private Ltd.  has held that Section 147 of the Income Tax Act does not allow re-assessment of an income merely because of the fact that the assessing officer has change of opinion on the same facts and circumstances which were already in his knowledge even during the original assessment proceedings.

A bench of Justice RK Agrawal and Justice Mohan M Shantanagoudar were considering an appeal filed by the Revenue against Delhi High Court order that had quashed the show cause notice as well as reassessment order.

The court said that the use of the words ‘reason to believe’ in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such re-assessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings.

Section 147 of the IT Act does not allow the re-assessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review.

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