Reassessment based on subsequent decision does not amount to change of opinion
Reassessment of income is allowed in cases where the Assessing Officer believes that any income chargeable to tax has escaped assessment during any financial year. No reassessment is allowed normally where there is no failure by the assessee to disclose the material facts required for assessment.
Only due to the reason that subsequently the Apex Court pronounced a judgment on the contrary, the Assessing officer cannot be allowed to reassess the assessee. The claim cannot be said to be lacking material particulars or cannot be said to be false. Where all the material facts are fully disclosed and no false statements are made in support of the claim, it cannot be said that there is any reason to reassess the case.
If an Assessing Officer has changed his opinion based on a subsequent judgment of the Apex Court, that does not amount to any failure on the part of the assessee. Hence no reassessment can be allowed.The only question which has to be considered is whether there was any failure by the assessee to disclose all material facts required for the assessment.
When is reassessment allowed?
The power under Section 147 of the Income Tax Act can be availed by the Assessing Officer in strict accordance with the law. Hence, merely the fact that a judgment has been pronounced, it is not a ground for reopening the assessment under Section 147 of the Act.
Decision of the Gujarat High Court on the point:
The Hon’ble Gujarat High Court as held in the case of Austin Engineering Co. Ltd. vs. JCIT (312 ITR 70) states that where the material facts were totally disclosed and the assessment has been completed and the assessee has been allowed deduction under Section 80HHC, the assessment cannot be reopened for a subsequent decision of the Apex Court, as it only a change of opinion.
No reopening is allowed after it is shown that the Assessing Officer has already applied his mind to the circumstances of the case except where the reopening has to be made in consequence of any information obtained after the assessment.
Decision of the Bombay High Court on the point:
The Hon’ble Bombay High Court as held by the Division Bench in the case of M/s.Dalal & Broacha Stock Broking Pvt. Ltd. vs. Asst. Commissioner of Income tax 4(1), Mumbai & Anr. A (WP no.419 OF 2013) states that the assessment which was to be re-opened is valid as it was within the jurisdiction of the Assessing Officer. The notice for re-opening of the assessment was a valid one. A subsequent decision of the Apex Court would have no application to a case for re-assessment by the Assessing Officer.