Log In

| Recover password


The assessing officer is given a specific power under the Act to assess income that has escaped assessment in the original proceedings Under the law it is desired that the assessing officer must have a reason beforehand to initiate action for reopening of an assessment. Often there has remained a controversy in the past on the exercise of power u/s 147 at the instance of a valuation report of the Government valuer. While the Courts of Rajasthan, Calcutta and Punj. & Har. Have held such action improper whereas the Madras and the Delhi Courts have ruled in favour of the revenue. In one more attempt the Calcutta High Court in Kajaria Investment & Properties P. Ltd. v. ITO (250ITR619) held that valuation is always a question of opinion and one the audited accounts and supporting vouchers and documents are produced in the original assessment the assessing officer in a later action taken u/s 147 cannot claim that the assessee did not produce any material. The Court requited that it is for the assessing officer concerned at the point of original assessment either to accept or reject or to believe or disbelieve the materials at that juncture only. The High Court quashed the very notice issued in this case.

The scope of such action has been further widened after 01.04.1989, which apparently went unnoticed by the Calcutta High Court. Arijit Payasat of the Delhi High Court in the case of Bawa Abhai Sngh v. Dy. Commissioner of I Tax (2001) 117TAX12 in a lucid manner however dealt with the amended provision viz. a viz. earlier drafting and found that the only condition for action under section 147 is that the assessing officer should have reason to believe that income has escaped assessment, which belief can be reached in any manner and is not qualified by a pre-condition of faith and true disclosure of material fact by an assessee as contemplated in the pre-amended section 147(a). In other words action under section 147 is possible even in case where the assessee has disclosed fully and truly all the material facts. In this case the High Court held that valuation officer’s report can form the basis to reopen the assessment even when the other High Courts of Rajasthan, Calcutta and Punj. & Har. have held that such a report constitute a mere opinion and therefore cannot constitute the foundation or an information to invest jurisdiction on the assessing officer to reopen completed proceedings. In another ruling in the case of New Light Trading Co. v. CIT (2001) 117TAX741 the Delhi High Court held that reopening on the basis of a pointer by the audit party is valid under the law.

Leave a Reply

Your email address will not be published.

error: Do not copy the content of this website.