Taxation Law – Change of Opinion Does Not Justify Reassessment: Supreme Court
In a latest judgment, the Supreme Court of India has reinstated the Income Tax Appellate Tribunal’s decision concerning the reassessment of income under Section 147 of the Income Tax Act, 1961. The apex court, led by Justice Ujjal Bhuyan, overturned the High Court’s ruling that had favored reassessment, emphasizing that a mere change of opinion by the assessing officer does not warrant the reopening of assessment cases.
The judgment, which has significant implications for income tax jurisprudence, revolved around the reassessment of income for M/s Mangalam Publications, Kottayam, for the assessment years 1990-91, 1991-92, and 1992-93. The Supreme Court meticulously analyzed the circumstances under which reassessment can be initiated, underscoring the need for specific and reliable information as a basis for such actions.
Justice Bhuyan, in the Court’s observation, noted, “A mere change of opinion cannot be a ground for reassessment.” This statement underlines the Court’s stance that reassessment should be based on tangible, new evidence and not on subjective reinterpretations of existing facts.
The Court scrutinized the assessee’s duty of disclosure, pointing out that while the duty to disclose fully and truly all primary facts is essential, it does not extend beyond this. The judgment clarified that the assessing officer’s discretion in declaring returns as defective plays a crucial role in determining the validity of those returns. “If the assessing officer does not exercise discretion, the return of income cannot be construed as defective,” the Court observed.
Supreme Court found that the reassessments were initiated based on the assessing officer’s subjective analysis rather than on new, concrete evidence. The judgment reinstates the Tribunal’s decision that deemed the reassessments unjustified, thus allowing the appeals of the assessee and its partners.
Date of Decision: 23rd January 2024
M/S MANGALAM PUBLICATIONS VS COMMISSIONER OF INCOME TAX
