Gujarat H.C : The petitioners in these two petitions seek to challenge the notices dt. 29th March, 1996, at Annexure “A” to the petitions, issued by the respondent Asstt. CIT, proposing to reopen the completed assessment of the petitioners for the asst. yr. 1991-92.

High Court Of Gujarat

Praful Chunilal Patel vs. M.J. Makwana, Assistant Commissioner Of Income Tax

Section 147

Asst. Year 1991-92

R.K. Abichandani & Kundan Singh, JJ.

Spl. Civil Appln. No. 4201 of 1996

19th February, 1998

Counsel Appeared

S.N. Divatia, for the Petitioner : Mihir Joshi with Manish R. Bhatt, for the Respondent

JUDGMENT

R.K. ABICHANDANI, J. :

The petitioners in these two petitions seek to challenge the notices dt. 29th March, 1996, at Annexure “A” to the petitions, issued by the respondent Asstt. CIT, proposing to reopen the completed assessment of the petitioners for the asst. yr. 1991-92. The facts of both these petitions are almost identical and the parties have filed their complete papers in Special Civil Appln. No. 4201/96 and argued that case as a main matter. The assessee of Special Civil Appln. No. 4203/96 has challenged identical notice issued under s. 148 of the Act on identical grounds and the learned advocates appearing for both the sides have raised common contentions in both these petitions. The facts of Special Civil Appln. No. 4201/96 are being set out and the facts of the other petition admittedly being almost identical, are not repeated.

2. The petitioner had filed his return of income for the asst. yr. 1991-92 on 21st Oct., 1992, declaring his total income at Rs. 27,118 along with the statement of income, orders appended thereto and other enclosures which are at Annexure “C” to the petition. The case of the petitioner is that his return of income was duly scrutinised during the course of a regular assessment and the assessment order was made under s. 143(3) of the IT Act, 1961, on 31st Jan., 1994, determining his total income at Rs. 27,120. According to the petitioner, he had submitted a written explanation in his letter dt. 29th Dec., 1993, which was handed over to the AO on 5th Jan., 1994, in connection with the conversion of capital asset being his share in immovable property on 15th Aug., 1990, into stock-in-trade and its consequential effect, in view of the query raised by the AO. The ITO passed the assessment order for the said asst. yr. 1990-91 on 31st Jan., 1994, a copy of which is at Annexure “B” to the petition.

The petitioner was thereafter assessed protectively by way of regular assessment under s. 143(3) on 27th March, 1996, for the asst. yr. 1993-94 by the respondent, who held in that order that the introduction of the said converted property as capital contribution in the firm of M/s Krishnan Enterprises by the petitioner on 19th Sept., 1990, was a ‘transfer’ under s. 2(47)(iv) and s. 45 of the said Act and the long-term capital gain was chargeable in the hands of the petitioner on 19th Sept., 1990 i.e., in the relevant asst. yr. 1991-92. In the said order dt. 27th March, 1996, at annexure “E” to the petition, it was found by the AO that the possession of the bungalow was taken over by the partnership firm of M/s Krishnan Enterprises on 19th Sept., 1990, and thereafter, it was demolished. It was noted that the value of the bungalow was taken at Rs. 56,00,000 on the basis of the valuation report dt. 20th Aug., 1990, and after becoming partners in the said firm, four brothers who were the co-owners, were given credit of Rs14,00,000 each in their capital account with the firm. It was noticed that the long-term capital gain was, therefore, chargeable on 19th Sept., 1990, as stock-in-trade of the assessee and his brothers was sold to the said firm on 19th Sept., 1990, and under s. 45 of the Act, it should have been taxed in the asst. yr. 1991-92. Therefore, while making protective assessment in respect of the asst. yr. 1993-94 under the said order dt. 27th March, 1996, the AO observed that proceedings under s. 148 of the Act were separately required to be taken. Thereafter, the impugned notice dt. 29th March, 1996, under s. 148 was served on the petitioner, in which the petitioner was informed by the Asstt. CIT, that he had a reason to believe that the petitioner-assessee’s income which was assessable/chargeable to tax for the asst. yr. 1991-92 had escaped assessment within the meaning of s. 147 of the said Act, and, therefore, the said Officer proposed to reassess the income for the said assessment year. The petitioner was, by this notice required to deliver within thirty days from the date of the service of the notice, a return in the prescribed form showing income in respect of which he was assessable for the said assessment year.

The case of the respondent as reflected in the affidavit-in-reply filed in this petition is that the petitioner has approached this Court at a premature stage when only a notice under s. 148 of the Act, has been issued. It is stated that the notice has been issued after recording reasons which are in the order-sheet at Annexure “A” to the affidavit-in-reply. It is stated that the computation of capital gains was shown by the assessee in respect of the said transfer in the return for asst. yr. 1993-94. The assessee and his three brothers had adopted a weightage method by which the sale consideration for the land was computed at Rs. 34,44,679 on the basis of the amount realised till that time from the shops sold, instead of straightaway showing the amount of Rs. 56,00,000 as sale consideration.

It is stated that the stock-in-trade which came into existence by conversion of the capital asset on 15th Aug., 1990, was transferred to the firm on 19th Sept., 1990, by the assessee. However, the assessee did not include the capital gains arising out of such transfer, in the computation of the total income for the asst. yr. 1991-92. It is stated that if, on the correct capital gains, tax was worked out in the asst. yr. 1991-92, the tax effect in this group of cases would come to Rs. 14,94,012 whereas the assessee and his three brothers by using an erroneous method paid tax on capital gains of only Rs. 4,17,212. It is stated that from a perusal of the assessment order for the asst. yr. 1993-94, it can be noticed that the concealment of income for asst. yr. 1991-92 was detected during the course of the assessment proceedings for the asst. yr. 1993-94. It is also stated that the AO had, in the assessment order for the asst. yr. 1991-92, not mentioned anything about the taxability of capital gains arising out of the said transfer made in favour of the firm. It is stated that the assessee in his note attached to the return of that year, had stated that “since, before 31st March, 1991, the said stock-in-trade was not sold or otherwise transferred, no capital gain arises”. Thus, it is contended that, the assessee had clearly misled the AO at the time of the original assessment.

The learned counsel appearing for the petitioner strongly contended before us that the impugned notice issued under s. 148 of the said Act, on the footing that the income had escaped assessment, is without jurisdiction since the AO could not have had any reason to believe that any income chargeable to tax, had escaped assessment. It was submitted that the impugned notice was issued on a mere change of opinion on the part of the AO and that it was not permissible in law to initiate such proceedings when there was a mere change of opinion. It was contended that all the relevant details were placed by the assessee on the record of the previous assessment proceedings and the assessment order was framed by the AO on 31st Jan., 1994, after proper scrutiny. It was pointed out from the order, a copy of which is at Annexure “B” to the petition, that the assessee had filed details called for from time to time and from the data made available, the total income was computed as mentioned therein, and it is contended that the AO must, in view of the fact that all the material was placed on record and considered by him, deemed to have come to a finding that the total income computed did not include any capital gains in respect of the transfer made by the petitioner-assessee of his share in favour of the said partnership firm. Reliance was placed in support of these submissions on the decisions of this Court in VXL India Ltd. vs. Asstt. CIT (1995) 127 CTR (Guj) 204 : (1995) 215 ITR 295 (Guj) : TC 51R.1569, Birla VXL Ltd. vs. Asstt. CIT (1996) 130 CTR (Guj) 281 : (1996) 217 ITR 1 (Guj) : TC 51R.1022, Garden Silk Mills Ltd. vs. Dy. CIT (1996) 135 CTR (Guj) 405 : (1996) 222 ITR 68 (Guj) : TC 51R.1520, Kaira District Cooperative Milk Producers Union Ltd. vs. Asstt. CIT (1996) 134 CTR (Guj) 228 : (1996) 220 ITR 194 (Guj) : TC 51R.1561. It was further contended that the term ‘escaped assessment’ should be given a restricted meaning and that it would not cover a mere change of opinion without there being any fresh material. It was submitted that ‘assessment’ was a whole process of ascertaining income which was subjected to tax and an income which was not subjected to tax and once the material is placed on record and thereafter the assessment order is made, it should be assumed that the relevant taxable income had undergone the whole process of assessment and, therefore, there can arise no question of any escapement of the assessment of such income.

Reliance was placed by the learned counsel in support of this submission on a decision of the Bombay High Court in the case of Chimanram Motilal vs. CIT (1943) 11 ITR 44 (Bom) : TC 51R.1647, and a Circular No. 549, dt. 31st Oct., 1989 [See (1990) 82 CTR (St.) 1 : (1990) 182 ITR 1 (St.)], the relevant para 7.2. It was submitted that when all the facts were correctly disclosed on the record during the assessment proceedings of the relevant asst. yr. 1991-92, and the order was made by the AO after seeking details, it should be assumed that he had consciously not taxed the income which is now sought to be looked into by him. It was emphasised that it should be assumed that the AO had formed an opinion that there was no transfer and hence, no capital gains accrued. According to the learned counsel, the AO cannot re-examine the matter on the same material.

The learned counsel appearing for the Revenue argued that in view of the fact that the AO while making an order of protective assessment in respect of the asst. yr. 1993-94, found that there was a transfer in favour of the partnership firm by the assessee of his stock-in-trade on 19th Sept., 1990, the capital account of the assessee in the firm was credited by Rs. 14 lakhs and though the stock-in-trade was sold to that firm on that day, it remained to be taxed in the case of the assessee in that asst. yr. 1991-92. There was sufficient reason to believe that the income in the form of capital gains had escaped assessment in that year. It was submitted that escapement of income may be for any reason and merely because material was on the record of the previous assessment proceedings, it cannot be said that such income, which in fact and reality not brought to tax, was already assessed. It was further argued that the concept of ‘mere change of opinion’ had arisen in the context of cl. (b) of s. 147 of the Act, as it stood prior to the amendment which was made w.e.f. 11th April, 1981. It was submitted that if any error of law or fact was discovered later on, that can constitute a reason to believe that the income had escaped assessment. It was also pointed out that the Expln. 2 enumerated deemed cases of escapement of income. Reliance was placed in support of the case of the Revenue on a decision of the Full Bench of Lahore High Court in the case of Madan Mohan Lal vs. CIT (1935) 3 ITR 438 (Lah) : TC 51R.1634, and a decision of the Calcutta High Court in the case of Hum Boldt Wedag India Ltd. & Anr. vs. Asstt. CIT & Ors. 1997 TLR 786, by their learned counsel. It was contended that the AO was proceeding with the matter in lawful exercise of his jurisdiction under s. 147 of the Act and, therefore, a writ of prohibition or any other writ or order in the nature of writ of prohibition, cannot lie in such cases. It was submitted that if ultimately any adverse order is passed, that can be challenged by the assessee under the provisions of the Act and the assessee had, therefore, alternative and efficacious remedies available in the special machinery set-up for the purpose under the Act. There is no dispute about the fact that the impugned notice under s. 148 of the Act, has been issued within four years from the end of the relevant asst. yr. 1991-92. Under s. 147 of the said Act, within four years from the end of the relevant assessment year, the AO, where he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, may assess or reassess such income. However, after four years, the proviso would be attracted and no action can be taken under this section unless such income has escaped assessment by reason of failure on the part of the assessee to make return under s. 139 or in response to a notice under s. 142(1) or s. 148 of the said Act, to disclose fully and truly all material facts for his assessment for that assessment year. Therefore, it is only when the case falls under the proviso that the question of non-disclosure of material facts would become relevant. In such cases, if the assessee has made full disclosure on record, then even if such income has escaped assessment, no action can be initiated by the AO under this section. Where, however, the said period of four years has not expired, the conduct of the assessee regarding disclosure of material facts need not be the basis for initiating the proceedings and they can be commenced if the AO has reason to believe that the income has escaped assessment notwithstanding that there was full disclosure of material facts on record. The assessee in such cases cannot defend the initiation of action on the ground that the facts were already placed on record and that the AO must have or ought to have considered them. Expln. 1 to s. 147 of the said Act has a bearing on disclosure aspect and it applies to the proviso to the extent it allows initiation of the proceedings under s. 147 on account of non-disclosure of material facts by the assessee. Expln. 2 applies to the entire section and it enumerates deemed cases where income has escaped assessment. Clause (a) thereof covers the case where no return is filed though the income had exceeded the maximum amount which is not chargeable to income-tax. In such cases, in order to put it beyond the pale of doubt or controversy, the provision is made that they will be deemed to be cases of escaped assessment so as to warrant the proceedings even beyond the said period of four years, since, in that event, the case would fall in the enabling part of the proviso. Clause (b) deals with cases where no assessment is made and the AO notices that the income is understated or excessive loss, deduction allowance or relief is claimed in the return. These would be cases where the return is accepted without scrutiny and no formal assessment is made. Clause (c) would cover cases where, in the assessment already made, income was underassessed or assessed too low or excessive relief is given or thatexcessive loss or depreciation allowance or other allowance under the Act has been computed. In the aforesaid deemed cases of escapement of income, the AO can initiate the proceedings on finding or discovering such cases and no debate whether they constitute cases of escapement of income, would be permissible.

7. It will thus, be seen that in the proceedings taken under s. 147, the AO may make an assessment or reassessment or recomputation, as the case may be. The word ‘assess’ refers to a situation where the assessment was not made in the normal manner while the word ‘reassess’ refers to a situation where an assessment is already made, but it is sought to be reassessed on the basis of this provision.

In cases where the AO has not made an assessment of any item of income chargeable to tax while passing the assessment order in the relevant assessment year, it cannot be said that such income was subjected to an assessment. In the assessment proceedings, the AO would ascertain on consideration of all relevant circumstances the amount of tax chargeable to a given taxpayer. The word ‘assessment’ would mean the ascertainment of the amount of taxable income and of the tax payable thereon. In other words, where there is no ascertaining of the amount of taxable income and the tax payable thereon, it can never be said that such income was assessed. Merely because during the assessment proceedings the relevant material was on record or could have been with due diligence discerned by the AO for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the AO must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. If looking back it appears to the AO, (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on the record was not subjected to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of non-disclosure of material facts by the assessee. In fact, if there is material placed on record which would show existence of income chargeable to tax and which ordinarily ought to have been included in the ascertainment of taxable income made in the assessment order but was not so included, that would itself provide a cause or justification for a belief to the AO that such income had escaped assessment and the AO in such cases would be ex facie justified in initiating the proceedings on such basis. The cases of non-assessment of an item of income chargeable to tax would warrant formation of requisite belief to initiate the proceedings within four years of the end of the relevant assessment year, even where full disclosure were made and yet an income chargeable to tax had escaped from being included in the final assessment order in which taxable income was worked out. In such cases the AO has in fact a duty to exercise his jurisdiction. The AO has not to conclusively come to any finding on the facts which prompted his reason to believe, at the stage of the issuance of notice under s. 148 pursuant to which the assessee is to be heard; and the order if adverse, can be questioned under the provisions of the Act.

8. The cases of underassessment or excessive relief which are deemed cases of escapement of income leave no scope for an argument that they are not the cases of income having escaped assessment. If the AO prima facie finds or discovers that the case falls in any of the clauses of Expln. 2, then those cases will be of deemed cases of income that has escaped assessment and without anything more beyond such find or discovery, he can initiate the proceedings under s. 147 of the Act. On a proper interpretation of s. 147 of the Act, it would appear that the power to make assessment or reassessment within four years of the end of the relevant assessment year would be attracted even in cases where there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance, and whether it is an error of fact or law that has been discovered or found out justifying the belief required to initiate the proceedings. In our view, the words “escaped assessment” where the return is filed, are apt to cover the case of a discovery of a mistake in the assessment caused by either an erroneous construction of the transaction or due to its non-consideration, or, caused by a mistake of law applicable to such transfer or transaction even where there has been a complete disclosure of all relevant facts upon which a correct assessment could have been based.

As noted above, the provision of s. 147 requires that the AO should have reason to believe that any income chargeable to tax has escaped assessment. The word “reason” in the phrase ‘reason to believe’ would mean cause or justification. If the AO has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. The words “reason to believe”, cannot mean that the AO should have finally ascertained the facts by legal evidence. They only mean that he formsa belief from the examination he makes and if he likes from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he had reason to believe that such income had escaped assessment. The justification of his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under s. 147, may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the AO is not required to base his belief on any final adjudication of the matter. In the present case, from the first assessment it appeared to the AO, while making an order in respect of the asst. yr. 1993-94, that the amount of taxable income in the form of capital gains in respect of the transfer of the land which was treated as stock-in-trade on 19th Sept., 1990, in favour of the firm and the tax payable thereon not being ascertained, there was escapement of income. Since the AO at the first assessment in the year 1991-92 never really formed an opinion on the question whether there was a transfer on 19th Sept., 1990, of the land in question to the firm and that the amounts credited to the accounts of the partners who had contributed the lands to the firm, were meant to be the price of the land which was to be actually paid from the collections received by the firm from membership fees as soon as received, as was envisaged admittedly in para. 11 of the partnership deed, there was no question of any change of opinion when on the relevant facts being found the AO, while protectively assessing the petitionerassessee for the year 1993-94, noted that this was a case for issuance of a notice under s. 148, which came to be issued thereafter. When the amount of taxable income and of the tax payable thereon were not ascertained at all by the AO in respect of the transfer made by the assessee in favour of the firm on 19th Sept., 1990, there obviously was no opinion formed in that regard and consequently, there would not arise any question of a mere change of opinion. In cases where the AO had overlooked something at the first assessment, there can, in our opinion, be no question of any change of opinion when the income which was chargeable to tax is actually taxed as it ought to have been under the law but was not, due to an error committed at the first assessment.

The function of the AO is to administer the Act with solicitude for public treasury and with fairness to the taxpayers. He is necessarily armed with great powers. Upto four years an assessment is open to his unreserved consideration on his formation of the requisite belief. If he has such reason, he has the power, and we may add that it is his duty, to reopen the door and demand the amount legally owing. His formation of belief is not a judicial decision, but an administrative decision. It does not determine anything at this initial stage, but the AO has a duty to proceed so as to obtain what the taxpayer was always bound to pay if the increase is justified at all. The decision to initiate the proceedings is not to be preceded by any judicial or quasi-judicial enquiry. His reasoning may be the result of official information or his own investigation or may come from any source that he considers reliable. His reason is not to be judged by a Court by the standard of what the ideal man would think. He is the actual man trusted by the legislature and charged with the duty of forming of a belief, for the mere purposes of determining whether he should proceed to collect what is strictly due by law, and no other authority can substitute its standard of sufficient reason in the circumstances, or his opinion or belief for his. Unless the ground or material on which his belief is based, is found to be so irrational as not to be worthy of being called a reason by any honest man, his conclusion that it constitutes a sufficient reason, cannot be overridden. What is, therefore, to be ascertained is, whether the alleged reason really existed, and if it did, whether it was so irrational as to be outside the limits of his administrative discretion with which the AO is invested so as to be really in disregard of the statutory condition. If the AO honestly comes to a conclusion that a mistake has been made, it matters nothing so far as his jurisdiction to initiate the proceedings under s. 147 is concerned, that he may have come to an erroneous conclusion whether on law or on facts. His jurisdiction to initiate proceedings under s. 147 for assessment and reassessment is, even in such case correctly and rightly exercised, though he may have taken an erroneous view of the law with regard to the mistake committed at the first assessment proceedings that he has found out. Therefore, unless it is shown that the AO never enquired into the matter at all or that he never honestly believed that a mistake has been made, the result of his investigation and initiation of the proceedings under s. 147 of the Act cannot be challenged on the ground of want of jurisdiction. The AO has to determine the facts and the law in order to give him jurisdiction to proceed and if in the determination of this he goes wrong, the proper remedy for the assessee would be to go up in appeal and to have the case referred to the High Court under the provisions of the Act. A writ of prohibition under Art. 226 cannot be issued against the AO in such cases.

11. As noted above, while narrating the facts, the AO while making the assessment of a latter year when capital gains arising out of the said transaction were disclosed, found in paras. 3, 4 and 5 of his order that the assessee anhis three brothers had decided to form a partnership firm with two other partners from 19th Sept., 1990, to develop the land and accordingly possession of bungalow was taken by M/s Krishnan Enterprises, who had demolished the bungalow. It was noticed that the assessee had treated the bungalow as stock-in-trade and its value was arrived at Rs. 56 lakhs and each of the four brothers’ capital account with the firm was credited by Rs. 14 lakhs. It was also noticed that after the said property was converted by the said assessee and other co-owners on 15th Aug., 1990 from capital asset to stock-in-trade and its fair market value was decided at Rs. 56,00,000 by the registered valuer, the converted property was sold on 19th Sept., 1990, to M/s Krishnan Enterprises. The reasons which are contained in the order-sheet, which is at Annexure “A” to the affidavit-in-reply, clearly mention these facts which was found out or discovered, that the capital account of the assessee which was credited by Rs. 14 lakhs after the said transfer on 19th Sept., 1990, by which the stock-in-trade was sold to the firm, remained to be taxed in the case of the assessee in the asst. yr. 1991-92. In our view, the AO, therefore, clearly had a reason to believe that the income chargeable to tax in the form of capital gains in respect of the transfer that took place on 19th Sept., 1990, had escaped assessment in the relevant asst. yr. 1990-91. The initiation of the proceedings under s. 147 cannot, therefore, be assailed on the ground that it was without jurisdiction. The legislature has entrusted the AO with a jurisdiction which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further to assess, reassess or recompute as indicated in s. 148. The AO has formed his belief on discovery of the earlier error which resulted in the said income having escaped assessment which constituted the fact primary to giving him jurisdiction to proceed with the matter for assessment or reassessment. If his decision on the question whether there was sufficient justification or cause for formation of the belief in view of the error committed in the first assessment was wrong, the only remedy would be by way of an appeal against his ultimate order and not by a writ of prohibition; for, the AO has not assumed jurisdiction not vested in him, but has merely exercised jurisdiction, the existence of which is necessarily involved by the scope of his functions under the IT Act, pursuant to the said provision of s. 147. In view of the facts noted above, it is utterly impossible to say that there was no evidence of primary facts upon which the AO may apply his mind and exercise his power and proceed further under the said provision. It is not for this Court in exercise of its extraordinary jurisdiction under the Constitution, to examine the sufficiency of the reason which led the AO to believe that the income had escaped assessment. In this view of the matter, the present petition is wholly misconceived and deserves to be rejected.

12. The decision of this Court in VXL India Ltd. vs. CIT (supra) cannot assist the petitioner because in that case the assessment order, as held therein, did not disclose any reason as to why the AO considered that taking into consideration the fluctuation of the exchange rate for the purpose of valuing, cost of asset was erroneous. It was held that the necessary condition for issuing notice under s. 148 r/w s. 147 of the Act were not satisfied. Similarly, in Birla VXL Ltd. vs. Asstt. CIT (supra) on which reliance was placed on behalf of the petitioner, it was held that merely saying that excessive loss or depreciation allowance had been computed without disclosing the reasons which led the assessing authority to hold such belief, did not confer jurisdiction on him to take action under s. 147. It was held that the necessary conditions for proceeding under s. 147 had not been satisfied. Even the decision of this Court in Garden Silk Mills vs. Dy. CIT (supra) cannot assist the petitioner because in that case it was held that the AO was aware about the investment and fluctuations in the exchange rate and depreciation had been allowed after considering the material on record and further that the notice was issued after four years and there was no failure on the part of the assessee to disclose material facts necessary for the assessment. Reliance placed on the case of that very assessee, reported in the same volume at page 68 also cannot help the petitioner, because in that case the Court found that in the first assessment, the AO had applied his mind in the computation of income and that there cannot be a mere change of opinion. When, at the first assessment all the relevant aspects are considered and there is proper applicability of mind for ascertainment of the amount of taxable income and of the tax payable thereon, then in the absence of any error or mistake being discovered or found, the AO later on cannot merely for the sake of giving a different opinion, change the earlier opinion. However, in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected and which constituted a valid decision or cause to form a belief in the first assessment as a result of which the income has escaped assessment, would constitute a reason to believe that the income had escaped assessment and such cases where mistakes and errors are detected and which constitute a valid justification or cause to form a belief sought to be corrected, cannot be said to be cases of mere change of opinion. In M/s Chimanram Motilal’s vs. CIT’s case (supra), on which reliance was sought to be placed, it was in fact observed by Beaumont, C.J. that : “if it be once admitted that an assessment may be reopened under s. 34 (and the language seems to make such an

admission inevitable) it is very difficult to draw the line in any way, and to say that it can only be reopened on a particular ground, such as change of facts, or alteration in the law”.

It was in the facts of the case held that the notice issued under s. 35 was justified. The decision is rendered under the old law while we are concerned with the provisions of s. 147 of the said Act, which we have tried to construe in our humble light.

Under the above circumstances, we find no merit in these petitions and they are, therefore, rejected. Rule is discharged in each of them, with no order as to costs.

[Citation : 236 ITR 832]

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