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Case Law Details

Case Name : Export Import Bank of India Vs ACIT (ITAT Mumbai)
Appeal Number : ITA No. 6847/MUM/2012
Date of Judgement/Order : 09/02/2018
Related Assessment Year : 2003-04
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Export Import Bank of India Vs ACIT (ITAT Mumbai)

A Full Bench of the Hon’ble Delhi High Court in CIT v. Kelvinator 256 ITR 1 held that even after the Direct Tax Laws (Amendment) Act 1987, (i) the AO must have ‘reason to believe’ that income has escaped assessment, (ii) a mere change of opinion does not justify a re­assessment and (iii) the AO does not have the power of review on the same set of facts and law.

The re-assessment proceedings cannot be initiated by the AO when he has accepted the matter in the original assessment, therefore, indicating a mere change of opinion. The principle that there must be tangible material on the basis of which an assessment is sought to be re-opened even within a period of four years is now well established in view of the judgment of the Hon’ble Supreme Court in CIT v. Kelvinator 320 ITR 561 (SC).

Indisputably, in the instant case, the AO has issued notice u/s 148 after four years from the relevant assessment year. We find that notice for reassessment issued after four years from the end of the relevant assessment year is unsustainable where there is no material to hold that there was a failure on the part of the assessee to disclose true and full facts resulting in escapement of income. The reason that some material which was available on record while making the assessment order, was inadvertently excluded from consideration, was held to be a re-opening merely on change of opinion and not valid. We refer here to the decision in Balkrishna Hiralal Wani v. ITO 321 ITR 519; Asian Paints Ltd. v. DCIT 308 ITR 195; D.T. & T.D.C. Ltd. v. ACIT 324 ITR 234; Satnam Overseas Ltd. v. ACIT 329 ITR 237.

To sum up, even under the amended law, in all cases, there must exist reason to believe that income has escaped assessment and a mere change of opinion on the same facts and law does not justify a reassessment. For a reassessment proceeding initiated after four years, it must further be established that the escapement was by reason of failure of the assessee to disclose fully and truly all material facts.

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