COMMISSIONER OF INCOME TAX vs INDIAN OVERSEAS BANK LTD.

R. Jayasimh Babu, J.

The Tribunal has upheld the assessee''s objection to the reopening of the assessment for the assessment year 1977-78 by holding that what the

Income Tax Officer purported to do was merely to reopen the assessment based on a change in his own opinion as to how the computation of the

income should have been done.

In the original assessment, all the information required for the computation of the income, and the deductions claimed had been placed before

the Income Tax Officer. There is no dispute on that score, The weighted deduction as claimed by the assessee u/s 35B of the Income Tax Act in

respect of interest earned on securities had been allowed, so also the assessee''s claim for treating the loss on securities as a revenue loss. The law

with regard to these aspects had not changed as a consequence of any judicial decision after the date of the assessment nor had the law laid down

in a manner different from the way it was applied to the original assessment before the original assessment was made. The original assessment was

not made contrary to any statutory provision. The computations required to be made under the relevant provisions of the statute had been made.

There was no error in the computation actually made. Nevertheless, the Income Tax Officer sought reopening only on the revised view entertained

by him that what had been allowed as a revenue loss should have been treated as a capital loss, and that the quantum of weighted deduction

allowed u/s 35B of the Act should be reduced. The change in the view on the part of the assessing officer with regard to those items after the

assessment is not sufficient to clothe him with the jurisdiction to reopen the assessment u/s 147(b) of the Act.

Learned counsel for the revenue , however, submitted that the Income Tax Officer did not overstep his jurisdiction by resorting to section

147(b) of the Act, in the light of what has been held by the Supreme Court in the case of Commissioner of Income Tax Vs. P.V.S. Beedies Pvt.

Ltd., . That was a case where the audit party had pointed out the Income Tax Officer the fact that recognition granted to the charitable trust had

already expired, which fact had not been noticed by the Income Tax Officer in the original assessment. The expiry of the recognition had a direct

impact on the assessment. It was in those circumstances that the court held that the information so given to him by the audit party was with regard

to a factual error or omission in the assessment and that the reopening of the assessment on the basis of a factual error so pointed out was

permissible in law.

That case cannot be regarded as an authority for the proposition that a change in the view on the part of the Income Tax Officer would by itself

constitute sufficient basis for reopening the assessment u/s 147(b) of the Act. The assessment once completed is to be normally regarded as final

subject to the process of appeal and revision. The assessing officer is not to make a trial. Assessment, and thereafter make further assessments

depending upon the revised views entertained by him with regard to the matters dealt with in the assessment. While patent errors are undoubtedly

capable of being corrected. Section 147(b) of the Act is not intended to empower the Income Tax Officer to go on revising his assessment as and

when he changes his opinion with regard to the matters dealt with in the order of assessment.

The Tribunal was, therefore, right in holding that the reopening of the assessment was not valid. The question is answered in favour of the

assessee, and against the revenue .