Commissioner of Income Tax vs Paper Products Ltd.

Arijit Pasayat, C.J.—Pursuant to the directions given by this court in I. T. C. No. 38 of 1977 u/s 256(2) of the Income Tax Act, 1961 (in short the "Act"), the following question has been referred for opinion of this court by the Income Tax Appellate Tribunal, Delhi Bench "E" (in short "the Tribunal"), along with the statement of case :

"Whether, on the facts and in the circumstances of the case, the Tribunal were legally correct in cancelling the assessment made u/s 147(b) withdrawing the relief of Rs. 2,97,8G8 u/s 84 which was wrongly allowed in the original assessment ?"

The factual position as detailed in the statement of case is as follows :

The assessed is a public limited company carrying on business of manufacture of paper and packing material. The original assessment for the assessment year in question, i.e., 1966-67, was completed by the Income Tax Officer on October 23, 1970, on a total income of Rs. 14,47,186. Relief u/s 84 of the Act was allowed to the extent of Rs. 2,97,868. Subsequently, the assessment was reopened by the successor-income tax Officer u/s 147(b) of the Act on the ground that his predecessor overlooked the fact that there was a loss in Roha Paper Mills in respect of which relief u/s 84 had been allowed. The assessed objected to the reopening of the assessment as per its letter dated September 14, 1971. It was stated that the entire facts in regard to the claim u/s 84 were before the Income Tax Officer who made the original assessment and applying his mind relief u/s 84 of the Act was allowed, since the income determined was Rs. 15,60,690, relief u/s 84 was clearly admissible. The said contentions were rejected and the relief u/s 84 was withdrawn in reassessment. The assessed preferred an appeal before the Appellate Assistant Commissioner (in short "the MC"). The appeal was allowed by the Appellate Assistant Commissioner holding" that there was a mere change of opinion on the same facts and, Therefore, the Income Tax Officer was not justified in initiating proceeding''s u/s 147(b) of the Act. Against such order, the Revenue preferred an appeal before the Tribunal. It was contended that the first Income Tax Officer, who had made the original assessment, did not apply his mind to the admissibility of relief u/s 84 of the Act and his successor was entitled to instruct himself about the correct interpretation of Section 84 and such an instruction about the correct state of law would be information within the meaning of Section 147(b) of the Act. On behalf of the assessed it was submitted that in the original assessment relief had been granted u/s 84 after considering the facts of the case and position in law. Therefore, a subsequent change of opinion cannot bring any application of Section 147(b). The Tribunal was of the view that it was a case of mere change of opinion by the successor-officer as was rightly observed by the Appellate Assistant Commissioner and, Therefore, reopening assessment u/s 147(b) was improper.

Learned counsel for the Revenue submitted that the facts do not make out a case for mere change of opinion. There is no appearance on behalf of the assessee.

We have considered the submissions made by learned counsel for the Revenue in the background of the conclusions arrived at by the Appellate Assistant Commissioner and the Tribunal on the question as to whether there was change of opinion. As has been observed by this court Jindal Photo Films Ltd. Vs. The Deputy Commissioner of Income Tax, , mere change of opinion will not be sufficient to bring in application of Section 147(b) of the Act. The Tribunal has rightly dealt with the question as to why it was considered to be a case of mere change of opinion. That being the position, we answer the question referred in the affirmative, in favor of the assessed and against the Revenue.

The reference stands disposed of.