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We know that provisions of sections 147 to 151 of the Income Tax Act,1961 deal with Reassessment and escaped assessment of income of an assessee. Income Tax Officer under these provisions reassess by reopening the cases assessed earlier on the believe that incomes or profits or gains chargeable to income tax has escaped assessment.

There are some cases which have been reopened on the basis of change in opinion of an Assessing Officer and these are not allowed. There are various judgments of the court against the revenue ,where assessment have been reopened under provisions of section 147 of the IT Act, 1961.


Income escaping assessment.

If the Assessing Officer has reason to believe that

  1. any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153,
  2. assess or reassess such income and
  3. also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year).

PROVIDED THAT where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in-response to a notice issued under sub- section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year.

Will it be possible to re-open assessment only because of a change of opinion


Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.


For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:-

(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income- tax;

(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;

(c) where an assessment has been made, but-

(i) income chargeable to tax has been under- assessed; or

(ii) such income has been assessed at too low a rate; or

(iii) such income has been made the subject of excessive relief under this Act; or

(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed.


PLEASE NOTE THAT -there are two important conditions for invoking provisions of section 147 of the Act,1961;

  1. The AO must have reason to believe that incomes or profits or gains chargeable to income tax had escaped assessment;
  2. The AO must also have reason to believe that such escarpment had occurred by the reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year or failure on the part of the assessee to make a return of income under section 139 or in response of notice issued under section 142(1) or 148 of the Income Tax Act, 1961.

It is settled that the responsibility of an assessee is limited to disclosure of all primary facts and nothing beyond ,while filing his return of income. Once an assessee has disclosed all primary facts that is the end of his duty.


Here means change in opinion of Assessing Officer, in assessment proceedings or after. Such as an AO wants to reopen a case on the basis of that the assessee has charged excess depreciation, claimed higher deductions, taken excess rebates , and there is legal irregularity at the time of assessment , these are some examples of " Change of Opinion". An AO is not allowed to reopen a case in which assessment has been done on the basis of " Change in Opinion", unless his opinion is based on fresh information and evidence that there is escaped assessment.


  • THE SUPREME COURT IN KELVINATOR OF INDIA LTD. VS. CIT[ 320 ITR 561(S)]: Held that the Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer.

Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.


Our view gets support from the changes made to Section 147 of the Act, as quoted herein-above. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer.

We quote here in below the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows:

"7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147. –A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer.

It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion.

To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same."

  • CIT Vs. Bhanji Lavji [1971 ,791 ITR 582(SC)]: An assessment cannot be reopened only because of change of opinion. The mere change in opinion or wrong legal reference may not empower an AO to reopen an assessment. Similarly a re-assessment cannot be made fresh opinion on the same fact on which assessment has been made.
  • Kamalchand Vs. ITO[1981,128 ITR 290 Taxmman 216(MP)]: An assessment was sought to be reopened by the AO on the ground that his predecessor -in-office had committed an error in allowing certain deductions. The MP High court held that since no fresh information had come into the possession of AO , the assessment could not be opened. The court held that the decision of AO amount only change of his opinion without anything else. Reassessment without any additional information amount to be change of opinion.
  • Fluorescent Fixtures (P.) Ltd. Vs. ITO[2009, 34 SOT 48(Mum)]: In this case assessee has declared full facts and information regarding claim of depreciation at higher rate on commercial vehicles were furnished by the assessee and Assessing Officer has considered the same and had done assessment in previous years. Subsequently reopening of previous assessments on the basis of opinion of AO that the depreciation claimed in previous rates were of higher than applicable is not allowed. It is mere change of opinion of the AO that depreciation had been claimed on higher rates than applicable.
  • ONGC Vs. CIT[2003, 133 Taxman 104(Uttaranchal)]: If the assessee has disclosed fully and truly all material facts necessary for the purpose of assessment , an action under Section 147 cannot be taken after expiry of 4 years from the relevant assessment year on the basis of change in opinion of the AO that a larger sum ought to have been disallowed under original assessment.
  • J.P.Bajpai (HUF) Vs. CIT[2003,133 Taxmann 27(Uttaranchal)]: The Allahabad High Court held that the responsibility of the assessee is limited to the disclosure of all primary facts and nothing beyond. Once the assessee has disclosed all the primary facts that is the end of his duty. It is then for the assessing authority to draw the proper conclusions from the facts. If the conclusions drawn by he AO from the primary facts disclosed by the assessee are erroneous, the assessing officer cannot reopened the assessment merely on the basis of change of opinion. A mere change in opinion would not confer jurisdiction upon AO to initiate a proceeding under Section 147. However the reason to believe of an AO founded on an information which might have been received by AO father completion of assessment , it Amy be a sound foundation for exercising power under Section 147 read with the provisions of Section 148 of the IT Act, 1961.


From above judicial rulings it is clear that mere change in opinion does not empowers an AO to reopen a case under provisions of Section 147 of the IT Act,1961.

DISCLAIMER: The article produced here is only for information to the readers. The views expressed here are the personal views of the author ,it should not be considered as professional advise. In case of necessity do consult with Tax Consultant for more clarification and understanding on this matter.

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Published by

FCS Deepak Pratap Singh
(Manager Compliance -SBI General Insurance Co. Ltd.)
Category Income Tax   Report

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