Income Tax

Change of Opinion don’t Give Jurisdiction for Reopening of Assessment

Reopening of Assessment

The Hon’ble Bombay High Court pronounced a judgement on 20th February 2023 in the case titled Survival Technologies Pvt. Ltd. v.DCIT   wherein the assessee questioned the legality of the notice dated 30.-03 2021 issued u/s 148 of the ITA 1961[1], which sought for the reopening of the petitioner’s assessment for the AY 2015-16 along with the order dated 21.07. 2022 passed by the DCIT, wherein the objections regarding the reopening of assessment were disposed off. The Bombay high court set aside the order and notice, holding that change of opinion don’t give jurisdiction for the reopening of Assessment. The present article shall discuss the facts, issues, observations of the court and the final judgement to provide clarity in respect of the same.

Facts of the Case

  • The ITR for the year 2015-16 was filed by the assessee, followed by the case being selected for scrutiny assessment by the  CASS, which led to the issuance of notice u/s 143(2) of the Act on 17.03. 2016  and u/s 142(1) subsequently , on  23rd January 2017.
  • The petitioner filed the necessary documents and details after the issue of such notice, along with claiming for deduction u/s 35(2AB) of the IT Act.
  • Finally, an order of assessment dated 13.06.  2017 was passed u/s 143(3) of the IT Act where the assessment of the total income at Rs.8,48,00,190/-,  along with the disallowance of Rs.32,70,724/- being excess deduction claimed u/s 35(2AB) of the Act followed by the reduction in such disallowance Rs.16,35,262/- as per rectification order dated 23. O6.2017 passed u/s 154 of the Act.
  • On 31.03.21, the AO issued notice u/s 148 of the IT Act for reopening of assessment on the income chargeable to tax that has escaped the assessment. The assessee filed the ITR again in compliance with the notice.
  • The assessee filed objections to the reopening of assessment proceedings by the AO. However, the same was rejected vide order dated 21.02.22, which was also impugned in the present petition.

Contentions of the Parties

The counsel for the assessee contended the order dated 21.02.22 and the impugned notice to be unsustainable due to the assessee making full disclosure of the material facts to the AO leading to the passing of the order u/s 143 of the Act. It was urged that there wasn’t any failure by the assessee towards the disclosure of the material facts for the purpose of assessment, which was a jurisdictional pre-condition, the onus of which hasn’t been discharged by the AO u/s 147 of the Act bad and illegal in law.

On the contrary, the counsel for the DR supported the view of the AO


Whether the reopening of the assessment be done due to a change of opinion upon the expiration of the period of 4 years unless there is an escape of assessment with regard to any income chargeable to tax?

Observations of the Court

The Hon’ble Bombay High Court did a thorough analysis of Section 147 of the IT Act that provided the power of assessing or re-assessing an income to the AO  in the presence of reasons to believe that there has been an escape of assessment of such income; however, no action shall be taken subsequent to the expiration of a period of four years from the end of the relevant AY unless in case of escape of assessment of the taxable income.

The court observed that,  due to the case being reopened beyond the period of four years, the revenue is required to satisfy the jurisdictional conditions on both aspects, i.e. ‘reason to believe’ and ‘failure to fully and truly disclose the material facts’.

Further, the court stated that it is already  a settled principle of the law that the jurisdiction  which is exercised u/s 147 of the IT Act by an AO  is required to be tested on the reasons recorded,  that can neither be subsequently improved  nor added in the reply or in the pleadings subsequent  to the same

The court placed reliance on the earlier judgment in Hindustan Lever Ltd. v. Rb. Wadkar, ACIT & Ors wherein. The AO was obliged to disclose the fact or material which wasn’t disclosed fully and truly, by the assessee for the purposes of assessment of that A.Y.,  for the purpose of establishing a vital linkage between the reasons and the evidence while making a note that, the jurisdictional condition hasn’t been satisfied by the Respondent, except making a bald statement regarding the non-disclosure of the full and true material facts.

 The court opined that the Respondent has failed to in establishing the failure of the assessee towards the full and true disclosure of any material fact.

It was further observed that the impugned notice had been issued without the existence of any tangible material with the revenue, as he clearly relied upon the material which was already placed on record before the officer.

Relied on the judgment of Hon’ble Delhi HC in Jindal Photo Films Ltd. v. DCIT Anr wherein, it was held that, in the event of availability of materials for a reason to believe, the writ court wouldn’t exercise its power of judicial review for checking the sufficiency or adequacy of the material available.


 After analysing the facts and circumstances of the case, the high court held that a mere ‘change of opinion’ don’t provide jurisdiction for the reopening of Assessment. Therefore, the court set aside the notice and the impugned order.


The judgement pronounced in the present case firmly establishes that a mere change in the opinion doesn’t empower the AO  for the reopening of assessment after the expiration of 4 yrs. This also provides clarification regarding the powers of the AO with regard to the initiation of reassessment proceedings.

Also Read: No Notice for Reopening Of Assessment without Furnishing Information


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