The officer looked at this exact issue in the original assessment and now wants to look again. Can he?
No. Reopening needs tangible material. A mere change of opinion is not a ground, and where a s.143(3) assessment was made the officer is presumed to have applied his mind — so re-examining the same material is review, which the Act does not permit.
Decided by the Supreme Court (S.H. Kapadia J, Aftab Alam J and Swatanter Kumar J) on 2010-01-18, reported as (2010) 320 ITR 561 (SC); [2010] 187 Taxman 312 (SC); [2010] 228 CTR 488 (SC); (2010) 2 SCC 723; Civil Appeal Nos. 2009-2011 of 2003 and 2520 of 2008. It bears on section 147, section 148 of the Income Tax Act 1961, in Reassessment & Reopening matters.
This is the first thing to test in any reopening where the issue was visible in the original assessment. Nine words decide most of these cases: the officer has the power to reassess, not to review.
Binding on every court and authority in India.
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The judgment records no facts. It decided a batch of departmental appeals on a single question of construction: whether the concept of 'change of opinion' stands obliterated with effect from 1 April 1989, after section 147 was substituted by the Direct Tax Laws (Amendment) Act, 1987 (para 2). The appeals were against the Delhi High Court's Full Bench decision in CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 and its decision in CIT v. Eicher Ltd. [2007] 294 ITR 310, both of which the Court affirmed.
The Court dismissed the Department's appeals. Section 147 as substituted from 1 April 1989 leaves a single condition — that the Assessing Officer has reason to believe income has escaped assessment — and the power to reopen is therefore wider than before; but the words 'reason to believe' must be given a schematic interpretation, failing which the section would confer arbitrary power to reopen on a mere change of opinion, which cannot by itself be a reason to reopen. Change of opinion must be treated as an in-built test against abuse of power. After 1 April 1989 the officer may reopen provided there is tangible material to conclude that income has escaped assessment, and the reasons recorded must have a live link with the formation of the belief (para 4).
The Court set the three successive texts of section 147 side by side (paras 3 to 3.2). Before the 1987 Amendment Act, jurisdiction to make a back assessment arose only on one of two conditions — failure to file a return or to disclose fully and truly all material facts, or information coming into the officer's possession. Those conditions were given a go-by from 1 April 1989, leaving only 'reason to believe' (para 4). The Court accepted that the power is on its face wider, but held that the conceptual difference between the power to review and the power to reassess must be kept in mind: the Assessing Officer has no power to review, only to reassess, and if change of opinion were removed as the Department argued, review would take place in the garb of reopening. The safeguard is therefore read into the section as an in-built test, and the reopening must rest on tangible material with a live link to the belief formed. The Court found support in the legislative history: the 1987 Act had deleted 'reason to believe' and inserted 'opinion', but after representations from companies Parliament re-introduced 'reason to believe' and deleted 'opinion' precisely because the latter would vest arbitrary power in the officer, as CBDT Circular No. 549 dated 31 October 1989 records (para 4).
The Assessing Officer has no power to review; he has the power to reassess. 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.
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Handle my notice → Ask a CA on WhatsAppNo. Reopening needs tangible material. A mere change of opinion is not a ground, and where a s.143(3) assessment was made the officer is presumed to have applied his mind — so re-examining the same material is review, which the Act does not permit. This was decided by the Supreme Court (S.H. Kapadia J, Aftab Alam J and Swatanter Kumar J) and bears on section 147, section 148 of the Income Tax Act 1961. It is reported as (2010) 320 ITR 561 (SC); [2010] 187 Taxman 312 (SC); [2010] 228 CTR 488 (SC); (2010) 2 SCC 723; Civil Appeal Nos. 2009-2011 of 2003 and 2520 of 2008. This is the first thing to test in any reopening where the issue was visible in the original assessment. Nine words decide most of these cases: the officer has the power to reassess, not to review. If it applies to you, the first step is this: Get the reasons recorded and compare them against the questionnaire and replies from the original assessment.
The judgment records no facts. It decided a batch of departmental appeals on a single question of construction: whether the concept of 'change of opinion' stands obliterated with effect from 1 April 1989, after section 147 was substituted by the Direct Tax Laws (Amendment) Act, 1987 (para 2). The appeals were against the Delhi High Court's Full Bench decision in CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 and its decision in CIT v. Eicher Ltd. [2007] 294 ITR 310, both of which the Court affirmed. The matter was decided on 2010-01-18 by the Supreme Court (S.H. Kapadia J, Aftab Alam J and Swatanter Kumar J). On those facts the Supreme Court held as follows. The Court dismissed the Department's appeals. Section 147 as substituted from 1 April 1989 leaves a single condition — that the Assessing Officer has reason to believe income has escaped assessment — and the power to reopen is therefore wider than before; but the words 'reason to believe' must be given a schematic interpretation, failing which the section would confer arbitrary power to reopen on a mere change of opinion, which cannot by itself be a reason to reopen. Change of opinion must be treated as an in-built test against abuse of power. After 1 April 1989 the officer may reopen provided there is tangible material to conclude that income has escaped assessment, and the reasons recorded must have a live link with the formation of the belief (para 4).
The Court set the three successive texts of section 147 side by side (paras 3 to 3.2). Before the 1987 Amendment Act, jurisdiction to make a back assessment arose only on one of two conditions — failure to file a return or to disclose fully and truly all material facts, or information coming into the officer's possession. Those conditions were given a go-by from 1 April 1989, leaving only 'reason to believe' (para 4). The Court accepted that the power is on its face wider, but held that the conceptual difference between the power to review and the power to reassess must be kept in mind: the Assessing Officer has no power to review, only to reassess, and if change of opinion were removed as the Department argued, review would take place in the garb of reopening. The safeguard is therefore read into the section as an in-built test, and the reopening must rest on tangible material with a live link to the belief formed. The Court found support in the legislative history: the 1987 Act had deleted 'reason to believe' and inserted 'opinion', but after representations from companies Parliament re-introduced 'reason to believe' and deleted 'opinion' precisely because the latter would vest arbitrary power in the officer, as CBDT Circular No. 549 dated 31 October 1989 records (para 4). In the words reproduced by the source cited on this page: "The Assessing Officer has no power to review; he has the power to reassess. 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." The decision followed or applied CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 (Delhi) (FB) — affirmed; CIT v. Eicher Ltd. [2007] 294 ITR 310 (Delhi) — affirmed.
It was decided by the Supreme Court on 2010-01-18 and is reported as (2010) 320 ITR 561 (SC); [2010] 187 Taxman 312 (SC); [2010] 228 CTR 488 (SC); (2010) 2 SCC 723; Civil Appeal Nos. 2009-2011 of 2003 and 2520 of 2008. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 147, section 148, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The Court dismissed the Department's appeals. Section 147 as substituted from 1 April 1989 leaves a single condition — that the Assessing Officer has reason to believe income has escaped assessment — and the power to reopen is therefore wider than before; but the words 'reason to believe' must be given a schematic interpretation, failing which the section would confer arbitrary power to reopen on a mere change of opinion, which cannot by itself be a reason to reopen. Change of opinion must be treated as an in-built test against abuse of power. After 1 April 1989 the officer may reopen provided there is tangible material to conclude that income has escaped assessment, and the reasons recorded must have a live link with the formation of the belief (para 4). It arises in Reassessment & Reopening matters, on section 147, section 148 of the Income Tax Act 1961, and was decided by S.H. Kapadia J, Aftab Alam J and Swatanter Kumar J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the same issue was raised and answered before, say so with the correspondence attached — that is what makes it a change of opinion. Read the editor's note before relying on it for a notice issued after 1 April 2021; the statutory standard has changed.
Still good law. Not overruled. The Gujarat High Court applied it in Hareshkumar Bhupatbhai Panchani (17 September 2024) and the Supreme Court cited it in Sanand Properties (2026). But the Finance Act 2021 substituted 'information which suggests' for 'reason to believe', so commentary records that change of opinion is not expressly carried into s.148A — its survival into the new regime rests on High Court decisions such as Seema Gupta, which read it in as an in-built safeguard. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Decided under the pre-2021 regime. For a notice issued on or after 1 April 2021 the statutory test is different and the change-of-opinion argument has to be made, not assumed — see the validity note. Note also what this judgment does and does not say: it decides one question of construction in four paragraphs and states no facts. The familiar propositions that a completed assessment under section 143(3) raises a presumption that the officer applied his mind, and that reopening on the same material is barred even within four years, come from the Delhi High Court Full Bench decision that the Supreme Court affirmed ([2002] 123 Taxman 433), and are better cited to it. The judgment states no facts, no assessment year and no details of the underlying reopening; it answers a question of construction and affirms the High Court decisions below. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Court dismissed the Department's appeals. Section 147 as substituted from 1 April 1989 leaves a single condition — that the Assessing Officer has reason to believe income has escaped assessment — and the power to reopen is therefore wider than before; but the words 'reason to believe' must be given a schematic interpretation, failing which the section would confer arbitrary power to reopen on a mere change of opinion, which cannot by itself be a reason to reopen. Change of opinion must be treated as an in-built test against abuse of power. After 1 April 1989 the officer may reopen provided there is tangible material to conclude that income has escaped assessment, and the reasons recorded must have a live link with the formation of the belief (para 4).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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