My return was only processed under section 143(1) and now the officer wants to reopen it. Can I say he is changing his opinion?
No. The Supreme Court held that where a return is accepted under section 143(1), no assessment order is made and no opinion is formed, so the change of opinion objection simply does not arise. The point was held to be squarely covered by Rajesh Jhaveri Stock Brokers. The Bombay High Court had quashed the reopening notice without addressing this contention at all, and its judgment was set aside. The Tribunal's order, which had merely followed the High Court, went with it, and the appeal was remitted to the Tribunal to be decided on merits.
Decided by the Supreme Court (Supreme Court of India - Justice A.K. Sikri and Justice Rohinton Fali Nariman) on 2015-04-17, reported as Civil Appeal No. 6758 of 2004 (Supreme Court of India). It bears on section 147, section 143(1), section 148, section 143(1)(a) of the Income Tax Act 1961, in Reassessment & Reopening and Assessment & Scrutiny matters.
This is the Supreme Court applying Rajesh Jhaveri to a live reopening and, in doing so, confirming that the Kelvinator change of opinion doctrine has no field where the original return went through only as an intimation. Practitioners reach for it in the common situation where a client's return was processed under section 143(1) and the department reopens years later on material that was in the return all along; the reopening cannot be attacked on the ground that the officer already looked at it. What survives is the requirement that the officer have reason to believe income escaped assessment on some tangible material. The order is also a reminder that a High Court which does not deal with the department's principal contention leaves its judgment vulnerable.
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For assessment year 1991-92 the company's return was accepted under section 143(1). By an agreement of 19 June 1984 it had agreed to sell a building to Bank of Maharashtra for Rs.85,40,800, the sale to be completed only after five years but before the end of the sixth, at the purchaser's option. The Bank paid Rs.84,47,111, being 90 per cent of the consideration, on 20 June 1984, and possession was handed over in part performance the same day. The Bank called for completion by 18 June 1990; in 1993 the company confirmed the Bank was in possession and said it would complete by 30 September 1993, but it did not. In its 1991 accounts the company had shown Rs.84,47,112 as a current liability described as "Advance against deferred sale of building". While assessing the year 1994-95 the officer asked why the capital gain on the premises should not be taxed in assessment year 1991-92, and on 4 December 1996 issued a notice under section 147 to reopen that year. The company challenged the notice by writ petition and the Bombay High Court quashed it. The reassessment made meanwhile was upheld by the Commissioner (Appeals), and the Tribunal allowed the company's appeal on 29 January 2004 by simply following the High Court.
The appeal was allowed and the High Court's judgment set aside. The Supreme Court found that the High Court had not addressed the Department's main contention at all: that because the return had been accepted under section 143(1), no opinion had been formed and there could be no change of opinion. That contention was held to be squarely covered by Rajesh Jhaveri Stock Brokers, from which the Court set out the reasoning that an intimation under section 143(1)(a) is not an order of assessment. Since the Tribunal's order of 29 January 2004 had done nothing but follow the High Court, it too was set aside, and the company's appeal was remitted to the Tribunal to be decided on merits. The Court did not itself decide whether the capital gain was chargeable in assessment year 1991-92.
The reasoning is that of Rajesh Jhaveri, adopted as covering the case. Before 1 April 1989, section 143(1)(a) required the officer to pass an assessment order if he decided to accept the return; the amended provision dispenses with that and requires only an intimation to be sent. The Board's circulars show the legislative intent, which was to reduce the work of scrutinising every return and to concentrate on selective scrutiny. Under the first proviso to section 143(1) as substituted from 1 June 1999, the acknowledgment of the return is deemed to be an intimation where no sum is payable and no refund is due, and that acknowledgment is issued not by any assessing officer but mostly by ministerial staff, so no assessment can be said to have been made. The intimation is deemed a notice of demand under section 156 only so that the machinery for recovery applies, and nothing more can be inferred from that deeming provision. There being no assessment under section 143(1)(a), the question of change of opinion does not arise.
Therefore, there being no assessment under Section 143(1)(a), the question of change of opinion, as contended, does not arise.
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Handle my notice → Ask a CA on WhatsAppNo. The Supreme Court held that where a return is accepted under section 143(1), no assessment order is made and no opinion is formed, so the change of opinion objection simply does not arise. The point was held to be squarely covered by Rajesh Jhaveri Stock Brokers. The Bombay High Court had quashed the reopening notice without addressing this contention at all, and its judgment was set aside. The Tribunal's order, which had merely followed the High Court, went with it, and the appeal was remitted to the Tribunal to be decided on merits. This was decided by the Supreme Court (Supreme Court of India - Justice A.K. Sikri and Justice Rohinton Fali Nariman) and bears on section 147, section 143(1), section 148, section 143(1)(a) of the Income Tax Act 1961. It is reported as Civil Appeal No. 6758 of 2004 (Supreme Court of India). This is the Supreme Court applying Rajesh Jhaveri to a live reopening and, in doing so, confirming that the Kelvinator change of opinion doctrine has no field where the original return went through only as an intimation. Practitioners reach for it in the common situation where a client's return was processed under section 143(1) and the department reopens years later on material that was in the return all along; the reopening cannot be attacked on the ground that the officer already looked at it. What survives is the requirement that the officer have reason to believe income escaped assessment on some tangible material. The order is also a reminder that a High Court which does not deal with the department's principal contention leaves its judgment vulnerable. If it applies to you, the first step is this: Check first whether the original proceeding ended in an intimation under section 143(1) or in an assessment order; the change of opinion argument is only open in the second case.
For assessment year 1991-92 the company's return was accepted under section 143(1). By an agreement of 19 June 1984 it had agreed to sell a building to Bank of Maharashtra for Rs.85,40,800, the sale to be completed only after five years but before the end of the sixth, at the purchaser's option. The Bank paid Rs.84,47,111, being 90 per cent of the consideration, on 20 June 1984, and possession was handed over in part performance the same day. The Bank called for completion by 18 June 1990; in 1993 the company confirmed the Bank was in possession and said it would complete by 30 September 1993, but it did not. In its 1991 accounts the company had shown Rs.84,47,112 as a current liability described as "Advance against deferred sale of building". While assessing the year 1994-95 the officer asked why the capital gain on the premises should not be taxed in assessment year 1991-92, and on 4 December 1996 issued a notice under section 147 to reopen that year. The company challenged the notice by writ petition and the Bombay High Court quashed it. The reassessment made meanwhile was upheld by the Commissioner (Appeals), and the Tribunal allowed the company's appeal on 29 January 2004 by simply following the High Court. The matter was decided on 2015-04-17 by the Supreme Court (Supreme Court of India - Justice A.K. Sikri and Justice Rohinton Fali Nariman). On those facts the Supreme Court held as follows. The appeal was allowed and the High Court's judgment set aside. The Supreme Court found that the High Court had not addressed the Department's main contention at all: that because the return had been accepted under section 143(1), no opinion had been formed and there could be no change of opinion. That contention was held to be squarely covered by Rajesh Jhaveri Stock Brokers, from which the Court set out the reasoning that an intimation under section 143(1)(a) is not an order of assessment. Since the Tribunal's order of 29 January 2004 had done nothing but follow the High Court, it too was set aside, and the company's appeal was remitted to the Tribunal to be decided on merits. The Court did not itself decide whether the capital gain was chargeable in assessment year 1991-92.
The reasoning is that of Rajesh Jhaveri, adopted as covering the case. Before 1 April 1989, section 143(1)(a) required the officer to pass an assessment order if he decided to accept the return; the amended provision dispenses with that and requires only an intimation to be sent. The Board's circulars show the legislative intent, which was to reduce the work of scrutinising every return and to concentrate on selective scrutiny. Under the first proviso to section 143(1) as substituted from 1 June 1999, the acknowledgment of the return is deemed to be an intimation where no sum is payable and no refund is due, and that acknowledgment is issued not by any assessing officer but mostly by ministerial staff, so no assessment can be said to have been made. The intimation is deemed a notice of demand under section 156 only so that the machinery for recovery applies, and nothing more can be inferred from that deeming provision. There being no assessment under section 143(1)(a), the question of change of opinion does not arise. In the words reproduced by the source cited on this page: "Therefore, there being no assessment under Section 143(1)(a), the question of change of opinion, as contended, does not arise."
It was decided by the Supreme Court on 2015-04-17 and is reported as Civil Appeal No. 6758 of 2004 (Supreme Court of India). 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 143(1), section 148, section 143(1)(a), 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeal was allowed and the High Court's judgment set aside. The Supreme Court found that the High Court had not addressed the Department's main contention at all: that because the return had been accepted under section 143(1), no opinion had been formed and there could be no change of opinion. That contention was held to be squarely covered by Rajesh Jhaveri Stock Brokers, from which the Court set out the reasoning that an intimation under section 143(1)(a) is not an order of assessment. Since the Tribunal's order of 29 January 2004 had done nothing but follow the High Court, it too was set aside, and the company's appeal was remitted to the Tribunal to be decided on merits. The Court did not itself decide whether the capital gain was chargeable in assessment year 1991-92. It arises in Reassessment & Reopening and Assessment & Scrutiny matters, on section 147, section 143(1), section 148, section 143(1)(a) of the Income Tax Act 1961, and was decided by Supreme Court of India - Justice A.K. Sikri and Justice Rohinton Fali Nariman. 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. Where it was an intimation, put the challenge on the reasons themselves - what material the officer had and whether it supports a belief that income escaped assessment - not on his having formed a view earlier. In a writ against a reopening notice, make sure the High Court is asked to deal with every contention; a judgment silent on the department's main point invites this outcome. Remember that setting aside the reopening does not decide the merits; here the matter simply went back to the Tribunal.
Still good law. This is a signed reasoned order of the Supreme Court, read in full including the record of proceedings; being a Supreme Court decision applying its own earlier ruling in Rajesh Jhaveri, it binds unless overruled. I have not checked for any later Supreme Court decision qualifying it. No source could be cited for that finding. 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.
The order is short - five pages plus the record of proceedings - and reasons the point entirely by adopting the passage from Rajesh Jhaveri Stock Brokers, so the key quote above is that adopted passage rather than fresh reasoning of this Bench. The source page classes the document as "Supreme Court - Daily Orders", but it is a signed speaking order deciding a question of law, not a listing entry. The order describes the reopening notice of 4 December 1996 as issued "under Section 143 read with Section 147"; a reopening notice is issued under section 148 and the batch line lists that section, but I have kept the description the order gives. The Court expressly left the merits - whether the capital gain arose in assessment year 1991-92 - to the Tribunal, so nothing here bears on that question. The source page carried no reporter citations, so the case number is given instead. 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 appeal was allowed and the High Court's judgment set aside. The Supreme Court found that the High Court had not addressed the Department's main contention at all: that because the return had been accepted under section 143(1), no opinion had been formed and there could be no change of opinion. That contention was held to be squarely covered by Rajesh Jhaveri Stock Brokers, from which the Court set out the reasoning that an intimation under section 143(1)(a) is not an order of assessment. Since the Tribunal's order of 29 January 2004 had done nothing but follow the High Court, it too was set aside, and the company's appeal was remitted to the Tribunal to be decided on merits. The Court did not itself decide whether the capital gain was chargeable in assessment year 1991-92.
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My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?