VittSphere ONE Calculators Blog CA Prabhakar Kumar · FCA · ICAI 560762
Case lawConcepts › Change of opinion

Change of opinion

The same papers were before the officer last time — can he reopen and take a different view now?

The same papers were before the officer last time — can he reopen and take a different view now?

No. Reassessment is a power to reassess, not a power to review, and a fresh view on material already considered is a change of opinion which cannot support reopening. There must be tangible material coming from outside the concluded assessment.

This is an explainer, not a judgment. It states the law in our own words, which is exactly why it needs checking. Everything below was written from the sources listed at the foot of this page, and no chartered accountant has yet signed it off. Read the source before you rely on it in a reply or an appeal.

When an assessment is completed after scrutiny, the officer is taken to have applied his mind to the material on record. If he later looks at the same material and forms a different opinion, reopening on that basis is a review dressed up as a reassessment. The Supreme Court in CIT v. Kelvinator of India Ltd. put it as a distinction between the power to review and the power to reassess: the Act gives the officer only the latter, and the change of opinion doctrine is an in-built test to check abuse of power.

What the doctrine requires is tangible material. The officer must be able to point to something that was not part of the completed assessment — new facts, information from an external source, a subsequent finding — and show a live link between that material and the belief that income escaped assessment. Reopening supported only by a re-reading of the return, the audit report, or a note already on the assessment file does not clear that bar.

The doctrine does not depend on the earlier order having discussed the issue. That is where most disputes arise. Where a query was raised in the original scrutiny and the assessee answered it, the officer is treated as having formed an opinion even if the order is silent on the point, because he did not disturb what was explained. That is why the original questionnaire and your replies to it are the key documents in a change of opinion argument.

The doctrine also has limits. It presupposes a concluded assessment in which an opinion could have been formed. Where the return was merely processed and no scrutiny assessment was made, there is no earlier opinion to change. And where the assessee did not disclose the material at all, the officer never had the opportunity to form a view on it.

Whether the doctrine survives the reassessment regime substituted by the Finance Act 2021 — which speaks of "information which suggests" escapement rather than "reason to believe" — is the live question. The better view taken in professional commentary is that it does survive, because it rests on the difference between review and reassessment rather than on the particular words of the old section, and because the safeguard exists to prevent arbitrary exercise of power. The Delhi High Court in Seema Gupta v. ITO entertained a change of opinion plea under the new regime and set aside the section 148A(d) order for fresh consideration, though without deciding the doctrinal question squarely.

In practice, run the argument alongside the "information" argument rather than instead of it. Show first that the material relied on was already before the officer in the original assessment, and second that it therefore is not information that "suggests" anything new. That way the point works under either formulation.

Why it matters

If you can show the point was examined in the original scrutiny, the reopening can be quashed without arguing the merits of the addition at all. This makes your original assessment file — the questionnaire, your replies and the annexures — the most valuable document in the reply. It also means you should press for the reopening to be decided as a preliminary issue rather than merged into the merits.

What to do

Where people go wrong

Unsettled, or not pinned down. Whether the change of opinion doctrine applies to the post-Finance Act 2021 regime has not been authoritatively decided on the sources I could read; the commentary I fetched identifies only one High Court decision touching it, and that decision did not decide the question. I have therefore stated the position as arguable rather than settled.

Authorities on these sections

Judgments in this library that turn on the same provisions.

Where this came from

Every page in this library links to what it was written from, so you can check it rather than take our word for it.