COMMISSIONER OF INCOME TAX, DELHI vs. M/S. KELVINATOR OF INDIA LIMITED

CIVIL APPEAL No. 2009/2003Supreme Court[2010] 1 S.C.R. 76818 January 2010Bench: 3 JudgesAuthor: S.H. KAPADIA, AFTAB ALAM, SWATANTER KUMAR B6 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the concept of 'change of opinion' is not obliterated and serves as an in-built test to prevent abuse of power by the Assessing Officer. Post-April 1, 1989, while the power to re-open assessments is wider, it cannot be exercised on the basis of a 'mere change of opinion'. The Assessing Officer has the power to re-assess, but this power must be based on fulfilling certain pre-conditions. If the concept of 'change of opinion' were removed, it would lead to review in the garb of re-opening. Therefore, after April 1, 1989, an Assessing Officer can re-open an assessment only if there is 'tangible material' to conclude that income has escaped assessment. The reasons for forming the belief must have a live link with the belief itself. The Court supported this view by referencing the legislative intent behind the amendments, where the word 'opinion' was initially inserted and then replaced by 'reason to believe' to avoid vesting arbitrary powers in the Assessing Officer. The appeals filed by the Department were dismissed.

What were the facts?

The appeals before the Supreme Court of India concerned the interpretation of Section 147 of the Income Tax Act, 1961, specifically regarding the power of the Assessing Officer to reopen assessments. The core issue revolved around whether the concept of 'change of opinion' was obliterated after the substitution of Section 147 by the Direct Tax Laws (Amendment) Act, 1989, effective from April 1, 1989. The judgment analyzes the evolution of Section 147, including amendments made by the Direct Tax Laws (Amendment) Act, 1987, and the subsequent Amending Act of 1989. The appeals were filed by the Commissioner of Income Tax, Delhi, challenging the High Court's decisions.

What were the issues?

1. Whether the concept of 'change of opinion' stands obliterated with effect from April 1, 1989, following the substitution of Section 147 of the Income Tax Act, 1961, by the Direct Tax Laws (Amendment) Act, 1989? Assessee's Contention: The judgment does not explicitly record the assessee's contentions. Revenue's Contention: The revenue contended that the concept of 'change of opinion' was removed after April 1, 1989, implying that the Assessing Officer could reopen assessments based on a mere change of opinion. The revenue relied on the amendments to Section 147.

Which sections of the Income-tax Act were involved?

Section 147,Section 139,Section 148,Section 153

AI-generated summary — verify with the full judgment below

Cited by 1,673 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

A B [201 OJ 1 S.C.R. 768 COMMISSIONER OF INCOME TAX, DELHI v. M/S. KELVINATOR OF INDIA LIMITED (Civil Appeal Nos. 2009-2011 of 2003) JANUARY 18, 2010 [S.H. KAPADIA, AFTAB ALAM AND SWATANTER KUMAR, JJ.] Income Tax Act, 1961: s.147 - Power to reassess - The C word "opinion" inserted in s.147 after the enactment of Direct Tax Laws (Amendment) Act, 1987 i.e. prior to 1st April, 1989, vested arbitrary powers in the Assessing Officer to reopen past assessments on mere change of opinion - The concept of "change of opinion" stood obliterated with effect from 1st April, D 1989, i.e. after substitution of s.147 of the Act by Direct Tax Laws (Amendment) Act, 1989- Direct Tax Laws (Amendment)

Act, 1987 - Circular No.549 dated 31st October, 1989. The question which arose for consideration in the present appeal is whether the concept of "change of E opinion" stands obliterated with effect from 1st April, 1989, i.e. after substitution of section 147 of the Income Tax Act, 1961 by Direct Tax Laws (Amendment) Act, 1989. F Dismissing the appeals, the Court HELD: Post-1st April, 1989, power to re-open is much wider. The words "reason to believe" need to be given a schemati

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →