“Kelvinator”
The decision most relied on for Kelvinator is CIT v. Kelvinator of India Ltd. (320 ITR 561), cited in 1,673 judgments on BharatTax.
Leading authorities on Kelvinator
An Assessing Officer cannot initiate reassessment proceedings under Section 147 of the Income Tax Act based on a mere change of opinion. Reassessment is permissible only when there is fresh tangible material leading to the belief of income escapement, not merely a review of existing facts.
An Assessing Officer cannot reopen an assessment under Section 147 based on a mere change of opinion regarding the same material available during the original assessment. Reopening requires fresh, tangible material or information that leads to a reason to believe income has escaped assessment.
Reassessment proceedings are invalid if the reasons recorded for initiating action under section 148 are not served on the assessee within the limitation period prescribed by section 149. Furthermore, reassessment cannot be based on a mere change of opinion without tangible material, particularly when the assessee has made a full and true disclosure of material facts.
A reassessment is invalid due to 'mere change of opinion' if an issue was raised during original assessment but no addition was made, implying the issue was examined. However, if a subject matter was not examined and no opinion was formed, the principle of 'change of opinion' does not apply.
Reassessment initiated under Section 147/148 is invalid if the Assessing Officer relies on material obtained post-recording of reasons, or if it amounts to a mere change of opinion on facts fully and truly disclosed by the assessee during the original assessment. An assessee's obligation extends only to the full and true disclosure of primary facts, not to provide further assistance or inferences.
The Assessing Officer is considered to have applied their mind and formed an opinion on an issue if the assessee fully disclosed all material facts and responded to queries during the original assessment, even without explicit discussion in the assessment order. Reopening an assessment beyond four years on such an issue without new tangible material constitutes a mere change of opinion and is impermissible under Section 147.
Reassessment cannot be initiated on "borrowed satisfaction"; the Assessing Officer must independently apply their mind to tangible material to form a reasonable belief that income has escaped assessment. The sanctioning authority under Section 151 must also apply its mind to the recorded reasons before granting approval.
Reassessment proceedings under Section 147 cannot be initiated based on a mere change of opinion or reappraisal of existing facts, but require new or fresh tangible material or information indicating escapement of income.