Law:

Section:

I. Section 147 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 2003-04 - Investigation report of custom authority which came to notice of Assessing Officer after completing original assessment could be relied upon to reopen assessment [In favour of revenue] The Assessing Officer reopened the assessment relying upon a report received from custom department which mentioned about an action of search and seizure by the AIR Intelligence officials on the assessee which resulted into discovery of 5877 carats of cut and polished diamonds. The reasons for reopening also mentioned that the assessee had been indulging in power theft and out of books production which had resulted in unaccounted profits. The assessee challenged the reopening of assessment contending that report of custom authorities was well within the knowledge of the Assessing Officer while framing the original assessment and as such the reopening was based on a change of opinion and as such was not sustainable in law. Held that the fact regarding the investigation carried out by the customs authority did not find place in the original assessment order. In the circumstances, the Assessing Officer, while framing the original assessment under section 143(3), had not formed any opinion in respect of the income which was alleged to have escaped assessment in the reasons recorded by the Assessing Officer. Apart from the fact that there was nothing to indicate that the aforesaid facts were before the Assessing Officer while framing the original assessment, jurisdiction of the Income-tax Officer to reassess income arises if he has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment. That information, must, it is true, have come to the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer…

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