Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Illustration - Assessment years 1956-57 to 1959-60 - Whether where all material facts relevant on question of valuation were disclosed by assessee and method of valuation adopted by assessee could not be disputed as one of recognised methods of valuation then it was duty of ITO who made assessment to satisfy himself in background of primary facts disclosed by assessee whether that method was correct method applicable in instant case - Held, yes - Where on facts disclosed by assessee, ITO who made assessment was satisfied that method of valuation adopted by assessee was correct method, but on same facts subsequently different view was taken, that would amount to a change of opinion and hence, would not confer jurisdiction upon ITO to reopen assessment - Held, yes FACTS For the assessment years in question the assessments of the assessee company were sought to be reopened by the department on the ground that there was escapement of income from the assessment because of the fact that the assessee's stock-in-trade and work-in-progress were not correctly assessed due to non-disclosure of material facts by the assessee. It was stated that the assessee had not followed either the cost price or cost or market price whichever was lower; but a method which had not been recognised in any commercial practice. The under valuation of closing stock had resulted in under-assessment. The assessment had therefore, to be reopened under section 147. It was further stated that in the balance-sheet filed for the various years, the company had stated that the stocks had been valued at 'cost or under'; but it was only in 1963-64, that the full particulars were obtained and it was noticed that the stocks had not been valued according to the recognised commercial principles. On writ, the High Court held that there was no non-disclosure of material facts for which the ITO concerned was authorised to take action under section 147(a) or to issue the said notices under section 148. On appeal: HELD In the instant case, all the relevant primary facts necessary for the valuation of the assessee's stock-in-trade and…

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