Law:

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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1989 - Assessment years 1973-74 and 1974-75 - Whether in order to invoke provisions of section 147 (b) - ITO must have information in his possession and then in consequence of such information, he must have reason to believe that income had escaped assessment - Held, yes - Whether Assessing Officer cannot reopen an assessment on a mere change of opinion in respect of materials already on record and in respect of materials which were considered by him at time of original assessment - Held, yes FACTS The assessee owned a multi-storeyed building in Delhi, 90 per cent of which was let out to various tenants. The rental income was assessed under the head 'Income from house property'. In order to provide certain facilities to various tenants, the assessee had provided lifts, air-conditioning, electric power, drinking water, etc. for which it charged separately and unconnected with the rent for the space let out. Such charges, termed as service charges were assessed under 'other sources'. The machinery and plant was owned by the assessee and not let out. The assessee had claimed deduction on account of depreciation on assets and insurance premium which were allowed as per statement filed with the original returns for the relevant assessment years. While scrutinising the records for the assessment year 1972-73, the assessing officer found that such deduction though not permissible under law, was allowed. He therefore, came to the conclusion that in the original assessments for the relevant assessment years excessive depreciation was allowed. Therefore, he reopened those assessments under section 147(b) and completed them accordingly. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer which was further affirmed by the Tribunal. On reference: HELD In order to invoke section 147(b ) the ITO must have information in his possession and then in consequence of such information, he must have reason to believe that income had escaped assessment. It is also well settled that the court cannot go into the sufficiency of the materials on the basis of which the…

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