COMMISSIONER OF INCOME TAX Vs. PRANCHAND BHANDARI

JUDGEMENT

(1.) THE assessee furnished a return under the I.T. Act, 1961, for the assessment year 1971-72 showing the annual income from his property at No. 24, Krumbigal Road, Bangalore, at Rs. 3,767 and the annual letting value was determined on that basis by the ITO. For the assessment year 1975-76, the value of the property for purposes of wealth-tax assessment was returned at Rs. 2,00,000. As the rental income shown for the assessment year 1971-72 was found to be too low when compared with the value of the property, which was admitted to be two lakhs of rupees in 1975-76 by the assessee, the assessing authority, by invoking his powers under s. 147(b), reopened the assessment for the assessment year 1971-72 and determined the annual letting value of the property at Rs 12,000 under s. 23(1) of the I.T. Act, 1961.

(2.) ON appeal by the assessee, the AAC held that the rent receipts as returned by the assessee and the value of the building were already on record at the time of the ITO making the original assessment and, as such, there was no fresh material which subsequently came into his possession so as to enables him to reopen the assessment under s. 147(b). In this view, the AAC set aside the reassessment.

(3.) IT is not possible for us to accept the above contention advanced by the Revenue. At the stage of the original assessment, the ITO had two options, namely, (1) to apply clause (a), or (2) to apply clause (b) of s. 23(1). When the assessee furnished the annual letting value based on the annual rents received, the ITO chose to accept that valuation without further probing as to the sum for which the property might reasonably be expected to let from year to year and whether such sum is higher then the annual rents received. Subsequently, the ITO felt that if he had applied clause (a), the Revenue will stand to be benefited, But that cannot be a ground for reopening the assessment under s. 147(b), which contemplates the reopening of an assessment on receipt of fresh information or fresh material on which the ITO should have reason to believe that the income chargeable to tax had escaped assessment as contemplated by Expln. 1 to s. 147. In this case, the Tribunal has specifically found, and it is not disputed before us, that excepting the fresh valuation of the property for the assessment year 1975-76 for wealth-tax assessment, there was no other fresh information or material from which the ITO could have entertained the belief that income had escaped assessment. Even assuming that the learned counsel is right in her submissions that there is no necessity for any fresh material or information and the ITO can inform himself from the materials already on record before him for purposes of reopening the assessment, in this case the reopening of the assessment under s. 147(b) cannot be sustained, for he has already accepted the annual letting value given by the assessee and completed the assessment on that basis. Now, the reopening of the assessment has been made for the specific reason that the annual rental value has not been correctly determined. IT will clearly amount to change of opinion on his part as to what is the annual letting value of the property. Even assuming what the learned counsel for the Revenue submits that the ITO has blindly accepted the annual letting value given by the assessee for the assessment year 1971-72 is correct, still he must be deemed to have applied his mind to s. 23 and determined the annual letting value for the purposes of assessment. If his present attempt to reassess the annual rental value of the property will amount only to a change of opinion, it is well estabished that the change of opinion cannot form the basis for reopening the assessment under s. 147(b). In this view, we are inclined to agree with the view taken by the Tribunal. The question is, therefore, answered in the affirmative and against the Revenue. The Revenue will pay the costs to the assessee. Counsel fee Rs. 500.