Mar 28, 2024

“Change of Opinion” – A Valid Safeguard in New-Reassessment Regime!!

This update is in continuation of our September, 2022 edition of What’s Up in Tax[1], analysing the availability of safeguard of “change of opinion” with the taxpayer(s) against the initiation of reassessment proceedings under the new reassessment regime inserted by way of the Finance Act, 2021. In this edition, we had concluded that in view of the decision of the Hon’ble High Court of Delhi in the case of Seema Gupta v. Income-tax Officer,[2] there was a sliver of hope that the historical safeguard of ‘change of opinion’ would be read into the amended provisions of Section 147/148 of the IT Act.

Subsequently, this position has been affirmed by the High Court of Bombay in the case of Siemens Financial Services (P.) Ltd. v. Deputy Commissioner of Income Tax,[3] wherein the High Court had the occasion to examine the applicability of such safeguard in the new reassessment regime. The High Court in this decision specifically rejected the plea of the Revenue that the defense of “change of opinion” as propounded by the Apex Court has been given a complete go-by in the new reassessment regime. The High Court opined that if the plea of the Revenue is accepted, it would result in empowering Income-tax Authorities with the arbitrary and unbridled power to initiate reassessment proceedings, which in effect would tantamount to review of their own decision which is impermissible in terms of settled judicial dictum. Further, the High Court of Karnataka[4] as well as Delhi[5] has also held that “change of opinion” being an in-built test to check the abuse of power by the Assessing Officer still holds water in the new reassessment regime.

Hence, in view of the above, it is clear that the safeguard of “change of opinion” is still a valid defence to check the abuse of power of reassessment under the new reassessment regime.

[1] .

[2] Seema Gupta v. Income-tax Officer [Order dated July 19, 2022 in W.P.(C) 10740/2022] (Delhi High Court).

[3] Siemens Financial Services (P.) Ltd. v. Deputy Commissioner of Income Tax, [2023] 457 ITR 647 (Bombay High Court); see also: Knight Riders Sports (P.) Ltd. v. Assistant Commissioner of Income Tax, [2023] 459 ITR 16 (Bombay High Court).

[4] Vasanthi Ramdas Pai v. Income-tax Officer [Order dated February 12, 2024 in WP No. 8797 of 2022] (Karnataka High Court).

[5] Basic Clothing (P.) Ltd. v. Income-tax Officer, [2023] 155 507 (Delhi High Court).




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