By TIOL News Service

NEW DELHI, DEC 07, 2016: THE ISSUE IS - Whether information received by AO after completion of assessment which is out of the existing record, is mandated for exercising power u/s 147 r/w/s 148. YES IS THE VERDICT.

Facts of the case:

The assessee, power generating private limited company had got its original assessment completed u/s 143. During assessment, the claims for provision of bad and doubtful debts have been made. The AO reopened the assessment. The tribunal however found the reopening unwanted.

On appeal, the HC held that,

++ The expression "reason to believe", was the subject matter of extensive discussion by full bench of this court reported as Commissioner of Income Tax vs. Kelvinator of India Limited. The full bench laid down by reasoning prepositions as to what can constitute valid "reason to believe". The Supreme Court considered the correctness of that judgment. The court held that the information received by the assessing officer after completion of assessment alone is "the sound foundation for exercising the power under Section 147 read with Section 148". In these circumstances, the arguments of the revenue that the previous contrary ruling in ALA Firm's case continues to govern the field cannot be countenanced.

++ The judgment in ALA Firm's case concerned an assessment for the year 1961-62. Section 147 was amended in 1989. Consequently, the declaration of law in ALA Firm's case was of the pre-existing law. The law as exists was dealt with in Kelvinator of India Limited's case (supra) which has pronounced the correct position decisively.

(See 2016-TIOL-2945-HC-DEL-IT)