Reopening and Review: Debate and Controversy

Abstract

This paper deals with the issue of reopening of a closed income tax assessment under Section 147 of the Income Tax Act 1961. The introduction elucidates the clash between reopening proceedings and the law of limitation. It is followed by a discussion of case laws involving reopening of claims. The next section delves into the judiciary’s interpretation of reason to believe, application of mind, formation of opinion, fault theory, and review powers of the court. Major case laws are analyzed to understand the thresholds for justifying re-assessment of completed income tax matters. Further, the jurisprudence on materiality of information unearthed subsequently, commissioner’s powers to review and time restrictions are exposited. A brief overview of the nature and practice of block assessments is also provided. The conclusion draws inferences from the case law discussion and highlights that the judicial trends and legislative approach favor the protection of the rights of the assessee.