Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live; substituted by the Finance Act, 2021 (w.e.f. 1 April 2021). The charging/jurisdictional provision for reassessment: if any income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may, subject to sections 148 to 153, assess or reassess such income (and any other income that comes to notice subsequently in the course of the proceeding), and recompute loss/depreciation/allowance.
FA 2026: The Finance Act, 2026 refines the time-limit for reassessment that gives effect to a court/appellate order (three months from the end of the quarter of receipt of the order) — see sections 148/149/150/153.
Regime change: The Finance Act, 2021 replaced the old 'reason to believe' scheme with an 'information'-driven scheme operated through the new section 148A procedure; the Finance Act, 2024 (w.e.f. 1 September 2024) and the Finance Act, 2025 further restructured the machinery.
A. SECTION COMMENTARY
Section 147 is the gateway to reassessment. Post the Finance Act, 2021, it is shorn of the old phrase 'reason to believe' that income has escaped assessment; the threshold is now whether 'income chargeable to tax has escaped assessment', and the jurisdiction is engaged only where the AO has 'information' (as defined in section 148) which suggests escapement and the pre-issue procedure of section 148A has been followed. Once a valid reassessment is on foot, the AO may assess the escaped income and 'also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings'.
Although the statutory language has changed, a substantial body of pre-2021 Supreme Court jurisprudence remains instructive on the underlying discipline: reassessment cannot be founded on a mere change of opinion; there must be tangible material with a live link to the formation of belief/possession of information; full and true disclosure of primary facts protects the assessee (subject to the new scheme's own conditions); and the reassessment is confined to bringing escaped income to tax — it is not an occasion to re-do the entire assessment in the assessee's favour. The new regime channels these safeguards through the 'information' requirement and the section 148A procedure rather than through 'reason to believe', but the core anti-arbitrariness principles survive.
B. STATUTORY POSITION (verbatim text)
Reproduced from the local Act (base text to the Finance Act, 2025), as substituted by the Finance Act, 2021 and amended thereafter.
147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year
Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.
C. AUTHORITIES
The authorities are grouped into the enduring foundational principles, the scope of reassessment, and the post-2021 shift.
1. Foundational principles (pre-2021, still instructive)
CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC)
Court: Supreme Court of India (judgment affirming the Full Bench of the Delhi High Court).
Held: The Assessing Officer has no power to review; he has only the power to reassess, and that power can be exercised only where there is 'tangible material' to come to the conclusion that there is escapement of income — a 'mere change of opinion' cannot be the basis for reopening. The concept of 'change of opinion' is an in-built test to check abuse of the reassessment power.
Significance: The bedrock authority against reopening on a change of opinion and for the requirement of tangible material. Under the post-2021 regime, the analogue is that valid 'information' (not a re-look at the same record) is the jurisdictional pre-condition; the anti-review principle continues.
Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC)
Court: Supreme Court of India (Constitution Bench).
Held: The assessee's duty is to make a full and true disclosure of all primary/material facts; it is not his duty to draw the legal inferences from those facts — that is for the Assessing Officer. Where primary facts have been fully and truly disclosed, the AO cannot reopen merely because he later forms a different inference.
Significance: The classic statement of the disclosure obligation and its limits; it continues to inform the protection available where there has been full and true disclosure, particularly for reopening beyond the normal period.
ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC)
Court: Supreme Court of India.
Held: The reasons for the formation of the belief must have a rational connection or relevant bearing on the formation of the belief — a 'live link or close nexus' between the material and the belief that income has escaped assessment. The belief must be that of an honest and reasonable person based on reasonable grounds, not on suspicion, gossip or rumour.
Significance: The 'live link / rational connection' test; carried into the new regime as the requirement that the 'information' genuinely 'suggests' escapement.
Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC)
Held: Reopening is valid where, after the original assessment, the AO comes into possession of fresh, specific and reliable information demonstrating that the earlier assessment was based on untrue or incomplete facts; acquisition of fresh information justifies reassessment even on facts earlier considered, provided the information is specific and not vague.
Significance: Authority that fresh, specific information legitimises reopening; closely aligned with the post-2021 'information' threshold.
2. Scope of reassessment — escaped income only
CIT v. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC)
Held: Reassessment proceedings are for the benefit of the revenue and are confined to bringing to tax the income that has escaped assessment; the assessee cannot use them to re-open or re-agitate concluded matters or to claim a recomputation of items already finally decided in the original assessment. The earlier assessment, except to the extent of the escaped income, attains finality.
Significance: Defines the limited compass of reassessment; an assessee cannot convert a reassessment into a fresh round of the whole assessment. Read with section 152(2).
A.L.A. Firm v. CIT (1991) 189 ITR 285 (SC)
Held: Where, after completing the assessment, the AO finds — even from material already on the record but whose significance was not noticed — that income has escaped assessment, reassessment may be valid; the line between a permissible reassessment and an impermissible review turns on whether there is escapement objectively shown, not merely a second look at the same inference.
Significance: Illustrates the boundary between reassessment and review; relevant to the 'information' analysis under the new regime.
3. The post-2021 shift
From 'reason to believe' to 'information' — the new scheme
Position: Under section 147 as substituted by the Finance Act, 2021, the jurisdiction depends on the AO having 'information which suggests that income chargeable to tax has escaped assessment' (defined in section 148, Explanation), and on compliance with the section 148A procedure. The 'change of opinion' and 'tangible material' jurisprudence survives in substance as a guard against reopening on the same record, but is now mediated through the statutory 'information' requirement.
Cross-reference: See sections 148 (notice; Ashish Agarwal), 148A (pre-issue procedure), 149 (time-limit; Rajeev Bansal) and 151A (faceless; Hexaware) for the operative machinery and the leading post-2021 decisions.
4. 'Change of opinion' — the Kelvinator line elaborated
CIT v. Usha International Ltd. (2012) 348 ITR 485 (Delhi) [Full Bench]
Court: Delhi High Court, Full Bench.
Held: 'Change of opinion' postulates the formation of an opinion and then a change of it; the Assessing Officer must have formed an opinion in the original assessment and now propose a different view. Reassessment is barred as a change of opinion where the issue was raised and decided, or where it was raised and the AO, on the material, did not make any addition (a view being implicit). But there is no 'change of opinion' — and reopening is permissible — where the AO did not examine the issue at all and formed no opinion; the presumption of application of mind (section 114(e), Evidence Act) does not extend to issues never examined.
Significance: The leading Full Bench exposition of when reopening is/ is not a change of opinion; refines Kelvinator by distinguishing issues examined (opinion formed) from issues never looked at (no opinion, reopening open).
Gemini Leather Stores v. ITO (1975) 100 ITR 1 (SC)
Held: Where the Assessing Officer had all the primary facts before him at the original assessment and consciously or otherwise did not make an enquiry/addition, he cannot later reopen on the ground that he failed to apply his mind — that is a case of 'oversight' or non-application, not of fresh material; reopening on such a basis is impermissible.
Significance: The 'conscious possession of facts' bar on reopening; an AO cannot reopen to remedy his own earlier failure to draw inferences from facts already on record (contrast A.L.A. Firm where significance was genuinely not noticed).
ITO v. Nawab Mir Barkat Ali Khan Bahadur / Indian & Eastern Newspaper Society v. CIT (1979) 119 ITR 996 (SC)
Held: An error discovered on a reconsideration of the same material (and nothing more) does not give the Assessing Officer the power to reopen; an opinion of an internal audit party on a point of law cannot, by itself, constitute 'information' for reopening — the AO must himself form the requisite belief on a legal basis.
Significance: Classic authority that reappraisal of the same material, or a mere audit opinion on law, is not a valid foundation for reassessment. (Cited as decided under the pre-2021 scheme; the 'information' concept is now statutorily defined, but the anti-reappraisal principle endures.)
5. Scope of reassessment — Explanation 3 and the 'and also' rule
Held: On the words 'and also any other income' in section 147 (and Explanation 3), if the Assessing Officer, after issuing the section 148 notice, does not assess the very income for which the reasons were recorded (i.e. accepts that it did not escape assessment), he cannot proceed to assess some other income that came to notice during the proceeding; the jurisdiction to tax 'other income' is contingent on an addition being sustainable on the recorded-reason income.
Significance: The leading authority confining the reassessment's reach: the recorded-reason income is the jurisdictional anchor; 'other income' can be added only if the anchor survives.
Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Delhi)
Held: Though Explanation 3 permits assessment of escaped income not mentioned in the recorded reasons, it is essential that the income for which reasons were recorded is in fact assessed; if the AO accepts that the recorded-reason income did not escape, he had no 'reason to believe' and the notice itself is invalid, depriving him of jurisdiction to assess any other income — for a new issue he must issue a fresh section 148 notice.
Significance: Squarely aligned with Jet Airways; widely followed. Reinforces that the recorded reasons define and limit the jurisdiction.
New Delhi Television Ltd. v. Dy. CIT (2020) 424 ITR 607 (SC)
Held: The duty of the assessee is to disclose fully and truly all material 'primary' facts; it is not obliged to disclose 'secondary' facts or to instruct the AO on the inferences to be drawn. Where there was no failure to disclose primary facts, reopening beyond the normal period was without jurisdiction. The Court restated the principles governing reopening (a detailed original assessment does not bar reopening; but the jurisdictional pre-conditions, including true and full disclosure for the extended period, must be satisfied).
Significance: The modern Supreme Court restatement of the primary/secondary facts distinction and the limits on extended-period reopening; directly relevant to the proviso protecting fully-disclosing assessees.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the local Act (base text amended up to the Finance Act, 2025), with the publisher footnote apparatus and amendment-marker brackets removed; Finance Act, 2026 changes are flagged in the commentary. Citations are stated as reported; Tribunal / AAR / High Court orders are flagged. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.
CHAPTER XIV — PROCEDURE FOR ASSESSMENT
Section 147 — Income Escaping Assessment
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Live; substituted by the Finance Act, 2021 (w.e.f. 1 April 2021). The charging/jurisdictional provision for reassessment: if any income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may, subject to sections 148 to 153, assess or reassess such income (and any other income that comes to notice subsequently in the course of the proceeding), and recompute loss/depreciation/allowance.
FA 2026: The Finance Act, 2026 refines the time-limit for reassessment that gives effect to a court/appellate order (three months from the end of the quarter of receipt of the order) — see sections 148/149/150/153.
Regime change: The Finance Act, 2021 replaced the old 'reason to believe' scheme with an 'information'-driven scheme operated through the new section 148A procedure; the Finance Act, 2024 (w.e.f. 1 September 2024) and the Finance Act, 2025 further restructured the machinery.
A. SECTION COMMENTARY
Section 147 is the gateway to reassessment. Post the Finance Act, 2021, it is shorn of the old phrase 'reason to believe' that income has escaped assessment; the threshold is now whether 'income chargeable to tax has escaped assessment', and the jurisdiction is engaged only where the AO has 'information' (as defined in section 148) which suggests escapement and the pre-issue procedure of section 148A has been followed. Once a valid reassessment is on foot, the AO may assess the escaped income and 'also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings'.
Although the statutory language has changed, a substantial body of pre-2021 Supreme Court jurisprudence remains instructive on the underlying discipline: reassessment cannot be founded on a mere change of opinion; there must be tangible material with a live link to the formation of belief/possession of information; full and true disclosure of primary facts protects the assessee (subject to the new scheme's own conditions); and the reassessment is confined to bringing escaped income to tax — it is not an occasion to re-do the entire assessment in the assessee's favour. The new regime channels these safeguards through the 'information' requirement and the section 148A procedure rather than through 'reason to believe', but the core anti-arbitrariness principles survive.
B. STATUTORY POSITION (verbatim text)
Reproduced from the local Act (base text to the Finance Act, 2025), as substituted by the Finance Act, 2021 and amended thereafter.
147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year
Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.
C. AUTHORITIES
The authorities are grouped into the enduring foundational principles, the scope of reassessment, and the post-2021 shift.
1. Foundational principles (pre-2021, still instructive)
CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC)
Court: Supreme Court of India (judgment affirming the Full Bench of the Delhi High Court).
Held: The Assessing Officer has no power to review; he has only the power to reassess, and that power can be exercised only where there is 'tangible material' to come to the conclusion that there is escapement of income — a 'mere change of opinion' cannot be the basis for reopening. The concept of 'change of opinion' is an in-built test to check abuse of the reassessment power.
Significance: The bedrock authority against reopening on a change of opinion and for the requirement of tangible material. Under the post-2021 regime, the analogue is that valid 'information' (not a re-look at the same record) is the jurisdictional pre-condition; the anti-review principle continues.
Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC)
Court: Supreme Court of India (Constitution Bench).
Held: The assessee's duty is to make a full and true disclosure of all primary/material facts; it is not his duty to draw the legal inferences from those facts — that is for the Assessing Officer. Where primary facts have been fully and truly disclosed, the AO cannot reopen merely because he later forms a different inference.
Significance: The classic statement of the disclosure obligation and its limits; it continues to inform the protection available where there has been full and true disclosure, particularly for reopening beyond the normal period.
ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC)
Court: Supreme Court of India.
Held: The reasons for the formation of the belief must have a rational connection or relevant bearing on the formation of the belief — a 'live link or close nexus' between the material and the belief that income has escaped assessment. The belief must be that of an honest and reasonable person based on reasonable grounds, not on suspicion, gossip or rumour.
Significance: The 'live link / rational connection' test; carried into the new regime as the requirement that the 'information' genuinely 'suggests' escapement.
Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC)
Held: Reopening is valid where, after the original assessment, the AO comes into possession of fresh, specific and reliable information demonstrating that the earlier assessment was based on untrue or incomplete facts; acquisition of fresh information justifies reassessment even on facts earlier considered, provided the information is specific and not vague.
Significance: Authority that fresh, specific information legitimises reopening; closely aligned with the post-2021 'information' threshold.
2. Scope of reassessment — escaped income only
CIT v. Sun Engineering Works (P) Ltd. (1992) 198 ITR 297 (SC)
Held: Reassessment proceedings are for the benefit of the revenue and are confined to bringing to tax the income that has escaped assessment; the assessee cannot use them to re-open or re-agitate concluded matters or to claim a recomputation of items already finally decided in the original assessment. The earlier assessment, except to the extent of the escaped income, attains finality.
Significance: Defines the limited compass of reassessment; an assessee cannot convert a reassessment into a fresh round of the whole assessment. Read with section 152(2).
A.L.A. Firm v. CIT (1991) 189 ITR 285 (SC)
Held: Where, after completing the assessment, the AO finds — even from material already on the record but whose significance was not noticed — that income has escaped assessment, reassessment may be valid; the line between a permissible reassessment and an impermissible review turns on whether there is escapement objectively shown, not merely a second look at the same inference.
Significance: Illustrates the boundary between reassessment and review; relevant to the 'information' analysis under the new regime.
3. The post-2021 shift
From 'reason to believe' to 'information' — the new scheme
Position: Under section 147 as substituted by the Finance Act, 2021, the jurisdiction depends on the AO having 'information which suggests that income chargeable to tax has escaped assessment' (defined in section 148, Explanation), and on compliance with the section 148A procedure. The 'change of opinion' and 'tangible material' jurisprudence survives in substance as a guard against reopening on the same record, but is now mediated through the statutory 'information' requirement.
Cross-reference: See sections 148 (notice; Ashish Agarwal), 148A (pre-issue procedure), 149 (time-limit; Rajeev Bansal) and 151A (faceless; Hexaware) for the operative machinery and the leading post-2021 decisions.
4. 'Change of opinion' — the Kelvinator line elaborated
CIT v. Usha International Ltd. (2012) 348 ITR 485 (Delhi) [Full Bench]
Court: Delhi High Court, Full Bench.
Held: 'Change of opinion' postulates the formation of an opinion and then a change of it; the Assessing Officer must have formed an opinion in the original assessment and now propose a different view. Reassessment is barred as a change of opinion where the issue was raised and decided, or where it was raised and the AO, on the material, did not make any addition (a view being implicit). But there is no 'change of opinion' — and reopening is permissible — where the AO did not examine the issue at all and formed no opinion; the presumption of application of mind (section 114(e), Evidence Act) does not extend to issues never examined.
Significance: The leading Full Bench exposition of when reopening is/ is not a change of opinion; refines Kelvinator by distinguishing issues examined (opinion formed) from issues never looked at (no opinion, reopening open).
Gemini Leather Stores v. ITO (1975) 100 ITR 1 (SC)
Held: Where the Assessing Officer had all the primary facts before him at the original assessment and consciously or otherwise did not make an enquiry/addition, he cannot later reopen on the ground that he failed to apply his mind — that is a case of 'oversight' or non-application, not of fresh material; reopening on such a basis is impermissible.
Significance: The 'conscious possession of facts' bar on reopening; an AO cannot reopen to remedy his own earlier failure to draw inferences from facts already on record (contrast A.L.A. Firm where significance was genuinely not noticed).
ITO v. Nawab Mir Barkat Ali Khan Bahadur / Indian & Eastern Newspaper Society v. CIT (1979) 119 ITR 996 (SC)
Held: An error discovered on a reconsideration of the same material (and nothing more) does not give the Assessing Officer the power to reopen; an opinion of an internal audit party on a point of law cannot, by itself, constitute 'information' for reopening — the AO must himself form the requisite belief on a legal basis.
Significance: Classic authority that reappraisal of the same material, or a mere audit opinion on law, is not a valid foundation for reassessment. (Cited as decided under the pre-2021 scheme; the 'information' concept is now statutorily defined, but the anti-reappraisal principle endures.)
5. Scope of reassessment — Explanation 3 and the 'and also' rule
CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bombay)
Held: On the words 'and also any other income' in section 147 (and Explanation 3), if the Assessing Officer, after issuing the section 148 notice, does not assess the very income for which the reasons were recorded (i.e. accepts that it did not escape assessment), he cannot proceed to assess some other income that came to notice during the proceeding; the jurisdiction to tax 'other income' is contingent on an addition being sustainable on the recorded-reason income.
Significance: The leading authority confining the reassessment's reach: the recorded-reason income is the jurisdictional anchor; 'other income' can be added only if the anchor survives.
Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Delhi)
Held: Though Explanation 3 permits assessment of escaped income not mentioned in the recorded reasons, it is essential that the income for which reasons were recorded is in fact assessed; if the AO accepts that the recorded-reason income did not escape, he had no 'reason to believe' and the notice itself is invalid, depriving him of jurisdiction to assess any other income — for a new issue he must issue a fresh section 148 notice.
Significance: Squarely aligned with Jet Airways; widely followed. Reinforces that the recorded reasons define and limit the jurisdiction.
New Delhi Television Ltd. v. Dy. CIT (2020) 424 ITR 607 (SC)
Held: The duty of the assessee is to disclose fully and truly all material 'primary' facts; it is not obliged to disclose 'secondary' facts or to instruct the AO on the inferences to be drawn. Where there was no failure to disclose primary facts, reopening beyond the normal period was without jurisdiction. The Court restated the principles governing reopening (a detailed original assessment does not bar reopening; but the jurisdictional pre-conditions, including true and full disclosure for the extended period, must be satisfied).
Significance: The modern Supreme Court restatement of the primary/secondary facts distinction and the limits on extended-period reopening; directly relevant to the proviso protecting fully-disclosing assessees.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text reproduced from the local Act (base text amended up to the Finance Act, 2025), with the publisher footnote apparatus and amendment-marker brackets removed; Finance Act, 2026 changes are flagged in the commentary. Citations are stated as reported; Tribunal / AAR / High Court orders are flagged. Where a section has not been judicially construed, that is stated candidly and the nearest governing authority is given. This material is for professional reference and is not legal advice.