Summary
Applying the reassessment provisions governing the disputed assessment, the Supreme Court upheld quashing of the Revenue’s reopening notice. Allocation of common expenses and the resulting section 10A deduction had already been examined in the original assessment. Reopening on the same facts because the officer now regarded the deduction as excessive was a mere change of opinion. The Court also cautioned that an earlier opinion must actually be established, expressly or by necessary implication, rather than assumed from a cryptic assessment.
Issues
- Whether reopening revisited an issue already considered in the original assessment.
- How a court should determine whether an earlier opinion existed on the proposed reassessment issue.
Held
- Under the section 147 regime considered, reassessment was distinct from review. Mere reinterpretation on the same known facts could not justify reopening; the change-of-opinion test checked abuse of that power. (¶¶ 8, 9, 10, 11)
- Before striking down reopening as a change of opinion, the court must verify that the earlier assessment expressed an opinion on the issue expressly or by necessary implication. A non-speaking or perfunctory order did not necessarily establish such an opinion on every possible aspect. (¶ 12)
- The original show-cause notice specifically questioned separate accounts and proportional allocation of common expenses between software and human-resource activities, even suggesting allocation. The deduction issue invoked for reopening had therefore actually been considered; the later view that the allowance was excessive merely revisited the same facts. (¶¶ 2(c), 13)
- The ruling concerned validity of reopening on this record, rather than a fresh determination of the correct section 10A deduction or the effect of later amendments to the reassessment provisions. (¶¶ 4, 8, 13, 14)
Result
Revenue’s appeal dismissed without costs; High Court’s quashing of the reopening notice and order sustained.