(2007) 291 ITR 500 (SC)
Summary processing of return — intimation; income escaping assessment
No. An intimation on summary processing is not an assessment and involves no formation of opinion, so there is no opinion capable of being changed. Reopening remains subject to the reason to believe requirement.
Where a return has only been processed summarily and an intimation issued, does the change of opinion bar apply to prevent reopening?
The assessee's return was processed summarily and an intimation was issued accepting the return as filed, without any scrutiny. The Assessing Officer subsequently issued a notice reopening the matter in respect of a claim made in that return. The assessee resisted, contending that since the return had been accepted, reopening amounted to a change of opinion which Kelvinator forbids.
The High Court decided in the assessee's favour, treating the intimation as equivalent to an assessment. The Revenue appealed to the Supreme Court.
For the assessee
An intimation accepting the return determines the tax payable and is appealable. It should be treated as an assessment, with the consequence that reopening to re-examine the same claim is a change of opinion and impermissible.
For the Revenue
Summary processing is a mechanical exercise involving arithmetical checks and prima facie adjustments. No officer applies his mind to the merits of any claim, so no opinion is formed. Treating the intimation as an assessment would confer immunity on returns that were never examined at all.
The Court drew a sharp distinction between an intimation on summary processing and an assessment made after scrutiny. Summary processing, it held, is essentially a mechanical exercise: the return is checked for arithmetical accuracy and prima facie adjustments, and an intimation follows. No enquiry is made into the correctness of any claim, no material is examined, and the officer forms no opinion on the merits. An intimation is therefore not an assessment, and the expressions are not interchangeable even though an intimation is deemed to be a notice of demand for recovery purposes. Since no opinion was formed, there is no opinion capable of being changed, and the change of opinion bar has no application. The Court was careful to add that this does not leave the power at large: reopening in such a case still requires a reason to believe that income has escaped assessment, founded on some material, and the officer cannot issue a notice on mere suspicion or to make a fishing enquiry. The safeguard is the reason to believe requirement, not the change of opinion doctrine.
Summary processing is Section 277 and the reassessment trigger Section 279 under the IT Act 2025. The distinction remains important because most returns are processed summarily rather than scrutinised, so the change of opinion defence is unavailable in the majority of reopenings — the taxpayer must instead attack the sufficiency of the material, which the current inquiry procedure now requires to be disclosed.