In [2025] 181 taxmann.com 674 (Madras) [11-12-2025], the Assessing Authority contended that excess deduction under section 80HHC had been granted during the original scrutiny assessment. It therefore sought to reopen the assessment by invoking Explanation 2 to section 147, alleging that it was a case where income chargeable to tax had escaped assessment by a deeming fiction under the following clause:
(c)(iii) such income has been made the subject of excessive relief under this Act.
In this case, the assessment had been completed under section 143(3) after allowing deduction under section 80HHC. When the Assessing Authority subsequently attempted to reopen the assessment, the assessee challenged the action on the ground that it amounted to a mere change of opinion, though this contention did not succeed.
The High Court examined the assessment records and found that there was no correspondence or discussion on the issue of deduction under section 80HHC. According to the Court, this established that the assessment order was wholly non-speaking and that the Assessing Authority had completely lost sight of the claim for deduction under section 80HHC. On this basis, the Court formed the view that there was no formation of opinion or application of mind in the original assessment.
Section 143(3) requires the Assessing Officer to pass an order in writing after considering the evidence and material gathered and to make an assessment of total income, including deductions, and to determine the final amount payable or refundable. There is, however, no whisper or requirement under the section to pass a speaking order or to follow any prescribed manner of presentation of the total income. Further, Explanation 2 to section 147 does not contain any deeming provision that comes into operation merely because an order is non-speaking in form or substance. In such a situation, reopening an assessment solely on the ground that the original order is wholly non-speaking would be detrimental to the scheme of assessment /reassessment unless the law expressly provides otherwise in clear terms.
Accordingly, conferring power to reopen an assessment in the absence of any corresponding provision under section 143(3) to pass a speaking order may amount to an excessive exercise of power.