COMMNR. OF INCOME TAX, DELHI vs M/S. KELVINATOR OF INDIA LTD.

The Supreme Court analyzed the amendments to Section 147 of the Income Tax Act, 1961, particularly the changes made by the Direct Tax Laws (Amendment) Act, 1987, and the implications of these changes effective from 1st April 1989. The Court established that the power to re-open assessments under the amended Section 147 is broader, requiring only that the Assessing Officer has reason to believe that income has escaped assessment, thus eliminating the previous dual conditions. The Court emphasized the need for a structured interpretation of 'reason to believe' to prevent arbitrary exercise of power by the Assessing Officer.