Reopening of assessment is not permissible when the issues have already been adjudicated in revisional proceedings under Section 263 and no fresh material exists. Reassessment based on a change of opinion is not valid. The condition of failure to disclose material facts must be clearly established for reassessment beyond four years. 

The Court held that the original assessment order dated 31 December 2015, sought to be reopened, no longer existed after being set aside under Section 263. Reopening on identical issues already addressed in Section 263 proceedings was not permissible. No failure on the petitioner’s part to disclose material facts was established.The Court quashed the notice under Section 148, terming the reassessment proceedings invalid and bad in law.

Major Acts:

• Income Tax Act, 1961 (ITA) – Section 143(3), Section 147, Section 148, Section 151, Section 263

Subjects:

Reassessment Proceedings – Section 148 Notice – Section 263 Proceedings – Change of Opinion – Failure to Disclose – Material Facts – Bad in Law – Quashing of Notice – Revisional Proceedings

Nature of Litigation: Writ petitions were filed by the petitioner challenging the notice issued under Section 148 of the Income Tax Act, 1961 for reassessment of income for the assessment years 2013–14 and 2014–15.

Relief Sought: The petitioner sought the quashing of the notice under Section 148 on the ground that it was based on issues already addressed under Section 263 proceedings and lacked fresh material.

Reason for Filing: The petitioner contended that the reopening of assessment was barred by law as the issues raised had already been adjudicated in earlier revisional proceedings and there was no failure to disclose material facts.

Prior Decisions:

• Original assessment order under Section 143(3) passed on 31 December 2015.

• Order under Section 263 passed by the Commissioner of Income Tax on 16 March 2018, setting aside the assessment order and directing fresh inquiry.

• Fresh assessment order passed on 14 December 2018 under Section 143(3) read with Section 263.

Issues:

• Whether the reopening of assessment under Section 148 was valid when the same issues were already examined under Section 263.

• Whether there was any failure on the petitioner’s part to fully and truly disclose all material facts.

• Whether the approval obtained for reopening was legally justified.

Submissions:

(a) Petitioner’s Arguments:

• Reopening was based on the same grounds covered in Section 263 proceedings, amounting to a change of opinion.

• No fresh material existed to justify the reassessment.

• Proceedings were barred by the third proviso to Section 147.

(b) Respondent’s Arguments:

• Justified reopening on the grounds of oversight and inadvertence by the Assessing Officer in the original assessment.