The High Court quashed a reassessment notice issued to a bank for the Assessment Year 2015-16, holding that the notice was based solely on a change of opinion without any new tangible material or failure on the part of the assessee to disclose material facts. The court emphasized that under Section 147 of the Income Tax Act, reassessment after four years is permissible only if there is a failure to disclose fully and truly all material facts necessary for the original assessment. In this case, the original assessment had already scrutinized the relevant facts, and the reassessment was based on those same disclosed facts. The court deemed the notice invalid and arbitrary, quashing the proceedings initiated under it.

1. Background:

• The petitioner, a bank, challenged a reassessment notice issued for AY 2015-16 under Section 147/148 of the Income Tax Act, 1961.
• The original assessment was conducted in December 2017 after scrutiny, and the income was revised from ₹95.14 crores to ₹105.14 crores.
• The reassessment notice was issued five years after the end of the relevant AY, citing income that had allegedly escaped assessment due to the petitioner’s failure to disclose fully and truly all material facts.

2. Reasons for Reassessment:

• The reassessment was initiated based on four main reasons:
  1. Leasehold improvement costs treated as revenue expenditure instead of capital.
  2. Non-disallowance of donations claimed under Section 80G.
  3. Amortization of investments incorrectly claimed as revenue expenditure.
  4. Failure to disallow interest under Section 201(1A).

3. Petitioner’s Contentions:

• The petitioner argued that all relevant facts were fully disclosed during the original assessment.
• The reasons for reassessment relied on the same facts that had already been scrutinized, indicating a mere change of opinion without any new tangible material.
• As the reassessment notice was issued after four years, the Revenue failed to establish any failure on the petitioner’s part to disclose material facts.

4. Revenue’s Defense:

• The Revenue contended that the reassessment was based on an internal audit memo that highlighted gaps in the original assessment.
• It was argued that the reassessment was justified based on the reasons provided.

5. Court’s Analysis and Findings:

• The court examined the original assessment record, notices issued, and responses provided by the petitioner.
• It found that all the material facts had been fully and truly disclosed by the petitioner during the original assessment.
• The reassessment was merely based on a change of opinion by the Revenue without any new evidence or material.
• The court highlighted that, as per Section 147, reassessment after four years requires a clear failure to disclose material facts, which was absent in this case.

6. Conclusion:

• The court concluded that the reassessment notice was without jurisdiction and quashed the notice along with all consequential actions by the Revenue.
• The decision reinforced that mere changes in opinion cannot justify reassessment after the statutory four-year period, especially when the facts were fully disclosed during the original assessment.