Reassessment beyond four years is barred absent failure to disclose material facts, notwithstanding subsequent Section 50C invocation.

The petitioner filed its return for Assessment Year 2014–15 declaring income of ₹22,84,090.

During scrutiny, the Assessing Officer issued a notice under Section 142(1) seeking details of an immovable property sold during the relevant financial year.

The petitioner disclosed the sale consideration as ₹24,50,000 and explained that the additional amount of ₹23,57,605 reflected in the stamp-duty/DLC valuation arose from the change in the company’s name and was not consideration received on sale.

Supporting material, including the Sub-Registrar’s communication, was furnished.

The assessment was completed under Section 143(3) at the returned income on 30.12.2016.

On 26.03.2021, beyond four years from the end of the relevant assessment year, the Assessing Officer issued a notice under Section 148, alleging that the DLC value of ₹48,65,652 ought to have been treated as sale consideration under Section 50C, resulting in escapement of income of ₹24,15,652.

The petitioner’s objections were rejected on 01.09.2021, leading to the writ petition.

1. Whether the reassessment notice issued under Section 148 beyond four years from the end of Assessment Year 2014–15 was barred by the first proviso to Section 147 in the absence of any failure by the petitioner to disclose fully and truly all material facts necessary for assessment.

2. Whether the reassessment proceedings constituted an impermissible change of opinion based on the same transaction and material examined during the original scrutiny assessment.

3. Whether the Assessing Officer’s invocation of Section 50C, based on the difference between the declared sale consideration and the DLC value, could sustain the reopening of the completed assessment.

The Court applied Sections 147 and 148 of the Income-tax Act, 1961, particularly the first proviso to Section 147, under which an assessment completed under Section 143(3) cannot be reopened after four years from the end of the relevant assessment year unless the escapement of income resulted from the assessee’s failure to disclose fully and truly all material facts necessary for assessment.

Section 50C permits substitution of the stamp-duty valuation for the declared sale consideration in computing capital gains, but its applicability does not dispense with the limitation and jurisdictional requirements under Section 147.

The Court relied on the principle that reassessment cannot be initiated merely on a change of opinion or by reappraising material already available during the original assessment, as reiterated in Assistant Commissioner of Income Tax v. CEAT Ltd., CEAT Ltd. v. Assistant Commissioner of Income Tax, Saroj Chhabra v. Principal Commissioner of Income Tax, Rajasthan Marudhara Gramin Bank v. Union of India, and Shiv Lal Soni v. Union of India.

The Court found that the reassessment was initiated beyond four years from the end of Assessment Year 2014–15.

The property transaction, declared consideration, computation of capital gains, and explanation regarding the additional stamp-duty component had been specifically sought during the original scrutiny and fully disclosed by the petitioner along with supporting documents.

Therefore, the foundational facts were already before the Assessing Officer.

The reasons recorded merely asserted, without identifying any particular withheld fact, that the petitioner had failed to make full and true disclosure.

Whether the petitioner’s explanation was legally acceptable, or whether Section 50C applied, concerned the merits of the original assessment and could not retrospectively satisfy the mandatory jurisdictional condition for reopening after four years.

Since the proposed reassessment was based on reconsideration of the same transaction and material, it amounted to a change of opinion and was not legally sustainable.

The reassessment proceedings were consequently held to be barred by limitation and founded on an impermissible change of opinion.

The writ petition was allowed, and the notice dated 26.03.2021 under Section 148 and the consequential order dated 01.09.2021 rejecting the petitioner’s objections were quashed and set aside.