Reassessment is impermissible on material already examined during scrutiny where the original assessment proceedings were allowed to lapse.

The petitioner filed its return of income for AY 2021-22, which was initially processed under Section 143(1).

The case was later selected for complete scrutiny, leading to a show-cause notice and a Draft Assessment Order dated 28.12.2023 under Section 144C(1), proposing variations regarding Transfer Pricing (TP) adjustments and additional depreciation.

The petitioner filed objections but opted to appeal before the CIT(A) rather than the DRP.

However, the Assessing Officer (AO) failed to pass a final assessment order within the statutory one-month limitation period prescribed under Section 144C(4).

Subsequently, the AO issued a notice under Section 148 on 16.06.2025 to reopen the assessment based on the exact same grounds addressed in the lapsed scrutiny proceedings.

Whether the Revenue can initiate reassessment proceedings under Section 148 on the same material and issues that were subject to a scrutiny assessment which lapsed due to the AO's failure to pass a final order within the limitation period?

The court primarily applied Section 144C(4) of the Income Tax Act, 1961, which mandates that the AO "shall" pass a final assessment order within one month of the end of the month in which the period for filing objections expires.

It relied on the principle that reassessment cannot be based on a "change of opinion" where the material was already examined during original scrutiny.

The court further applied precedents from the Delhi High Court in *CIT v. Ved & Co.* (prohibiting reassessment while a valid return/proceeding is pending or lapsed due to AO's own inaction).

The court further applied precedents from *KLM Royal Dutch Airlines v. Assistant Director of Income-tax* (holding that Section 147 cannot be used to enlarge the time available for framing an original assessment).

The court reasoned that since the issues of TP adjustment and additional depreciation were already scrutinized and culminated in a Draft Assessment Order, the AO had all relevant materials at his disposal.

The failure to pass a final order under Section 144C(13) read with Section 143(3) within the statutory limitation was "entirely [the AO's] own doing".

The court determined that once the limitation for the original assessment expires, it is presumed the return was accepted as correct.

Therefore, the Revenue cannot use Section 148 to "camouflage its remissness" or indirectly bypass the statutory time limits for finalizing a scrutiny assessment.

Reopening the assessment on identical material without any "fresh tangible material" constitutes an impermissible change of opinion and an attempt to take advantage of the Revenue's own wrong.

The High Court allowed the writ petition and quashed the impugned notice dated 16.06.2025 and the order dated 14.06.2025 passed under Section 148A(3).