Reopening assessment beyond four years based on previously scrutinized material constitutes impermissible change of opinion.

The petitioner, formerly a manufacturer of wire harnesses, ceased operations in 2009 and subsequently sold its assets (land, building, plant, and machinery) for Rs. 7.30 crores

For Assessment Year (A.Y.) 2012-13, the petitioner filed a revised return following a stamp duty valuation enhancement, declaring a total income of Rs. 3,73,60,400

The Assessing Officer (AO) conducted a scrutiny assessment under Section 143(3) of the Income Tax Act, 1961, specifically querying the computation of capital gains. After reviewing the petitioner's detailed explanations and documents, the AO accepted the return and framed the assessment on 08.01.2015

On 28.03.2019, more than four years later, the respondent issued a notice under Section 148 to reopen the assessment, alleging that the petitioner wrongly claimed a set-off of capital losses from the sale of plant, machinery, and furniture against capital gains from land

1. Whether the reopening of assessment under Section 147/148 of the Act after four years was based on a "change of opinion" rather than new tangible material

2. Whether the petitioner failed to "disclose fully and truly all material facts" necessary for the original assessment

The court applied Section 147 and 148 of the Income Tax Act, 1961, regarding the reassessment of escaped income

It relied on the settled legal precedent that where an assessment is sought to be reopened after the expiry of four years from the end of the relevant assessment year, the revenue must establish that income escaped assessment due to the failure of the assessee to disclose fully and truly all material facts

the court applied the doctrine against "change of opinion," which prohibits reopening an assessment if the Assessing Officer had already formed a view on the same material during the original scrutiny proceedings under Section 143(3)

The court found that the issue of capital gains and the resulting set-offs had been specifically examined during the original scrutiny assessment. The petitioner had provided the balance sheet, cash flow statements, sale deeds, and valuation orders, which the AO considered before passing the Section 143(3) order in 2015

The court noted that the respondent failed to produce any "new or fresh tangible material" unearthed post-assessment. Since the AO had already deliberated upon and accepted the transparency of the fixed assets and capital gain computations during the initial proceedings, the impugned notice was deemed a retrospective attempt to re-evaluate the same facts.

Consequently, the court determined that the move to reopen the case was a mere "change of opinion," which is legally impermissible under Section 147 after the four-year threshold when full disclosure has been made

It held that the reopening of the assessment was unsustainable as it was based on a change of opinion without any failure on the part of the assessee to disclose material facts

The court concluded that once a specific issue is scrutinized and decided in an assessment under Section 143(3), it cannot be reopened in the absence of new tangible material