Reopening of assessment based on borrowed satisfaction and change of opinion without fresh tangible material is impermissible.

The petitioner filed its original income tax return for Assessment Year 2012-13, which was scrutinized and finalized under Section 143(3) of the Income Tax Act

Subsequently, the respondent issued a notice under Section 148 on March 28, 2019, to reopen the assessment based on an investigation report suggesting that a business partner, M/s. Manibhadra Textile Company, lacked creditworthiness and had withdrawn deposited funds in cash

The petitioner objected, asserting that the transactions were legitimate cotton purchases already disclosed during the initial scrutiny

1. Whether the Assessing Officer had a valid "reason to believe" that income had escaped assessment based on fresh tangible material or if the reopening constituted a mere change of opinion

2. Whether the petitioner failed to truly and fully disclose all material facts during the original assessment proceedings

The court applied Sections 143(3), 147, and 148 of the Income Tax Act, 1961, which govern the procedures for regular assessment and the stringent requirements for reopening completed assessments

The court relied on the legal principle that reassessment cannot be initiated without fresh tangible material and must not be based on a "change of opinion" or a "fishing and roving inquiry"

Furthermore, if an original assessment was conducted under Section 143(3), reopening after four years requires evidence of the assessee's failure to fully and truly disclose material facts

The Court observed that the petitioner had disclosed the transactions with M/s. Manibhadra Textile Company through invoices during the initial scrutiny assessment

It found that the respondent's reliance on the investigation report regarding the business partner’s cash withdrawals did not constitute "fresh tangible material" linked to the petitioner's income

The Court reasoned that since the information was already part of the record and evaluated during the original Section 143(3) proceedings, the attempt to reopen the case was an impermissible "change of opinion" and a "fishing and roving inquiry"

It concluded that there was no evidence of the petitioner suppressing material facts

Consequently, the High Court allowed the writ petition and quashed the impugned notice dated March 28, 2019, issued under Section 148 of the Act