Reopening Invalid Due to Change of Opinion on Same Material: Bombay HC

Transchem Limited Vs ACIT-8(3) (Bombay High Court)

The petition challenged the validity of a notice issued under Section 148 of the Income Tax Act, 1961, dated 29 March 2010, along with the approval granted under Section 151 and the order rejecting objections to reopening. The original assessment for the relevant assessment year had already been completed under Section 143(3), and the reopening notice was issued more than four years after the end of the assessment year.

In such circumstances, the proviso to Section 147 requires the Revenue to demonstrate that the assessee failed to fully and truly disclose all material facts necessary for assessment. The reasons recorded for reopening indicated that deduction under Section 80HHC had allegedly been incorrectly allowed without properly setting off brought forward losses, resulting in income escaping assessment. It was also stated that the assessee failed to disclose fully and truly all material facts.

However, the Court observed that the reasons did not establish any such failure by the assessee. Instead, they showed that the Assessing Officer relied on the same material that had already been considered during the original assessment. The reopening was therefore based on a reassessment of existing facts rather than any new information.