The assessee’s assessment was originally completed under section 143(3) after scrutiny. Subsequently, beyond a period of four years, the DCIT issued a notice under section 148 to reopen the assessment. The reasons provided for the reopening stated that on “verification of assessment records,” the DCIT believed income had escaped assessment due to excess deductions claimed and incorrect computation of capital gains.

The High Court quashed the reassessment notice, holding that since the reopening was initiated after four years from the end of the relevant assessment year, the proviso to section 147 was applicable. This required the DCIT to demonstrate a failure on the part of the assessee to disclose fully and truly all material facts. The Court noted that the reasons for reopening were explicitly based on materials already available on record and examined during the original assessment, thereby negating any allegation of non-disclosure by the assessee. It was held that the reopening was merely based on a change of opinion on the same set of facts, which is impermissible. Furthermore, an audit objection based on information already on the record does not constitute fresh tangible material to justify reopening an assessment. (AY. 2014-15)