The assessee’s income for AY 2015-16 was assessed under section 143(3) of the Income Tax Act, 1961 (‘the Act’). The assessment was reopened after five years on the ground that leasehold improvement costs and amortization of investments were capital in nature and, therefore, not allowable under section 37(1). The reassessment also questioned the omission of donation disallowance and non-disallowance of interest under section 201(1A). Aggrieved by the reopening, the assessee filed a writ petition before the Hon’ble Bombay High Court.

The Court held that since the reassessment was beyond four years, the first proviso to section 147 applied, requiring the Assessing Officer to demonstrate that the assessee failed to disclose fully and truly all material facts necessary for the assessment. The original assessment had been conducted through scrutiny proceedings where all relevant facts were disclosed, and the reassessment was based on a mere change of opinion. Additionally, the sanction under section 151 was held to be mechanical and without proper application of mind, rendering it invalid. Accordingly, the reassessment proceedings were quashed as illegal and without jurisdiction.(AY. 2015-16)