Reassessment notice after four years quashed as change of opinion, proviso to section 147 and Explanation 2 unmet

HC set aside the reopening notice issued after four years, holding that reassessment was based on a condemned change of opinion rather than any failure by the assessee to disclose material facts. The court found the prerequisites of the proviso to section 147 were not satisfied and Explanation 2 was inapplicable, as the reasons did not demonstrate nondisclosure. Section 149 merely fixes the time for service of notice; the notice under section 148 was therefore invalid for lack of the necessary precondition and was quashed.

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Issues involved:
Challenge to notice u/s 148 of the Income-tax Act, 1961 for reopening assessment u/s 143(3) for the assessment year 1992-93 based on change of opinion and failure to disclose material facts.

Facts:
- Petitioner, an Export House, filed return of income for AY 1992-93 claiming deduction u/s 80HHC.
- Assessment completed by respondent partially disallowing deduction claimed.
- Impugned notice issued in 1999 alleging income escapement.
- Petitioner requested reasons for notice issuance.
- Petitioner filed return without prejudice to challenge notice, maintaining deduction claim.
- Present petition filed against notice.

Arguments:
- Petitioner argued notice invalid as reopening based on change of opinion without fulfilling pre-conditions.
- Department relied on Explanation 2 to section 147 and section 149 for validity of reopening assessment.

Findings:
- Court found merit in petition, noting the four-year limit for reopening assessment.
- Department's reasons for reopening assessment based on change of opinion, not failure to disclose facts.
- Deeming provision in Explanation 2 to section 147 deemed inapplicable.
- Section 149 only prescribes time limit for notice, not grounds for reopening.
- Court satisfied that reopening sought based on change of opinion without evidence of failure to disclose facts.

Conclusion:
- Impugned notice set aside, both writ petitions allowed with no costs.

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