Change of opinion bars reassessment when permanent establishment issue was already examined in the original assessment.

Reassessment under sections 147 and 148 was held unsustainable where the Assessing Officer had already examined the assessee's India business activities, permanent establishment status and taxability in the original section 143(3) assessment. The reopening reasons disclosed no new tangible material after the original assessment; they merely reflected a different view on the same facts. Such reopening amounted to a change of opinion, which is impermissible because reassessment cannot be used as a power of review. The notice and consequential proceedings were quashed in favour of the assessee.

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Issues: Whether reassessment proceedings under sections 147 and 148 of the Income-tax Act, 1961 could be sustained when the issue of the assessee's permanent establishment in India had already been examined in the original assessment and the reassessment was based on a reappraisal of the same material.

Analysis: During the original assessment proceedings, the Assessing Officer specifically called for details on the nature of business activities in India, the existence of a permanent establishment, and the taxability of receipts. The assessee responded and the issue was consciously examined before the assessment under section 143(3) was completed. The reasons recorded for reopening did not refer to any new tangible material coming into existence after the original assessment; they only reflected a different view on the same set of facts, namely that the assessee had a permanent establishment in India and that the receipts should have been taxed differently. Reopening on such a basis amounted to a mere change of opinion, which is impermissible under section 147, as the power of reassessment cannot be used as a power of review.

Conclusion: The reassessment notice and all consequential proceedings were unsustainable and were quashed; the issue was decided in favour of the assessee.

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