Reassessment after scrutiny assessment failed where reopening rested on change of opinion and no specific non-disclosure was recorded.

Reassessment after a completed scrutiny assessment under section 143(3) cannot be sustained on the same material where the recorded reasons merely re-examine issues already considered, as that is a change of opinion and is impermissible. Where the first proviso to section 147 applies, the reasons for reopening must specifically identify which primary material facts were not fully and truly disclosed by the assessee; a general allegation of non-disclosure is insufficient. On the stated facts, the original assessment had already considered royalty receipts, permanent establishment, and treaty attribution, so the reopening was invalid and the reassessment proceedings were quashed.

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Issues: (i) whether the reassessment notices were based on a mere change of opinion after a completed assessment under section 143(3); and (ii) whether the reopening was valid despite the absence of any specific allegation that the assessee had failed to disclose fully and truly all material facts necessary for assessment.

Issue (i): whether the reassessment notices were based on a mere change of opinion after a completed assessment under section 143(3)

Analysis: The original assessment had already examined the taxability of royalty receipts, the assessee's permanent establishment in India, and the relevant treaty provisions governing attribution and taxation. Once a regular assessment under section 143(3) is completed, a presumption arises that it was made on application of mind. The reopening sought to rework the same material on a different understanding of the treaty position, which amounted to revisiting an issue already considered.

Conclusion: The reopening was founded on a mere change of opinion and was impermissible.

Issue (ii): whether the reopening was valid despite the absence of any specific allegation that the assessee had failed to disclose fully and truly all material facts necessary for assessment

Analysis: For cases covered by the first proviso to section 147, escapement of income by itself is insufficient. The recorded reasons must identify the particular material facts that were not fully and truly disclosed. Here, the reasons contained only a general assertion of non-disclosure and did not specify any omitted primary fact. The reopening was thus sought on the very same material that had been before the Assessing Officer in the original proceedings.

Conclusion: The statutory condition of failure to disclose fully and truly all material facts was not satisfied.

Final Conclusion: The reassessment proceedings for both assessment years were invalid and were quashed in full.

Ratio Decidendi: Reassessment after a completed scrutiny assessment cannot be sustained on the same material unless the recorded reasons specifically identify a failure by the assessee to disclose fully and truly all material facts necessary for assessment; otherwise, reopening amounts to an impermissible change of opinion.

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