Reassessment barred by change of opinion where full disclosure of royalty facts left no basis to reopen the assessment.

Reassessment under Section 147 could not be sustained where the assessee had disclosed all primary facts concerning royalty income and interest on delayed royalty, including agreements, returns, audit materials and transfer pricing documentation. The Revenue's reasons sought only to re-characterise the disclosed material and draw fresh legal inferences, without any new primary fact or failure to disclose fully and truly all material facts. The reopening was therefore treated as a mere change of opinion, which is impermissible, and the notice under Section 148 and the order rejecting objections were set aside.

---

---

Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 and the order rejecting objections to reopening were valid, or whether the reopening was barred for want of failure to disclose fully and truly all material facts and was otherwise based only on a change of opinion.

Analysis: The assessment records showed that all primary facts relating to the royalty income and interest on delayed royalty had been disclosed in the original proceedings, including the relevant agreements, returns, audit materials and transfer pricing documentation. The reasons recorded for reopening did not reveal any new primary fact; instead, they sought to re-characterise the royalty by applying the force of attraction principle and to alter the tax treatment earlier accepted by the Assessing Officer. The material relied upon by the Revenue required fresh legal inferences from already disclosed facts. In such circumstances, the first proviso to Section 147 was not attracted, and the reopening was founded on a mere change of opinion, which is impermissible.

Conclusion: The reopening was invalid and the challenge succeeded.

Final Conclusion: The impugned notice and the rejection order were set aside, and the petition was allowed.

Ratio Decidendi: Reassessment cannot be sustained where no primary fact was withheld and the attempt to reopen merely reflects a change in opinion on the legal inference to be drawn from fully disclosed material.

---