Reassessment on an audit note alone cannot stand where reopening is only a change of opinion and facts were fully disclosed.

Reassessment under Section 147(b) of the Income-tax Act, 1961 was held invalid where the assessee had disclosed all material facts and the reopening was based solely on an internal audit note. The court treated the attempted reopening as a mere change of opinion, which does not meet the statutory requirement for reassessment. An audit note by itself was not accepted as valid information to justify revisiting an assessment already made on the disclosed record. The reference was answered against the Revenue and in favour of the assessee.

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Issues: Whether reassessment proceedings were validly initiated under Section 147(b) of the Income-tax Act, 1961 on the basis of an audit note.

Analysis: The assessee had disclosed the material facts relevant to the assessment. The reassessment was founded on a note from the internal audit party, and the earlier view of the assessing officer was sought to be revisited on that basis alone. Such initiation amounted only to a change of opinion and did not satisfy the statutory requirement for reopening assessment.

Conclusion: The reassessment proceedings were not validly initiated under Section 147(b) of the Income-tax Act, 1961.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee.

Ratio Decidendi: An audit note, by itself, does not furnish valid information for reopening an assessment where the original assessment was made on the basis of disclosed facts and the proposed reassessment rests only on a change of opinion.

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