Reassessment based on audit objection and change of opinion quashed for lack of independent satisfaction and fresh tangible material.

Reassessment initiated on the basis of an audit objection and an alleged excess claim of pre-operative expenses was found invalid because the reasons recorded were a verbatim reproduction of the audit objection. The Assessing Officer had not formed an independent satisfaction; the reopening was based on borrowed satisfaction from the audit party. As no fresh tangible material emerged and the original assessment had already examined the claim, reopening on the same material amounted to a mere change of opinion, which is impermissible. The reassessment notice and all consequent proceedings were quashed in favour of the assessee.

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Issues: Whether the reassessment initiated under section 147 on the basis of an audit objection and on the alleged excess claim of pre-operative expenses was valid in law.

Analysis: The reasons recorded for reopening were found to be a verbatim reproduction of the audit objection. The basis for reopening was not an independent satisfaction formed by the Assessing Officer, but borrowed satisfaction from the audit party. The material relied upon did not disclose any fresh tangible material and the original assessment had already considered the claim in the assessment proceedings. Reopening on the same material amounted to a mere change of opinion, which is impermissible.

Conclusion: The reassessment notice and the consequential reassessment proceedings were held to be invalid and were quashed, in favour of the assessee.

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