Reassessment on change of opinion is invalid when reopening rests on old valuation material and an audit objection.

Reassessment under section 147 was held invalid where the original scrutiny assessments had been completed under section 143(3) and the reopening relied on an audit objection and valuation material already on record. The court held that the Assessing Officer must have an independent reason to believe, supported by fresh tangible material with a live nexus to escapement of income. A completed assessment cannot be reopened on a mere change of opinion, and an audit objection cannot replace the officer's own satisfaction. Wealth-tax valuation material already considered in the original assessment could not by itself justify reopening. The issue was decided in favour of the assessee.

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Issues: Whether reassessment proceedings initiated under section 147 of the Income-tax Act on the basis of an audit objection and valuation material already available with the Assessing Officer were valid, or were vitiated by mere change of opinion.

Analysis: The original assessments had been completed under section 143(3), and the material relied upon for reopening was already on record, including the wealth-tax valuation. Reopening was founded on the same material and not on any fresh tangible material discovered after the original assessment. The governing principle is that reassessment requires the Assessing Officer to have reason to believe that income has escaped assessment, and that belief must rest on relevant material having a live nexus with escapement of income. An audit objection by itself cannot substitute the Assessing Officer's independent satisfaction, and a completed scrutiny assessment cannot be reopened merely because a different view is later taken on the same facts. The court also noted that the valuation under the wealth-tax regime could not, by itself, justify reopening the income-tax assessment where the issue had already been considered.

Conclusion: The reopening was invalid as it was based on mere change of opinion and lacked independent, tangible material; the issue is answered in favour of the assessee.

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