Reassessment based on change of opinion was invalid where recorded reasons showed no failure to disclose material facts.

Reopening of assessment was invalid where the recorded reasons did not state any specific failure to fully and truly disclose material facts relating to DTAA benefits. The assessee had already disclosed UAE tax residence and related passport details in the original scrutiny assessment, and the reassessment was triggered only by absence of a Tax Residency Certificate, which was not then a statutory requirement. Since the validity of reassessment must be judged only from the recorded reasons and cannot be supported by later supplementation, the court held that the notice was based on an impermissible change of opinion. The impugned notices and order were quashed.

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Issues: Whether the reopening of assessment under section 148 was valid when the assessee had already disclosed the material facts relating to the claim of Double Tax Avoidance Agreement benefits and the reassessment reasons did not disclose any failure of full and true disclosure, or whether the action was barred as a mere change of opinion.

Analysis: The reasons recorded for reopening showed that the only trigger was non-production of a Tax Residency Certificate or similar proof of UAE residence. The Court noted that the assessment year in question pre-dated the statutory requirement for such certificate and also pre-dated the amended DTAA condition regarding six months' stay. The original return itself stated that the assessee was a tax resident of UAE and the scrutiny assessment recorded that the passport and other details had been furnished, leading to acceptance of non-resident status. Applying the settled principle that the validity of reassessment must be tested only on the reasons recorded and cannot be supplemented later, the Court found that no specific failure to disclose material facts was recorded and that the reopening was founded on an impermissible change of opinion.

Conclusion: The reopening under section 148 was invalid and the impugned notices and order were liable to be quashed in favour of the assessee.

Ratio Decidendi: Reassessment cannot be sustained unless the recorded reasons themselves disclose a legally relevant failure to fully and truly disclose material facts, and it cannot be founded merely on a change of opinion or on later supplementation of reasons.

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