Reassessment beyond four years fails where the issue was already scrutinised and reopening rests on a mere change of opinion.

A reopening notice issued beyond four years was invalid because the original scrutiny assessment had already examined the assessee's treaty-based exemption claim for interest income, and the assessee had furnished replies, residency documents and supporting details. The Assessing Officer had accepted the claim in the original order, so reopening on the same material amounted to a change of opinion. Since the recorded reasons did not validly allege any failure by the assessee to disclose fully and truly all material facts, the jurisdictional condition for reassessment beyond four years was not met. The Bombay HC therefore quashed the notice in favour of the assessee.

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Issues: Whether the reopening notice issued beyond four years from the end of the relevant assessment year was invalid for want of any failure by the assessee to disclose fully and truly all material facts, and whether the reassessment amounted to a mere change of opinion.

Analysis: The assessment record showed that the assessee's claim of exemption for interest income under the India-Mauritius treaty was specifically queried during the original scrutiny assessment. The assessee furnished replies, residency documents, treaty-based explanations and details of the ECB interest, and the Assessing Officer accepted the claim in the original assessment order by expressly recording that the assessee was carrying on bona fide banking business in Mauritius. The reopening sought to revisit the same issue on a different appreciation of the same material. As the notice was issued beyond four years, reopening was permissible only if the reasons recorded disclosed failure to make full and true disclosure of material facts. The recorded reasons did not allege such failure in a legally sustainable manner and merely relied on the existing material to draw a different inference.

Conclusion: The reopening was barred by change of opinion and by the absence of any valid allegation of failure to disclose fully and truly all material facts. The notice was quashed in favour of the assessee.

Ratio Decidendi: A reassessment notice issued beyond four years cannot be sustained where the very issue was examined in the original scrutiny assessment and the recorded reasons do not show a failure by the assessee to make full and true disclosure of material facts; reopening on the same material amounts to a change of opinion.

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