Reassessment based on disclosed facts and audit objection fails where reopening reflects only a change of opinion.

Reassessment was held unsustainable where the assessee had fully disclosed the primary facts, supporting records and computations in the original scrutiny assessment. For the year beyond four years, the proviso to Section 147 was not met because there was no failure to disclose material facts, and the reopening amounted to an impermissible review and change of opinion. For the year within four years, the reopening also failed because it was based only on an audit objection and material already on record, without independent tangible material or fresh reason to believe. The notices and rejection orders were quashed.

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Issues: (i) Whether reassessment for assessment year 2011-12, initiated beyond four years, was barred for want of failure by the assessee to fully and truly disclose material facts and whether the attempt amounted to a mere review of the completed scrutiny assessment. (ii) Whether reassessment for assessment year 2013-14, initiated within four years, was valid when it was founded on no new tangible material and was substantially based on audit objections and a change of opinion.

Issue (i): Whether reassessment for assessment year 2011-12, initiated beyond four years, was barred for want of failure by the assessee to fully and truly disclose material facts and whether the attempt amounted to a mere review of the completed scrutiny assessment.

Analysis: The record showed that the assessee had disclosed the programme and film-right expenditure, the method of amortisation, the relevant financial statements, tax audit report, schedules, and item-wise break-ups in the original proceedings. The Assessing Officer had called for and verified these materials during scrutiny and had accepted the claim in the assessment under Section 143(3). In these circumstances, the statutory condition in the proviso to Section 147 was not satisfied, because there was no failure to disclose primary facts fully and truly. The reassessment sought to revisit material already on record and therefore amounted to an impermissible review and a change of opinion.

Conclusion: The reassessment for assessment year 2011-12 was invalid and barred by limitation, and the assessee succeeded on this issue.

Issue (ii): Whether reassessment for assessment year 2013-14, initiated within four years, was valid when it was founded on no new tangible material and was substantially based on audit objections and a change of opinion.

Analysis: The assessee had again disclosed the relevant expenditure, foreign remittances, tax audit materials, and supporting particulars during the original scrutiny assessment, and the Assessing Officer had completed assessment under Section 143(3). The reasons recorded for reopening merely reproduced the audit objection and did not disclose any independent application of mind or any new tangible material. The audit note concerned questions of law and could not by itself supply the requisite reason to believe. Since the reopening was based on materials already on record and sought to revisit an issue already available for scrutiny, it was an impermissible change of opinion.

Conclusion: The reassessment for assessment year 2013-14 was invalid and the assessee succeeded on this issue as well.

Final Conclusion: The reassessment notices and the orders rejecting the assessee's objections were quashed, and all writ petitions were allowed.

Ratio Decidendi: Reassessment cannot be sustained either beyond four years without failure to disclose primary facts fully and truly, or within four years where it rests only on audit objection or on a mere change of opinion without independent tangible material.

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