Court quashes reassessment for refinery company due to lack of non-disclosure, deems it change of opinion.

The court quashed the notice to reopen the assessment for Assessment Year 2005-2006 for a petroleum refinery company. The court found that there was a full and true disclosure of material facts by the petitioner, and the reassessment was deemed a change of opinion rather than a valid reason to believe income had escaped assessment. The court concluded that the reassessment lacked allegations of non-disclosure, leading to the decision in favor of the petitioner.

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Issues:
1. Reopening of assessment for Assessment Year 2005-2006 under Section 147 of the Income Tax Act.
2. Allegation of income escaping assessment due to provisions for customs duty, advance doubtful of recovery, and provisions for non-moving inventory.
3. Compliance with the proviso to Section 147 regarding disclosure of material facts by the assessee.
4. Consideration of self-disallowances in the assessment proceedings.
5. Determination of book profits under Section 115JB of the Act.

Analysis:

Issue 1: Reopening of assessment under Section 147
The petitioner, a petroleum refinery company, filed a return for Assessment Year 2005-2006 disclosing income under normal provisions and "book profits" under Section 115JB. The Assessing Officer raised queries regarding a provision for customs duty debited to the P&L Account. Subsequently, a notice was issued under Section 148 alleging income escaping assessment due to various debits. The petitioner objected to the reopening, citing a lack of failure to disclose material facts and reliance on the same documents for reassessment.

Issue 2: Allegation of income escaping assessment
The Assessing Officer believed that income had escaped assessment due to provisions for customs duty, advance doubtful of recovery, and provisions for non-moving inventory. The petitioner argued that there was a full and true disclosure of material facts in the return and the reassessment was based on a change of opinion rather than fresh material.

Issue 3: Compliance with proviso to Section 147
The proviso to Section 147 mandates no action after four years unless income has escaped assessment due to failure to disclose material facts. The court found that the petitioner had made a full disclosure of material facts regarding the debits in question, and the reassessment lacked allegations of non-disclosure.

Issue 4: Consideration of self-disallowances
The court noted that the self-disallowances were part of the assessment proceedings, even though not explicitly discussed in the assessment order. The Assessing Officer computed book profits and total tax payable, indicating a consideration of all relevant aspects.

Issue 5: Determination of book profits
The court found that there was a full and true disclosure of material facts by the petitioner, leading to a conclusion that the reassessment was a change of opinion rather than a valid reason to believe income had escaped assessment. The court allowed the petition, quashing the notice to reopen the assessment for Assessment Year 2005-2006.

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