Reassessment procedure: Special search-derived provisions must be invoked; general Section 148 notices are void where based on search materials.

Reassessment founded on materials seized in a search of another person must proceed under the special search-derived reassessment regime rather than by issuing a standard notice under the general reassessment provisions; a notice issued under the general provisions on that basis is void, resulting in quashing of the reassessment. Separately, reopening an assessment to recharacterise a transaction already considered in the original assessment-merely to treat a declared long term capital gain as short term-is an impermissible change of opinion and vitiates the reassessment.

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Issues: (i) Whether initiation of reassessment proceedings by issuing notice under Section 148/147 instead of invoking Section 153C read with Section 153A, where reassessment was based on materials obtained from a search in another person s case, is valid; (ii) Whether reopening of assessment by the Assessing Officer on the ground that a transaction earlier treated as long term capital gain should be taxed as short term capital gain amounts to impermissible change of opinion.

Issue (i): Whether the reassessment initiated under Section 147/148 is valid where the reopening was founded on materials seized in a search in the case of another person and information obtained post-search.

Analysis: The statutory scheme provides special reassessment provisions applicable to cases arising from search and seizure, namely the provisions that require proceedings under the special regime rather than regular reassessment provisions. The Tribunal applied binding precedents of the Jurisdictional High Court and the Supreme Court interpreting the effect of search-derived materials and the compartmentalised operation of the special provisions to hold that reassessment based on such materials must proceed under the special provisions rather than under Section 147/148. The Tribunal considered the factual finding that the reopening was prompted by information and seized materials from the Banka Group search and that the Assessing Officer relied substantially on those materials in issuing the Section 148 notice.

Conclusion: The initiation of proceedings under Section 147/148 in place of proceedings under the special provisions applicable to search-derived materials (Section 153C read with Section 153A) is invalid and the notice under Section 148/147 is quashed. This conclusion is in favour of the assessee.

Issue (ii): Whether the reopening of assessment to treat a previously declared long term capital gain as short term capital gain is a permissible reassessment or is an impermissible change of opinion.

Analysis: When the facts giving rise to the alternative tax treatment were already available and considered by the Assessing Officer during the original assessment, reopening on the basis of the same facts to reach a different tax treatment constitutes a change of opinion. The Tribunal applied relevant authorities holding that reassessment is impermissible where it merely reflects a change of opinion on facts and tax characterization already on record. The assessee had declared and the Assessing Officer had considered the transaction as long term capital gain in the original assessment; the subsequent reassessment seeking to treat it as short term capital gain relied on no new material beyond what was already available.

Conclusion: The reopening to treat the previously declared long term capital gain as short term capital gain is a mere change of opinion and is invalid. This conclusion is in favour of the assessee.

Final Conclusion: Both grounds decided in favour of the assessee result in quashing and setting aside the reassessment proceedings initiated by issue of the notice under Section 148/147; consequential grounds are rendered academic and the appeal is allowed.

Ratio Decidendi: Where reassessment is initiated on the basis of materials obtained from a search in another person's case, the special reassessment provisions applicable to search-derived materials must be invoked and a notice under Section 148/147 in lieu of proceedings under those special provisions is void; further, reopening an assessment based on facts already considered in the original assessment, to arrive at a different tax characterization, constitutes an impermissible change of opinion and vitiates the reassessment.

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