Reassessment cannot revive an already examined interest disallowance without specific notice; a change of opinion is impermissible.

Reassessment under section 147 cannot be used to introduce a fresh disallowance on an issue already considered in the original section 143(3) assessment without notice to the assessee on that specific point. Where the disputed interest payment had been examined earlier and no disallowance was made, a later disallowance under section 40(b) in reassessment amounted to a change of opinion on the same material and breached the requirement of fair notice. The disallowance was therefore held unsustainable and directed to be deleted.

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Issues: Whether, in reassessment proceedings initiated under section 148 of the Income-tax Act, 1961, the Income-tax Officer could disallow interest under section 40(b) when the original assessments under section 143(3) had not made such disallowance and no notice on that issue had been issued.

Analysis: The original assessments had been completed under section 143(3) and the disputed interest payment had already been considered without any disallowance. In the reassessment proceedings, the disallowance under section 40(b) was introduced without issuing notice to the assessee on that specific issue. Reassessment power under section 147(a) is confined to income that has escaped assessment on the basis of requisite reason to believe, and it does not authorise a plenary reappraisal of matters already examined. On the facts, the attempted disallowance amounted to a change of opinion on the same material and also offended the requirement of fair notice.

Conclusion: The disallowance under section 40(b) in reassessment was not sustainable and had to be deleted.

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