Reassessment based on change of opinion is invalid where primary facts were already known to the tax officer.

Reassessment under section 34(1)(a) of the Income-tax Act, 1922 cannot be sustained where the Income-tax Officer already had knowledge of the primary facts and seeks to reopen the assessment merely by changing his view on the same material. The second notice and the reassessment founded on it were therefore invalid because the reopening was not based on any failure by the assessee to make a full and true disclosure of primary facts, and the result was in favour of the assessee.

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Issues: Whether the second notice issued under section 34 of the Income-tax Act, 1922, and the reassessment made pursuant to it were valid in law.

Analysis: The material facts relating to the high denomination notes had already been within the knowledge of the Income-tax Officer when the first reassessment was completed. The reopening was not based on any failure by the assessee to make a full and true disclosure of primary facts, but on facts already discovered by the department. Once the officer had possession of all the material facts, he could not reopen the matter merely by changing his view on the same material. The requirements of section 34(1)(a) were therefore not satisfied.

Conclusion: The second notice under section 34 and the reassessment based on it were invalid, and the answer to the issue was in favour of the assessee.

Ratio Decidendi: Reassessment under section 34(1)(a) cannot be sustained where the Income-tax Officer already knew the primary facts and seeks to reopen assessment merely by changing his opinion on the same material.

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