Reopening of assessment invalid where reasons in preliminary notice diverge from final assessment, vitiating entire proceedings.

Validity of reopening of assessment was challenged on grounds of a change of opinion and diversion of issues between the preliminary notice requiring explanation and the final assessment conclusions. The reasoning emphasises that when the basis for reopening materially varies from the issues communicated to the taxpayer, such a change of goalposts vitiates the assessment proceedings. The decision relied on prior High Court precedents to sustain that additions based on alleged bogus purchases cannot be sustained where the notice and final findings diverge, resulting in invalidation of the reassessment.

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Issues: (i) Whether the reassessment initiated under sections 147/148 read with section 144B and preceded by notices under section 148A(b) and order under section 148A(d) was valid where the issues in the final assessment differed from those indicated in the reopening notices; (ii) Whether notice under section 148 was permissible in the absence of "information" as defined in Explanation 1 to section 148 (first proviso to section 148).

Issue (i): Whether the reassessment proceedings were vitiated by a change of allegations between the reopening notice / section 148A proceedings and the ultimate assessment.

Analysis: The reopening notice and the proceedings under section 148A(b)/(d) identified a particular basis for reopening. The subsequent assessment advanced materially different allegations and treated purchases as bogus without that issue being the foundation of the section 148A notice and enquiry. Such divergence constitutes a change of the factual/legal basis on which the case was reopened and results in a shift of the goalposts during assessment proceedings.

Conclusion: The reassessment proceedings are vitiated for change of goalpost and the assessment founded on that altered basis is unsustainable in favour of the assessee.

Issue (ii): Whether issuance of notice under section 148 was valid in the absence of "information" as per Explanation 1 to section 148.

Analysis: The statutory scheme requires existence of "information" as defined in Explanation 1 to section 148 before issuance of a notice under section 148 (first proviso). The proceedings record did not establish such information forming the basis for the notice; consequently the jurisdictional precondition for reopening was not satisfied.

Conclusion: The notice under section 148 was issued without satisfying the requirement of "information" under Explanation 1 and therefore the reassessment is invalid, favouring the assessee.

Final Conclusion: Both issues being decided against the Revenue, the appeal is allowed and the impugned assessment is quashed.

Ratio Decidendi: A reassessment under section 147/148 is invalid if (a) the notice under section 148 is issued without "information" as defined in Explanation 1 to section 148, or (b) the assessing process changes the factual/legal basis after section 148A proceedings such that there is a material change of the issues (change of goalpost), and such defects vitiate the reassessment.

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