Reassessment barred by change of opinion where audit objections relied only on material already examined in scrutiny assessment.

Reassessment under Section 147 was held invalid where the original scrutiny assessment had already examined the disputed depreciation, goodwill, CSR deduction, unascertained liabilities, and additional depreciation claims, and no fresh tangible material emerged. Audit objections alone were treated as a change of opinion and not as jurisdictional material to reopen concluded proceedings. The Court also noted that the assessee's replies and disclosures had addressed these items during the original assessment, including the depreciation treatment for computers and computer software. The notice under Section 148 and the order rejecting objections were quashed, and the reassessment was held impermissible on all recorded grounds.

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Issues: (i) whether reopening under Section 147 of the Income-tax Act, 1961 was valid when the original assessment had already examined the impugned claims and no new tangible material existed; and (ii) whether the reassessment could be sustained on the basis of audit objections concerning depreciation on computers, computer software, goodwill, CSR-related deduction under Section 80G, unascertained liabilities, and additional depreciation on plant and machinery.

Issue (i): Whether reopening under Section 147 of the Income-tax Act, 1961 was valid when the original assessment had already examined the impugned claims and no new tangible material existed.

Analysis: The original scrutiny assessment had raised queries on each of the material items now sought to be reopened, and the assessee had furnished replies and supporting disclosures in the return, tax audit report, and subsequent submissions. The reasons recorded for reopening were founded only on the existing record and the audit party's objections. In the absence of any fresh tangible material, the reassessment amounted to a mere change of opinion. The first proviso to Section 147 was also inapplicable as the reopening was within four years, but that did not dispense with the need for jurisdictional compliance under Section 147. The Court applied the settled distinction between review and reassessment and held that an assessment concluded after enquiry cannot be disturbed merely because a different view is later suggested on the same material.

Conclusion: The reopening was invalid and could not be sustained.

Issue (ii): Whether the reassessment could be sustained on the basis of audit objections concerning depreciation on computers, computer software, goodwill, CSR-related deduction under Section 80G, unascertained liabilities, and additional depreciation on plant and machinery.

Analysis: On the individual issues, the Court found that the claim of additional depreciation on computers and plant and machinery was supported by the third proviso to Section 32(1) and the relevant depreciation schedule in Rule 5 of the Income-tax Rules, 1962; computers and computer software were treated as part of machinery and plant for depreciation purposes; CSR-related donations had been specifically queried and answered in the original assessment; the goodwill claim had already been examined in the year of acquisition and, for the relevant year, was not a valid basis for reopening in the absence of fresh material; and the provision for discount had likewise been scrutinised during the original proceedings. Audit objections, being only the opinion of the audit party, did not constitute new factual material capable of justifying reassessment where the Assessing Officer had already formed an opinion on the same matters.

Conclusion: The reassessment on all recorded grounds was impermissible.

Final Conclusion: The impugned notice under Section 148 and the order rejecting objections were quashed, and the writ petition succeeded.

Ratio Decidendi: Reassessment cannot be founded on audit objections or material already examined in the original scrutiny assessment unless there is fresh tangible material showing a live nexus to escapement of income; otherwise, reopening is barred as a mere change of opinion.

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