Reassessment based solely on an audit objection failed where original scrutiny had examined port infrastructure deduction eligibility.

Reassessment denying a deduction for a port infrastructure facility was impermissible because the undertaking's ownership, development through cranes and capital investment, lease arrangements, and deduction claim had been fully disclosed and examined in the original scrutiny assessment. Foreign shareholding in the Indian-registered assessee did not breach the ownership condition. As no new tangible material emerged, the recorded reasons reflected only a change of opinion, and a reopening based solely on a Revenue audit objection could not stand. The reopening notice, rejection of objections, show-cause notice, and draft assessment order were quashed.

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Issues: Whether reassessment for denying deduction for a port infrastructure facility was valid where the eligibility grounds had been examined in the original scrutiny assessment and the reopening was based on a Revenue audit objection.

Analysis: The relevant enterprise was the Bharathi Dock undertaking owned by the assessee, an Indian-registered company; the foreign shareholding of the assessee did not breach the ownership condition. The record also showed substantial development of the dock through installation of cranes and capital investment, notwithstanding use of certain existing leased assets. These matters, the licence arrangement and the deduction claim had been fully disclosed and examined during the original scrutiny assessment. No new tangible material emerged thereafter. The recorded reasons consequently represented a change of opinion, and reopening merely at the instance of an audit party, without anything further, was impermissible.

Conclusion: The reassessment proceedings were illegal and the notice reopening assessment, order rejecting objections, show-cause notice and draft assessment order were quashed, in favour of the assessee.

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