Reassessment: Change of opinion: S/s. 147 and 148: A. Y. 2005-06: AO completed original assessment u/s. 143(3) on 24-12-2007: Subsequently issued notice u/s. 148 on basis of investigation report dated 13-03-2006 received from investigation wing: Reasons to believe did not state that investigation report was not with Assessing Officer when he completed original assessment: Attempt to reopen assessment was result of a change of opinion: Reopening not valid

The assessee, an investment and security business company, had raised additional capital and offered shares at a premium of Rs. 90 per share during the previous year relevant to the A. Y. 2005-06. The Assessing Officer completed the assessment of the assessee for the A. Y. 2005-06 u/s. 143(3) on 24-12-2007. Subsequently the Assessing Officer issued notice u/s. 148 on the basis of the investigation report dated 13- 03-2006 received from the DIT (Investigation), New Delhi. The said report indicated that the assessee was amongst the beneficiaries of bogus accommodation entries. The Delhi High Court allowed the writ petition filed by the assessee and held as under:

“i) It is evident from the aforesaid that the reassessment proceedings were initiated by the impugned notice which expressly and plainly states that ‘reasons to believe’ are based upon the materials contained in the investigation report of 13-03-2006. The notice itself does not spell out that the report was not on the record when the original assessment was completed on 24-12-2007, nor did the revenue even suggest so in the counter affidavit filed in the proceedings. It is only in a subsequently filed additional affidavit that the position is sought to be clarified. Clearly, the High Court refrains from making such an enquiry at a time when the Assessing Officer has, in the first instance, failed to spell out clearly in section 148 notice itself that such report was not on record. In other words ‘the reasons to believe’ do not state even in one sentence that the investigation report was not with the Assessing Officer when he completed the assessment.

ii) The material on record in fact suggests otherwise. The nature of the queries put to assessee and the replies and confirmation furnished to the Assessing Officer in the course of the regular assessment clarify that what excited the suspicion was indeed gone into by the Assessing Officer himself while framing the assessment u/s. 143(3).

iii) Such being the case the Court has no doubt that the impugned notice, in the circumstances of the case, is based upon stale information which was available at the time of the original assessment and in fact appears to have been used by the Assessing Officer at the relevant time, i.e., during the completion of proceedings u/s. 143(3).

iv) Therefore, the attempt to reopen the proceedings u/ss 147 and 148 is really the result of a change of opinion. Consequently, the impugned notice and all proceedings further thereto are beyond the authority of law and were liable to be quashed.”