Reassessment Quashed for Change of Opinion

Reassessment quashed for change of opinion is now a settled position in income-tax law. Courts have repeatedly held that where an issue was examined during original assessment, reopening under Section 148 based on the same material is impermissible.

If there is no fresh tangible material, reassessment fails.

Legal issue involved

Whether reassessment proceedings are valid when:

The issue was examined during original assessment, and
Reopening is based on reappraisal of the same material, and
There is no new tangible material on record

The settled position is that change of opinion is not “reason to believe.”

CIT vs. Kelvinator of India Ltd. | Supreme Court | 2010

Facts:
Reassessment was initiated to re-examine a claim already considered during original assessment.

Held:
The Supreme Court held that:

Reassessment requires tangible material
Mere change of opinion is not permitted
The concept of “change of opinion” must be applied to prevent abuse of power

Why it matters:
This is the bedrock authority. Without new material, reassessment is invalid.

Usha International Ltd. vs. CIT | Delhi High Court (FB) | 2012

Facts:
The department attempted to reopen assessment on issues already examined.

Held:
The Court held that:

Once a query is raised and answered, the AO is deemed to have formed an opinion
Reopening on the same issue amounts to change of opinion

Why it matters:
Even if the assessment order is silent, enquiry on record protects the assessee.

Asian Paints Ltd. vs. DCIT | Bombay High Court | 2008

Facts:
Reassessment was initiated based on reinterpretation of the same facts.

Held:
The Court quashed the reassessment holding that reappraisal of existing material is impermissible.

Why it matters:
Reassessment cannot be used as a review mechanism.

ICICI Prudential Life Insurance Co. Ltd. vs. ACIT | Bombay High Court | 2019

Facts:
The AO reopened assessment without any new material, merely changing his earlier view.

Held:
The Court held that absence of new tangible material makes reassessment invalid.

Why it matters:
Burden lies on the department to show fresh material.

Aroni Commercials Ltd. vs. DCIT | Bombay High Court | 2014

Facts:
Reassessment was initiated on issues already examined during original proceedings.

Held:
The Court held that reopening on change of opinion is impermissible, even if the AO now believes a different view is possible.

Why it matters:
Two views possible → reassessment barred.

Common principles emerging

From the above judgments:

Reassessment requires fresh tangible material
Change of opinion is not permitted
Reassessment is not a review
Prior enquiry bars reopening
Jurisdiction fails at the threshold

How to use these judgments

These cases are decisive:

While replying to 148A(b) notices
When reasons rely on existing records only
Before High Courts in writ petitions
To challenge reassessment at jurisdiction stage

If the issue was examined earlier, attack reopening immediately.

Practical Use in Section 148A Reply and Appeals

These judgments are extremely useful while replying to notices under section 148A(b) and while challenging reassessment orders before CIT(A), ITAT, or High Courts.

Where the assessee can demonstrate that the issue was examined during original assessment and there is no fresh tangible material, reassessment proceedings are liable to be quashed at the threshold. Courts have repeatedly cautioned against mechanical reopening based on audit objections or re-appraisal of the same material and any such attempt shall lead to reassessment quashed for change of opinion under section 148.

Therefore, while drafting objections, the assessee should specifically highlight earlier queries raised, replies filed, and the assessment order passed, to establish that the reopening is based on a mere change of opinion.

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Key Case Laws Where Reassessment Was Quashed for Change of Opinion (Section 148)