Reassessment based on previously examined bank records without

Reassessment based on previously examined bank records without new tangible material constitutes impermissible change of opinion.

Issue

Whether an assessment completed under Section 143(3) can be reopened under Section 147 to examine bank credits and gross receipts that were already scrutinized, in the absence of any new tangible material.

Facts

Assessee’s return for AY 2012-13 was initially subjected to full scrutiny assessment under Section 143(3), during which all relevant records—including the bank account in question—were examined and accepted.
A subsequent reassessment notice under Section 147 was issued asking the assessee to explain the aggregate bank credits and total sales/gross receipts.
Assessee objected to the reopening on the ground that the bank statements and account details were already verified during the original scrutiny proceedings.
The Revenue failed to demonstrate or allege that the Investigation Wing or the Assessing Officer had come into possession of any new tangible material not available during the original Section 143(3) assessment.

Decision

Decided in favor of the assessee. Reopening the assessment without any new tangible material is a mere change of opinion on already verified facts, which is impermissible in law; accordingly, the Section 147 notice was quashed.

Key Takeaways

Change of Opinion Barred: Section 147 cannot be invoked to re-evaluate or re-examine matters, bank accounts, or gross receipts that were already considered and accepted during original Section 143(3) scrutiny.
Requirement of Tangible Material: For a valid reopening post-scrutiny, the Assessing Officer must possess fresh, tangible, and relevant material that was not available on record during the primary assessment.
Finality of Scrutiny: In the absence of new evidence, reassessment proceedings cannot be used as a tool to review an earlier concluded assessment.

HIGH COURT OF GUJARAT

Mahendra Gumanmalji Lodha

Assistant Commissioner of Income-tax Circle 5(2)(1)^*

A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.

R/SPECIAL CIVIL APPLICATION NO. 22641 of 2019

JULY 31, 2026

Tushar Hemani, Sr. Adv. and Ms Vaibhavi K Parikh, Adv. for the Petitioner. Dev D Patel for the Respondent.

ORDER

A.S. Supehia, J. – Learned Senior Advocate, Mr.Tushar Hemani, at the outset, has submitted that the reopening of the assessment in the case of the present petitioner is done for the Assessment Year (for short ‘A.Y.’) 2012-13 (the subject matter of the present petition) and also for A.Y. 2014-15. So far as the reopening of the assessment for A.Y. 2014-15 is concerned, he has tendered the order dated 29.03.2024 passed under Section 147 read with Section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) and has submitted that total income of the assessee remained the same and hence, it is urged that the impugned notice as well as the order for A.Y. 2012-13 may be also quashed and set aside. Moreover, he has pointed out that in the original assessment proceedings initiated under the provision of Section 143(2) of the Act culminated into the scrutiny assessment order under Section 143(3) of the Act, dated 05.02.2015. All the aspects relating to the dividend as well as the earned interest income was considered and accordingly, the assessment order was passed. It is submitted that so far as the Mahendra Gumanmal Lodha (HUF) is concerned, it had challenged the reopening of the assessment for the A.Y. 2014-15, which has been set aside by this Court vide order dated 21.07.2026 passed in Special Civil Application No.22636 of 2019/Mahendra Gumanmalji Lodha HUF v. Asstt. CIT (Gujarat). Thus, it is urged that the present writ petition may be allowed by setting aside the notice dated 28.03.2019.

2. In response to the foregoing submissions, learned Senior Standing Counsel, Mr. Dev D. Patel has submitted that since the new information was received by the Investigation Wing and there are sufficient reasons to conclude that the income more than Rs.1 lakh escaped assessment, the reopening of the assessment for the A.Y.2012-13 was undertaken under the provisions of Section 147 of the Act. It is submitted that there is ample material which would point out that the income chargeable to tax has escaped assessment. Thus, it is urged that the petition may not be entertained.

3. The facts which are established from the pleadings are that for the A.Y. 2012-13, the income tax returns filed by the petitioner were undertaken under scrutiny assessment under Section 143(3) of the Act and accordingly, the assessment order was passed therein on 05.02.2015. The said assessment order has been passed after considering all the relevant material, which included details of bank account in question assessing the income of Rs.4,64,47,470/-.

4. By the impugned notice, the petitioner was again called upon to explain the amount credited in his bank account aggregated to Rs.1,08,05,67,573/- and also the total sale/gross receipts for the year under consideration which is Rs.2,72,46,369/-. The respondent in light of the investigation report opined that Rs.1,07,62,56,281/- was required to be treated as unexplained income in the hands of the petitioner for the year under consideration. Accordingly, the impugned notice has been issued.

5. The petitioner objected the same reiterating that all the aspects were already undertaken in the prior assessment. It is not the case of the respondent that the Investigation Wing has formed its opinion upon any new tangible material, which was not in the possession of the Assessing Officer, who passed the order dated 05.02.2015 under Section 143(3) of the Act. The petitioner’s case was selected for scrutiny assessment. All the bank statements including the bank account in question were already submitted by the petitioner when examined in the scrutiny assessment and ultimately, the same has been accepted.

6. Under the circumstances, we are of the opinion that the reopening is nothing but a change of opinion. Hence, as a settled legal precedent, the impugned notice dated 28.03.2019 is quashed and set aside. The present writ petition succeeds.