Facts of the Case

The petitioner challenged reassessment proceedings initiated for AY 2011-12 and 2012-13. The original assessments had been completed under Section 143(3).

The reassessment notices were issued based on a survey conducted on 26.03.2015 at the premises of M/s Century Metal Recycling Pvt. Ltd. (CMR), the holding company of the petitioner.

The survey revealed:

  • The petitioner had high turnover but extremely low profit margins.
  • Documents allegedly indicated bogus purchase/sales transactions between the petitioner and CMR.
  • Statements of employees suggested lack of knowledge about transporters and invoices, raising suspicion regarding genuineness of transactions.

Based on this, the Assessing Officer (AO) formed a belief that income had escaped assessment and issued notices under Section 148.

Issues Involved

  1. Whether reassessment under Sections 147/148 is valid when original assessment was completed under Section 143(3).
  2. Whether the reassessment amounts to a mere change of opinion.
  3. Whether subsequent survey material constitutes “tangible material” for reopening assessment.
  4. Whether the assessee failed to disclose fully and truly all material facts.

Petitioner’s Arguments

  • The issues raised in reassessment were already examined during original scrutiny assessments.
  • Reopening is based on same material, hence amounts to change of opinion, which is impermissible.
  • All invoices and supporting documents were duly furnished earlier.
  • The reassessment is essentially a review of concluded assessment, which is not allowed under law.

Respondent’s Arguments

  • Reassessment was triggered by new material obtained from survey (post-assessment).
  • The survey revealed incriminating evidence and suspicious transactions.
  • Statements of employees and seized documents indicated possible bogus sales/purchases.
  • The assessee failed to make a true and full disclosure of material facts, attracting Section 147.

Court’s Findings / Order

  • The Court held that the reassessment was not based on change of opinion, but on fresh tangible material obtained from the survey.
  • The survey report (dated 26.03.2015) and subsequent information (shared on 19.03.2018) constituted valid basis for “reason to believe”.
  • The Court relied on settled law that reassessment is valid if:
    • New material comes into possession after original assessment; and
    • Such material indicates escapement of income.
  • It was observed that:
    • The transactions appeared “suspect, to say the least”.
    • The AO acted within jurisdiction in issuing notice under Section 148.

Final Decision:

  • Writ petitions dismissed
  • Reassessment notices upheld

Important Clarifications by Court

  • Reassessment is valid where fresh information exposes possible untruthfulness of earlier disclosures.
  • It is not necessary that AO must conclusively prove escapement at notice stage—only a prima facie belief is required.
  • Courts will not interfere if there exists a rational connection between material and belief.
  • Distinction emphasized:
    • Change of opinion → Not allowed
    • Fresh tangible material → Valid ground for reopening

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2019:DHC:2032-DB/SRB09042019CW117362018.pdf

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