Supreme Court: Reassessment under Sections 147 & 148 Upheld

The Supreme Court, comprising Justices J.B. Pardiwala and K. Vinod Chandran, dismissed the appeals filed by Chetan Sabharwal and co‑appellants against the Assistant Commissioner of Income Tax. The bench upheld the income‑tax reassessment made under Sections 147 and 148 of the Income‑Tax Act, confirming that the notice issued on 31‑03‑2015 to reopen Assessment Years 2008‑09 and 2009‑10 was valid.

The appellants had sold shares of two companies and claimed exemption under Section 54F. During the original assessment, the tax authority relied on the assessment order under Section 143(3) and found no irregularity. Later, an Investigation Unit report alleged that the share prices were over‑valued and that the sale proceeds were used to purchase a property, prompting the department to issue a Section 148 notice. The central question was whether the notice satisfied the statutory ‘reason to believe’ requirement and whether it amounted to an impermissible change of opinion after four years.

The Court held that the investigation report supplied tangible material that a reasonable person could rely upon to form a belief of escaped income, satisfying the ‘reason to believe’ test. It observed that the original Section 143(3) assessment did not express any opinion on the alleged overvaluation, so the reassessment was not a change of opinion but a fresh inquiry. Consequently, the appeals were dismissed and the reassessment under Sections 147 and 148 was affirmed.

Read the judgment and its head note on DLJ: Chetan Sabharwal vs Assistant Commissioner Of Income Tax ... (2026 INSC 1163).