Reassessment u/s 148 beyond four years invalid; retrospective s.80-IA amendment can't imply failure under s.147 proviso

HC held that reassessment notices issued u/s 148, beyond four years, were invalid as mandatory conditions of s.147 proviso were not met. The reasons recorded relied solely on a retrospective amendment to s.80-IA excluding works contracts from deduction, and not on any failure by the assessee to fully and truly disclose material facts. The record and the revenue's affidavit did not show such failure, and a "deemed" failure could not be inferred from the amendment. Consequently, the reassessment proceedings were vitiated and the impugned notices were quashed.

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Issues:
1. Validity of impugned notices issued under section 148 of the Income-tax Act, 1961 for reopening assessment.
2. Compliance with the provisions of section 147 regarding the period of reopening assessment.
3. Allegation of failure to disclose fully and truly all material facts necessary for assessment.

Issue 1: Validity of Impugned Notices:
The petitions challenged the impugned notices dated March 29, 2010, and April 29, 2010, issued under section 148 of the Income-tax Act, 1961, seeking to reopen assessments for the years 2003-04 and 2004-05. The main contention was the absence of any allegation that the petitioner failed to furnish all necessary facts for assessment, rendering the notices invalid beyond four years from the relevant assessment years. The respondent argued that the petitioner submitted untrue facts due to an amendment, justifying the reopening. The Court noted that the reasons for reopening assessments did not indicate any failure to disclose material facts, and the respondent did not dispute this fact. The Court held that without any failure to disclose facts, the notices issued after four years were invalid, quashing them.

Issue 2: Compliance with Section 147 Provisions:
The first proviso to section 147 of the Act mandates no action after four years from the end of the relevant assessment year unless income escaped assessment due to the assessee's failure to disclose material facts. In this case, the notices were issued beyond four years without any failure to disclose facts necessary for assessment. The Court emphasized that the initiation of proceedings under section 147 was vitiated due to the absence of any failure to disclose facts, rendering the notices unsustainable.

Issue 3: Allegation of Failure to Disclose Material Facts:
The petitioner contended that the notices were invalid as they were issued beyond four years without any failure to disclose all material facts. The respondent argued that an amendment deemed the petitioner submitted untrue facts, justifying the reopening. However, the Court found that the reasons for reopening did not mention any failure to disclose facts, and the respondent did not dispute this. The Court emphasized that without any failure to disclose facts, the notices issued after four years were invalid, leading to their quashing.

In conclusion, the High Court of Gujarat held that the impugned notices issued under section 148 of the Income-tax Act, 1961 for reopening assessments were invalid as they were issued beyond the permissible period of four years without any failure on the petitioner's part to disclose all material facts necessary for assessment. The Court quashed the notices dated March 29, 2010, and April 29, 2010, respectively, and allowed the petitions, directing the registry to keep a copy of the order in each case.

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