Reassessment beyond four years needs mandatory sanction and proof of nondisclosure of material facts.

A reassessment notice issued beyond four years from the end of the relevant assessment year required prior satisfaction of the Chief Commissioner or Commissioner under section 151, and the absence of that approval rendered the notice invalid. Reopening after the four-year period also depended on a failure by the assessee to fully and truly disclose all material facts necessary for assessment; a mere mistaken understanding of the legal effect of a notification, without suppression of primary facts, did not meet that threshold. Excess depreciation allowed on that basis was insufficient to justify reopening. The notice under section 148 was therefore held invalid.

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Issues: Whether a notice for reassessment issued under section 148 beyond four years from the end of the relevant assessment year was valid without the sanction of the Chief Commissioner or Commissioner, and whether the recorded reasons disclosed any failure by the assessee to fully and truly disclose material facts.

Analysis: For notices issued after the expiry of four years from the end of the relevant assessment year, section 151 of the Income-tax Act, 1961 makes the satisfaction of the Chief Commissioner or Commissioner on the reasons recorded by the Assessing Officer a mandatory precondition. The requirement applies even where the reasons are recorded by an Assessing Officer of higher rank, and the absence of such approval renders the notice bad in law. On the merits of reopening, reassessment after the prescribed period can be sustained only where there is a failure to disclose fully and truly all material facts necessary for assessment. A wrong understanding of the legal effect of a notification, without suppression of primary facts, does not amount to nondisclosure of material facts. Excessive depreciation allowed on that basis does not by itself satisfy the statutory threshold for reopening beyond four years.

Conclusion: The notice under section 148 issued beyond four years without the requisite sanction was invalid, and the writ petition succeeded.

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