Reassessment beyond four years requires nondisclosure of material facts; later benami findings cannot justify reopening.

Reassessment initiated beyond four years from the end of the assessment year could be sustained only if the assessee had failed to disclose fully and truly all material facts necessary for assessment under section 147. The reopening was based on a later finding in the assessee's son's case that he was a benamidar, but that finding arose long after the original assessment and was not in existence when the assessee was assessed. A fact not then in existence could not be treated as material that the assessee was bound to disclose. The reassessment was therefore held not validly initiated, and the reference was answered in favour of the assessee.

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Issues: Whether the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961, were validly commenced after the expiry of four years from the end of the assessment year, and whether the assessee had failed to disclose fully and truly all material facts necessary for the assessment.

Analysis: The assessment had originally been completed in the regular course, and the reopening was initiated beyond four years from the end of the relevant assessment year. In such a case, the reassessment could be sustained only under section 147(a), which required proof that the assessee had failed to disclose fully and truly all material facts necessary for the assessment. The basis for reopening was a later finding in the case of the assessee's son that he was a benamidar, but that finding was recorded long after the original assessment of the assessee and was not in existence at the relevant time. A fact or finding not then in existence could not be treated as something the assessee ought to have disclosed.

Conclusion: The reassessment proceedings were not validly initiated, and the question referred was answered in the negative, in favour of the assessee.

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