Reassessment after four years fails without recorded nondisclosure of material facts; treaty disclosure made reopening invalid.

Reassessment under Section 148 after four years from the end of the assessment year is invalid unless the recorded reasons show that the assessee failed to fully and truly disclose all material facts necessary for assessment. Here, the reopening rested on a view that income had been taxed at 15% instead of 40% plus surcharge, but the reasons did not allege any nondisclosure. The assessee had disclosed the treaty-based tax position in the return, computation and during scrutiny, and the original assessment noted that the issue was examined and accepted. The notice was therefore without jurisdiction and the consequential proceedings were quashed.

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Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 for the assessment year 2006-07, after the expiry of four years from the end of the relevant assessment year, was valid in the absence of any allegation or material showing failure by the assessee to fully and truly disclose all material particulars necessary for assessment.

Analysis: The reopening was based on the view that tax had been computed at 15% instead of 40% plus surcharge, but the recorded reasons did not allege any failure of disclosure by the assessee. The assessee had disclosed in the return and computation that the income was taxable at 15% under Article 11(2) of the India-Australia Double Tax Avoidance Treaty, and had also explained the relevant treaty position during the original scrutiny assessment. The original assessment order recorded that the issue was examined, details were furnished, and the returned income was accepted after discussion. In these circumstances, the precondition for invoking the first proviso to Section 147 was not satisfied.

Conclusion: The notice under Section 148 was without jurisdiction and was quashed, along with the consequential proceedings.

Ratio Decidendi: Reassessment initiated after four years from the end of the assessment year is invalid unless the reasons recorded disclose a failure by the assessee to fully and truly disclose all material facts necessary for assessment.

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