Reassessment beyond four years: non-disclosure of a foreign payee's India nexus supported reopening, while treaty issues were left open.

For reassessment notices issued beyond four years, section 147 read with section 148 requires reasons to believe that income escaped assessment due to the assessee's failure to fully and truly disclose all material facts necessary for assessment. The note records that disclosed audit material and accounts showed the remittances, but did not disclose the material fact that the foreign payee had a permanent establishment in India and that the payments could be taxable in India. On that basis, the reopening jurisdiction was treated as having a live nexus with the recorded reasons, while transfer pricing and India-Korea DTAA issues were considered premature at the notice stage and left for reassessment proceedings. The reopening notice and objection order were upheld as valid.

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Issues: Whether the notice reopening assessment beyond four years under section 148 read with section 147 was valid despite the assessee's objection that there was no failure to disclose fully and truly all material facts.

Analysis: The reopening was examined on the settled requirement that, after four years, the Assessing Officer must have reasons to believe that income has escaped assessment and that such escapement is attributable to the assessee's omission or failure to disclose fully and truly all material facts necessary for assessment. The disclosed audit material and accounts showed the payments made, but did not disclose the material fact that the foreign payee had a permanent establishment in India and that the remittances could be chargeable to tax in India. On the record, the Court found that this non-disclosure went to the root of the reassessment jurisdiction and that the reasons recorded had a live nexus with the belief that income had escaped assessment. Issues relating to transfer pricing and the India-Korea DTAA were held not to be material at the notice stage and were left open for reassessment proceedings.

Conclusion: The reopening notice and the order rejecting objections were upheld as valid.

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