Reassessment beyond four years fails without fresh tangible material and full disclosure allegation

Reassessment initiated beyond four years under section 147 was unsustainable because it relied on the same material used in the original scrutiny assessment and disclosed no fresh tangible material. The recorded reasons also failed to allege that the assessee had not fully and truly disclosed all material facts necessary for assessment, as required by the first proviso to section 147. On those facts, the reopening amounted to a mere change of opinion and could not be sustained. The reassessment proceedings under sections 147 and 148 were therefore invalid and quashed in favour of the assessee.

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Issues: Whether reassessment initiated beyond four years under section 147 of the Income-tax Act, 1961 was valid in the absence of fresh tangible material and without any recorded allegation that the assessee failed to disclose fully and truly all material facts necessary for assessment.

Analysis: The reassessment was based on the same material that was already available at the time of the original scrutiny assessment under section 143(3), and the recorded reasons did not disclose any new tangible material. The initiation was also beyond four years from the end of the relevant assessment year, attracting the first proviso to section 147, which requires a clear allegation of failure by the assessee to make a full and true disclosure of material facts. In these circumstances, reopening on the same material amounted to a change of opinion and was not legally sustainable.

Conclusion: The reassessment proceedings under sections 147 and 148 were invalid and were rightly quashed. The finding is in favour of the assessee.

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