Assessees win appeal as Tribunal deems reopening of assessments after four years invalid.

The Tribunal allowed the appeals of the assessees, ruling that the reopening of assessments under Section 147 after four years was invalid. It held that there was no failure on the part of the assessees to disclose all material facts necessary for assessment. The Tribunal found the precedents cited by the assessees applicable and vacated the CIT(A)'s findings, ultimately ruling in favor of the assessees.

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Issues Involved:
1. Validity of reopening the assessment under Section 147 after four years from the end of the relevant assessment year.
2. Whether there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
3. Applicability of judicial precedents cited by the assessee in support of their case.
4. Whether the reassessment notice issued under Section 148 was valid.

Detailed Analysis:

1. Validity of Reopening the Assessment Under Section 147 After Four Years:
The assessees contended that the reopening of the assessment under Section 147 after four years from the end of the relevant assessment year was invalid. They relied on the Supreme Court decision in CIT vs. Foramer France (264 ITR 566) and other judicial precedents. The CIT(A) held that the reopening was valid as the original assessment was completed under Section 153A r.w.s. 143(3) post-search, where the focus was on seized materials. The CIT(A) observed that the reopening was within the permissible limit of the Act as the escaped amount exceeded Rs. 1 lakh.

2. Failure to Disclose Material Facts:
The assessees argued that all material facts were fully and truly disclosed during the original assessment, and there was no failure on their part. They cited the case of Macdermott International Inc vs. Addl. CIT (259 ITR 138) and other judicial precedents. The CIT(A) disagreed, stating that the credit of Rs. 1,60,596/- in the current account was not brought to the notice of the Assessing Officer during the search assessment proceedings. The CIT(A) concluded that the reopening was based on cogent and credible evidence surfaced subsequently, not on a change of opinion.

3. Applicability of Judicial Precedents:
The assessees relied on several judicial precedents, including the decision of the Cochin Tribunal in the case of M/s. Cordial Company (ITA No. 119/Coch/2013), where it was held that reopening after four years was invalid if the original assessment was completed under Section 153A r.w.s. 143(3). The CIT(A) found these precedents inapplicable, as the original assessment in the present case was not completed under Section 143(3) but under Section 153A r.w.s. 143(3), focusing on seized materials.

4. Validity of Reassessment Notice Under Section 148:
The assessees contended that the notice under Section 148 was issued without recording that there was a failure on their part to disclose fully and truly all material facts necessary for the assessment. They cited the case of Titanor Components Ltd. vs. Asst CIT (243 CTR 520). The CIT(A) held that the reopening was valid as the assessee failed to disclose the amount credited to the current account and explain its source during the original assessment. The CIT(A) observed that the reopening was within the permissible limit of the Act and based on credible evidence.

Tribunal's Decision:
The Tribunal considered the rival submissions and perused the records. It noted that the original assessments were completed under Section 153A r.w.s. 143(3), and the authorized representative of the assessees had filed necessary documents, including bank statements and partners' current accounts. The Assessing Officer completed the assessments after being satisfied with the replies. The Tribunal held that there was no negligence on the part of the assessees in furnishing the required details. It found the ratio laid down in the case of Cordial Company applicable and vacated the findings of the CIT(A), allowing the appeals of the assessees.

Conclusion:
The Tribunal allowed the appeals of the assessees, holding that the reopening of the assessments under Section 147 after four years was invalid as there was no failure on the part of the assessees to disclose fully and truly all material facts necessary for the assessment. The Tribunal vacated the findings of the CIT(A) and ruled in favor of the assessees.

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