Reassessment beyond four years fails without nondisclosure, and CBDT Circular No. 7/2009 cannot apply retrospectively.

Reassessment initiated beyond four years was held invalid because the original scrutiny had already examined commission payments and the assessee had disclosed the relevant facts in response to specific queries; absent any fresh material or proof of failure to make full and true disclosure, the reopening could not stand. The disallowance founded on CBDT Circular No. 7/2009 also failed because the binding precedent applied in the note treated that circular as non-retrospective and inapplicable to commission payments made before its issue. On that reasoning, the reassessment order was quashed and the addition deleted.

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Issues: Whether reopening of assessment beyond four years was valid in the absence of failure by the assessee to fully and truly disclose all material facts, and whether the disallowance founded on the CBDT circular could be sustained.

Analysis: The reassessment was initiated after four years from the end of the relevant assessment year. The material on record showed that the original assessment had specifically examined commission payments and the assessee had responded to that query, so the relevant facts were already before the Assessing Officer. No fresh material was brought on record to show any failure of disclosure by the assessee. The reopening was based on Circular No. 7/2009 dated 22.10.2009, but the binding precedent relied upon held that the circular could not be applied retrospectively to payments made before its issuance.

Conclusion: The reopening was invalid and the reassessment order was quashed. The assessee succeeded and the Revenue's challenge to the deletion of the addition also failed.

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