Reassessment beyond four years fails where prior period expenses were fully disclosed and examined in the original assessment.

Reassessment under sections 147/148 was treated as invalid where notice issued beyond four years rested on alleged non-disclosure of prior period expenses, because the assessment record showed repeated queries, full particulars, vouchers and explanations had been furnished, and the Assessing Officer had already applied his mind in the original section 143(3) assessment. On those facts, reopening amounted to a mere change of opinion and was not saved by Explanation 1 to section 147, since the issue had been specifically examined rather than left to passive record production. The reassessment was therefore without jurisdiction for want of failure to make a full and true disclosure.

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Issues: Whether reassessment under sections 147/148 of the Income-tax Act, 1961 was valid where the notice was issued beyond four years on the allegation that the assessee had failed to disclose fully and truly all material facts relating to prior period expenses.

Analysis: The regular assessment proceedings showed that the Assessing Officer had raised repeated queries on the very issue of prior period expenses and the assessee had furnished details, vouchers and explanations. The record therefore demonstrated that the material facts were before the Assessing Officer and that he had applied his mind while completing the assessment under section 143(3). In such circumstances, reopening could not be justified on the basis of a mere change of opinion. Explanation 1 to section 147 did not assist the Revenue because the case was not one of passive production of records alone, but one in which the issue had been specifically examined during the original assessment.

Conclusion: The reassessment was without jurisdiction and the assessee had not failed to make a full and true disclosure. The reopening was invalid and the appeal failed.

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