Reassessment after four years barred by the proviso to section 147 where full disclosure existed and reopening was mere change of opinion.

Reassessment initiated after four years from the end of the relevant assessment year was unsustainable where the original scrutiny assessment under section 143(3) had been completed and the record showed full disclosure of material facts by the assessee. In the absence of any averment or finding of failure to disclose fully and truly all facts necessary for assessment, the reopening was treated as a mere change of opinion and was barred by the proviso to section 147 of the Income-tax Act, 1961. The reassessment notice and consequential rejection order were quashed.

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Issues: Whether reassessment initiated after expiry of four years from the end of the relevant assessment year was sustainable when the original scrutiny assessment had been completed and there was no disclosed failure by the assessee to fully and truly disclose all material facts.

Analysis: The reassessment notice was issued after the expiry of four years from the end of the relevant assessment year. The reasons recorded showed that the Assessing Officer had all material facts before him when the original assessment under section 143(3) of the Income-tax Act, 1961 was completed, and there was no indication of any material fact that had not been disclosed by the assessee. In the absence of any averment or finding of failure to disclose fully and truly all material facts necessary for assessment, the reopening amounted to a mere change of opinion. Such reopening is barred by the proviso to section 147 of the Income-tax Act, 1961.

Conclusion: The reassessment proceedings were unsustainable and the reopening notice and consequential rejection order were liable to be quashed. The issue was decided in favour of the assessee.

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