Reopening beyond four years fails without specific non-disclosure, and later circulars cannot justify section 147 action.

Reassessment beyond four years was held unsustainable because the recorded reasons did not specifically show that the assessee failed to fully and truly disclose material facts necessary for assessment, and the scrutiny record showed the relevant expenditure details had been furnished. Circular No. 5/2012 and the amended medical regulations, being introduced after assessment year 2008-09, could not supply tangible material for reopening that year's assessment. The reopening therefore lacked the jurisdictional basis required under section 147, and the reassessment notice and objection order were quashed in favour of the assessee.

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Issues: (i) Whether the reopening notice issued beyond four years from the end of the relevant assessment year was valid in the absence of a disclosed failure by the assessee to fully and truly disclose material facts necessary for assessment. (ii) Whether Circular No. 5/2012 and the amended medical regulations could furnish a valid basis for forming a belief that income had escaped assessment for assessment year 2008-09.

Issue (i): Whether the reopening notice issued beyond four years from the end of the relevant assessment year was valid in the absence of a disclosed failure by the assessee to fully and truly disclose material facts necessary for assessment.

Analysis: The reassessment was initiated after the expiry of four years, so the proviso to section 147 required the Revenue to show failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The recorded reasons did not identify any specific material fact that had been withheld. The assessment record showed that details regarding the disputed expenditure had been called for during scrutiny and were furnished. The assessee was required to disclose primary facts, not the legal inference or the later regulatory basis relied upon for reopening.

Conclusion: The reopening could not be sustained on the ground of alleged non-disclosure and was invalid in favour of the assessee.

Issue (ii): Whether Circular No. 5/2012 and the amended medical regulations could furnish a valid basis for forming a belief that income had escaped assessment for assessment year 2008-09.

Analysis: The circular and the amended regulation relied upon by the Revenue were brought into force in 2009 and 2012, whereas the relevant assessment year was 2008-09. The governing law is the law in force for the relevant assessment year unless a contrary legislative intent is shown. Since the circular and the amended regulation were not applicable to that year, they could not constitute tangible material for reopening. Without such applicable material, the belief that income had escaped assessment lacked jurisdictional foundation.

Conclusion: The circular and amended regulations could not justify reopening for assessment year 2008-09, and this issue is decided in favour of the assessee.

Final Conclusion: The reassessment notice and the order rejecting objections were quashed because the jurisdictional preconditions for reopening a concluded assessment beyond four years were not satisfied.

Ratio Decidendi: For reopening a completed assessment beyond four years, the recorded reasons must specifically disclose the assessee's failure to fully and truly disclose material facts, and a subsequent circular or regulatory amendment not applicable to the relevant assessment year cannot constitute valid tangible material for section 147 reopening.

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