Reassessment after four years requires recorded nondisclosure and independent belief; audit-driven change of opinion cannot justify reopening.

After four years from the end of the relevant assessment year, reassessment under Section 147 is permissible only where the recorded reasons specifically allege that the assessee failed to fully and truly disclose all material facts necessary for assessment. If the reasons contain no such allegation, and the material was already disclosed in the original scrutiny, reopening is invalid. A reassessment also cannot rest on an audit objection or a later change in treatment of the same item, because the Assessing Officer must form an independent belief based on his own reasons to believe. An audit-driven reopening in such circumstances amounts to a change of opinion and is legally unsustainable.

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Issues: (i) Whether reopening of assessment beyond four years from the end of the relevant assessment year was valid in the absence of an allegation of failure to fully and truly disclose all material facts. (ii) Whether the reassessment was vitiated because it was initiated on the basis of an audit objection and reflected a mere change of opinion rather than the Assessing Officer's independent belief.

Issue (i): Whether reopening of assessment beyond four years from the end of the relevant assessment year was valid in the absence of an allegation of failure 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, so the proviso to Section 147 governed the exercise of power. In such a case, reopening is permissible only if the recorded reasons disclose a failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. The recorded reasons did not contain any such allegation, and the record also showed that the disputed foreign exchange gain had been disclosed during the original assessment proceedings.

Conclusion: The reopening was invalid and the notice under Section 148 could not be sustained.

Issue (ii): Whether the reassessment was vitiated because it was initiated on the basis of an audit objection and reflected a mere change of opinion rather than the Assessing Officer's independent belief.

Analysis: The assessment records showed that the issue had been specifically raised and answered during the original scrutiny proceedings. The affidavit in reply also confirmed that the reopening was triggered by an audit objection and by a later year's treatment of the same item, which showed that the Assessing Officer was not acting on his own independent satisfaction. Reopening on such a basis amounts to a change of opinion and is not a valid foundation for reassessment.

Conclusion: The reassessment was unlawful because it was founded on an audit objection and not on the Assessing Officer's independent reasons to believe.

Final Conclusion: The reassessment notice and all consequential proceedings were quashed, and the petition succeeded.

Ratio Decidendi: After four years, reassessment requires a specific recorded failure by the assessee to disclose material facts fully and truly, and the reopening must rest on the Assessing Officer's own independent satisfaction rather than an audit-driven change of opinion.

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