Reopening of assessment requires independent reason to believe and full disclosure of material facts before four years expire.

Reopening of a completed assessment under sections 147 and 148 requires the Assessing Officer's own reason to believe, founded on tangible material with a live nexus to escapement of income, and not borrowed satisfaction from external reports or investigations. A bare assertion of independent inquiry, without disclosing what was examined or what material emerged, is insufficient to confer jurisdiction. Where the notice is issued beyond four years, the additional statutory condition of failure to disclose fully and truly all material facts must also be satisfied; that condition was not met where the alleged illegality became known only later and the assessee could not withhold a fact not then known to it. The reopening notices were invalid and quashed.

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Issues: Whether reopening of assessment under sections 147 and 148 was valid when the recorded reasons were based on the Shah Commission report and DRI material without independent application of mind; and whether, in the case of notice issued beyond four years, the statutory condition of failure to disclose fully and truly all material facts was satisfied.

Analysis: The recorded reasons in both matters substantially reproduced material from the Shah Commission report and the DRI investigation. The Court held that a reopening notice must rest on the Assessing Officer's own reason to believe, supported by tangible material having a rational nexus with escapement of income, and not on borrowed satisfaction. A bare statement that the office made an independent inquiry, without disclosure of what that inquiry was or what material emerged from it, was insufficient to sustain jurisdiction. The Court also held that, where reopening is beyond four years, the additional statutory requirement of failure to disclose fully and truly all material facts must be met. On the facts, the supposed illegality of mining leases was declared only later, and the assessee could not be faulted for not disclosing a fact not then known to it.

Conclusion: The reopening notices were invalid and liable to be quashed.

Final Conclusion: The petitions succeeded, and the reassessment notices were set aside for want of jurisdiction.

Ratio Decidendi: Reopening of a completed assessment, especially beyond four years, is valid only if the recorded reasons disclose the Assessing Officer's own independent belief based on tangible material with a live nexus to escapement of income, and the assessee's alleged failure to disclose must relate to facts actually known and withheld by it.

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