Reassessment beyond four years requires proof of failure to disclose material facts; reopening was quashed.

Reassessment initiated beyond four years from the end of the assessment year can be sustained only if the revenue shows that the assessee failed to fully and truly disclose all material facts necessary for assessment. Here, the original assessment was completed under scrutiny, and the recorded reasons for reopening showed only a fresh perusal of the assessment record. The Court found no material indicating any omission by the assessee, and the Assessing Officer had already considered the relevant documents in the original assessment. The reassessment notice and the order rejecting objections were therefore quashed as unsustainable.

---

---

Issues: Whether the notice issued for reassessment after expiry of four years from the end of the relevant assessment year was sustainable in the absence of any failure on the part of the assessee to fully and truly disclose all material facts.

Analysis: The Court noted that the original assessment had been completed under section 143(3) of the Income-tax Act, 1961 after scrutiny. The reassessment notice under section 148 was issued beyond four years, attracting the proviso to section 147, and therefore the revenue had to establish failure to disclose material facts fully and truly. On examining the recorded reasons and the assessment record, the Court found that the reopening was based on a mere perusal of the case records and that there was nothing to indicate any such failure by the assessee. The original assessment order showed that the Assessing Officer had already considered the relevant documents and accepted the returned figures.

Conclusion: The reassessment notice and the order rejecting objections were unsustainable and were quashed and set aside.

Final Conclusion: The reopening of assessment beyond four years was invalid for want of failure to disclose material facts, and the impugned reassessment action could not be continued.

Ratio Decidendi: Where reassessment is initiated beyond four years from the end of the assessment year, it can be sustained only if the revenue demonstrates failure by the assessee to fully and truly disclose all material facts necessary for assessment.

---