Reassessment beyond four years fails without recorded failure to fully and truly disclose material facts; reopening quashed.

A reassessment notice issued beyond four years from the end of the assessment year is invalid unless the recorded reasons show that income escaped assessment because the assessee failed to disclose fully and truly all material facts necessary for assessment. Where the original assessment was completed under section 143(3), and the reopening relied only on material already available in the annual accounts without any new information coming to the Assessing Officer, the statutory condition for extended limitation is not met. A reopening on such grounds amounts to a mere change of opinion. The reassessment was therefore quashed and the invalidity of the reopening upheld in favour of the assessee.

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Issues: (i) Whether reassessment notice issued beyond four years from the end of the assessment year was valid in the absence of any recorded failure by the assessee to disclose fully and truly all material facts necessary for assessment.

Analysis: The original assessment had been completed under section 143(3) of the Income-tax Act, 1961, and the reassessment notice was issued after the expiry of four years. The reasons recorded for reopening referred to material already available in the annual accounts and did not record any new information coming to the Assessing Officer after the original scrutiny. In a reopening beyond four years, the proviso to section 147 requires a finding that income escaped assessment because of the assessee's failure to make a full and true disclosure of material facts. That jurisdictional fact was absent. In such circumstances, reassessment cannot be sustained on a mere change of opinion or on reasons that do not satisfy the statutory condition for extended limitation.

Conclusion: The reassessment was invalid and the order quashing the reopening was rightly upheld, in favour of the assessee.

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