Reopening beyond four years and co-operative society deduction under section 80P(2)(d) were both resolved in favour of the assessee.

Reopening of a completed assessment beyond four years was invalid because the recorded reasons did not specifically allege failure by the assessee to disclose fully and truly all material facts; the exercise was treated as a mere change of opinion without fresh material, so the reassessment was quashed. Interest income earned by a co-operative society from deposits with a co-operative bank was held deductible under section 80P(2)(d), the jurisdictional High Court view being applied and the contrary Supreme Court authority distinguished on its facts. The assessment and appellate orders were set aside, and relief was granted to the assessee on both jurisdictional and merits grounds.

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Issues: (i) whether reopening of a completed assessment beyond four years was valid in the absence of any recorded allegation that the assessee failed to disclose fully and truly all material facts; and (ii) whether interest income earned from deposits made with a co-operative bank was eligible for deduction under section 80P(2)(d).

Issue (i): Whether reopening of a completed assessment beyond four years was valid in the absence of any recorded allegation that the assessee failed to disclose fully and truly all material facts.

Analysis: The recorded reasons for reopening referred only to alleged escapement of income and the inapplicability of the deduction claim, but did not allege any failure by the assessee to disclose fully and truly all material facts necessary for assessment. The original assessment had already been completed, and the subsequent rectification proceedings under section 154 were also not carried through to alter the assessment. In these circumstances, reopening was found to be based on a mere change of opinion and not on any fresh material, making the exercise contrary to the statutory requirement for reopening beyond four years.

Conclusion: The reopening was held invalid and the reassessment proceedings were quashed, in favour of the assessee.

Issue (ii): Whether interest income earned from deposits made with a co-operative bank was eligible for deduction under section 80P(2)(d).

Analysis: The interest arose from investments made by the co-operative society with a co-operative bank, and the jurisdictional High Court had taken the view that such income falls within the scope of section 80P(2)(d). The contrary reliance on the Supreme Court decision concerning a different factual setting was treated as distinguishable. On that basis, the deduction claim was held to be allowable on the facts of the case.

Conclusion: The assessee was held entitled to deduction under section 80P(2)(d), in favour of the assessee.

Final Conclusion: The assessment and appellate orders were set aside, and the deduction claim was directed to be allowed, resulting in relief to the assessee on both jurisdictional and merits grounds.

Ratio Decidendi: Reopening of a completed assessment beyond four years is impermissible unless the recorded reasons specifically allege failure to disclose fully and truly all material facts, and interest earned by a co-operative society from deposits with a co-operative bank is deductible under section 80P(2)(d).

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