Reassessment beyond four years fails without recorded satisfaction of failure to disclose fully and truly all material facts.

Reassessment under section 147 was invalid where the recorded reasons wrongly assumed that no return had been filed and that there was no response to the section 133(6) notice, although the return had in fact been filed, assessed under section 143(3), and the assessee had replied to the enquiry. Because the reopening was initiated beyond four years from the end of the assessment year after a completed section 143(3) assessment, the proviso to section 147 required a recorded satisfaction that escapement arose from failure to disclose fully and truly all material facts. No such satisfaction appeared in the reasons, and it could not be supplied later. The section 148 notice was therefore without jurisdiction and was set aside.

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Issues: Whether reassessment initiated under section 147 of the Income-tax Act, 1961 was valid when the recorded reasons stated that no return had been filed and no response had been given to the notice under section 133(6), and whether the absence of a recorded satisfaction regarding failure to disclose fully and truly all material facts, in a case reopened beyond four years after a completed assessment under section 143(3), vitiated the proceedings.

Analysis: The return of income had in fact been filed and was earlier assessed under section 143(3), so the foundational assumption in the recorded reasons that no return had been filed was incorrect. The record also showed that the assessee had responded to the enquiry, making the further assumption of no response factually unsustainable. Since the reopening was beyond four years from the end of the assessment year and the original assessment had been completed under section 143(3), the proviso to section 147 applied and required a further recorded belief that escapement was due to the assessee's failure to disclose fully and truly all material facts. No such satisfaction was recorded in the reasons, and that requirement could not be supplied later by subsequent material or submissions.

Conclusion: The reassessment notice under section 148 was held to be without jurisdiction and was set aside. The reopening failed in favour of the assessee, and the merits of the addition were treated as academic.

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