Reassessment beyond four years barred where full disclosure was made in the original assessment and no failure to disclose was recorded.

Reassessment initiated after four years from the end of the assessment year is barred under the proviso to section 147 unless income escaped assessment because the assessee failed to make a return or to fully and truly disclose all material facts necessary for assessment. Here, the disputed claim of deduction under section 43B for excise duty on stock in a bonded warehouse had been fully disclosed in the original assessment under section 143(3). As no recorded failure to disclose material facts existed, the reopening was held invalid and time-barred in favour of the assessee.

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Issues: Whether reassessment initiated beyond four years from the end of the assessment year was valid in the absence of any finding that the assessee had failed to disclose fully and truly all material facts necessary for assessment.

Analysis: The reopening was based on the Revenue's view that deduction under section 43B had been wrongly claimed in respect of excise duty on stock in bonded warehouse. The material fact relating to the claim had, however, been fully disclosed in the original assessment completed under section 143(3). In the absence of any recorded failure to disclose material facts, the proviso to section 147 barred reassessment after the expiry of four years from the end of the relevant assessment year.

Conclusion: The reassessment was invalid and barred by limitation; the issue is decided in favour of the assessee.

Ratio Decidendi: Reassessment under the proviso to section 147 cannot be initiated after four years from the end of the relevant assessment year unless income has escaped assessment by reason of the assessee's failure to make a return or to disclose fully and truly all material facts necessary for assessment.

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