Reassessment beyond four years needs a recorded allegation of non-disclosure; reopening fails without jurisdiction under the Income-tax Act.

Reassessment beyond four years from the end of the assessment year required the recorded reasons to allege a failure by the assessee to fully and truly disclose all material facts necessary for assessment. As the reasons did not contain that jurisdictional allegation, and the record showed consistent disclosure in the return and prior correspondence, reopening was invalid. A later year's assessment could not cure the missing jurisdictional basis for the earlier year, and a change in tax treatment for later years did not remove the statutory requirement. The notice and consequential rejection of objections were therefore quashed.

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

Analysis: The reassessment was sought after the expiry of four years, so the proviso to Section 147 of the Income-tax Act, 1961 required the Assessing Officer to record a belief that there had been a failure by the assessee to make a full and true disclosure of all material facts necessary for assessment. The recorded reasons did not contain such an allegation, and the material on record also showed that the assessee had disclosed its status consistently in the earlier proceedings and in the return and accompanying correspondence for the relevant year. A later assessment for a subsequent year could not supply the missing jurisdictional foundation for reopening the earlier assessment. The suggested change in tax treatment for later years did not dispense with the statutory requirement.

Conclusion: The reassessment notice and the consequential rejection of objections were without jurisdiction and were quashed. The challenge succeeded in favour of the assessee.

Ratio Decidendi: For reassessment beyond four years, mere reasons suggesting escapement of income are insufficient unless the recorded reasons specifically allege, and the material supports, failure by the assessee to fully and truly disclose all material facts necessary for assessment.

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