Reopening beyond four years barred where scrutiny disclosed all material facts and the issue was already examined

Reopening of an assessment beyond four years is barred where the assessee has already disclosed all material facts and the issue was examined during scrutiny. The text states that the recorded reasons showed queries on promotional expenses, partial disallowance in the original assessment, and disclosure of relevant submissions and CBDT circular material. In those circumstances, the first proviso to Section 147 was not satisfied, so the reassessment amounted to a mere change of opinion and an impermissible review of a completed assessment. It also notes that the same issue had already been carried in appeal, further supporting invalidity of the notice.

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Issues: Whether the notice reopening the assessment under Section 148 of the Income-tax Act, 1961 for an assessment year beyond four years from the end of the relevant year was valid when the issue sought to be reopened had already been examined in the original scrutiny assessment and partly disallowed.

Analysis: The reopening was issued after the expiry of four years, so the first proviso to Section 147 required a failure by the assessee to disclose fully and truly all material facts necessary for assessment. The recorded reasons themselves showed that the assessment records had been examined, the promotional expenses were specifically queried during scrutiny, and the assessing officer had already disallowed one-third of the expenditure while allowing the balance. On that admitted position, the condition of failure to disclose material facts was not satisfied. The material also showed that the assessee had furnished details and submissions during the scrutiny proceedings, including on the CBDT circular relied upon in the reasons recorded. The proposed reassessment would therefore amount to a mere change of opinion and an impermissible review of the completed assessment. The issue was also not open to reassessment once it had already been carried in appeal and decided.

Conclusion: The reopening notice was invalid and was quashed; the issue was decided in favour of the assessee.

Ratio Decidendi: Where reassessment is sought beyond four years, and the recorded reasons show that the material facts were already disclosed and the issue was examined in scrutiny assessment, reopening is barred by the first proviso to Section 147 and cannot be sustained as a mere change of opinion.

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