Reassessment beyond four years needs full and true disclosure failure; existing-record reappraisal and unsupported additions cannot justify tax demands.

Reassessment beyond four years requires a demonstrable failure by the assessee to make full and true disclosure of material facts, and it cannot rest on mere reappraisal of the existing record or a change of opinion; on the facts recorded, the reopening was therefore invalid. A capital gains exemption linked to investment in a residential house remained allowable where the relevant computation and investment details were already disclosed during original assessment, and the claim could be examined on the existing material. Receipts supported by evidence of agricultural operations and lease of agricultural land were not correctly treated as income from other sources, so the related addition was unsustainable.

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Issues: (i) whether the reassessment was validly initiated under the reopening provisions; (ii) whether the assessee was entitled to exemption for the capital gains claimed in respect of the residential house investment; (iii) whether the amount treated as income from other sources, including rent from agricultural land, was liable to be added as taxable income.

Issue (i): Whether the reassessment was validly initiated under the reopening provisions.

Analysis: The reopening was made after the expiry of four years from the end of the relevant assessment year. The recorded reasons did not disclose any failure by the assessee to make a full and true disclosure of material facts, and the reopening was founded on a reappraisal of the existing assessment record rather than fresh tangible material. The approval under the sanction provision was also found to be mechanical.

Conclusion: The reassessment initiation was invalid and failed on jurisdictional grounds, in favour of the assessee.

Issue (ii): Whether the assessee was entitled to exemption for the capital gains claimed in respect of the residential house investment.

Analysis: The record showed that the assessee had disclosed the capital gains computation and the house investment details during the original assessment proceedings. The entitlement to the exemption was not defeated merely because the claim was reiterated in reassessment proceedings or because the exemption was not separately claimed in the return in the manner suggested by the Revenue. The appellate authority was competent to entertain and grant the lawful claim on the materials already on record.

Conclusion: The exemption claim was allowable and the disallowance was unsustainable, in favour of the assessee.

Issue (iii): Whether the amount treated as income from other sources, including rent from agricultural land, was liable to be added as taxable income.

Analysis: The assessee produced material to show agricultural operations and lease of agricultural land for agricultural purposes. The treatment of the receipts as unexplained or as income from other sources was not supported by the evidence. The estimated disallowance made by the appellate authority was therefore unsustainable on the facts recorded.

Conclusion: The addition was not justified and was deleted, in favour of the assessee.

Final Conclusion: The impugned reassessment and the related additions could not be sustained, and the assessee succeeded on all substantive grounds.

Ratio Decidendi: Reassessment beyond four years requires a demonstrable failure to disclose material facts fully and truly, and a reopened assessment cannot rest on mere reappraisal of the existing record or change of opinion; appellate authorities may also allow a lawful exemption claim supported by the record.

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