Reassessment beyond four years fails where reasons lack disclosure failure, independent application of mind, and live link to escapement.

Reassessment beyond four years was held invalid where the recorded reasons did not identify any failure by the assessee to fully and truly disclose material facts after an assessment under section 143(3). The Tribunal found that the reopening was based on borrowed information from the Investigation Wing about alleged client code modification, without independent application of mind or a live link between the material and escapement of income. Procedural defects, including non-furnishing of complete reasons and supporting material, absence of sanction material, and denial of effective opportunity, further vitiated the reassessment. The consequential assessment was therefore set aside in favour of the assessee.

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Issues: Whether the reassessment proceedings and consequential assessment were valid in law.

Analysis: The reopening was founded on information from the Investigation Wing regarding alleged client code modification, but the recorded reasons did not show any specific failure by the assessee to fully and truly disclose material facts. The original assessment had been completed under section 143(3), and reopening beyond four years required satisfaction of the proviso to section 147. The Tribunal found that the case rested on borrowed information, without independent application of mind, and that the reasons did not establish a live link between the material and any escapement of income in the assessee's hands. It also noted procedural infirmities, including non-furnishing of complete reasons and material, absence of the sanction material, and denial of effective opportunity in the reassessment process.

Conclusion: The reassessment proceedings were invalid and the consequential assessment was set aside in favour of the assessee.

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