Reassessment beyond four years requires a clear failure to disclose material facts; vague reasons could not sustain reopening.

A reassessment notice issued beyond four years after scrutiny assessment was held invalid because the recorded reasons did not show failure by the assessee to fully and truly disclose all material facts. The AO had already sought and accepted details of unsecured loans in the original Section 143(3) assessment, and the reopening reasons relied only on general survey information without identifying the specific lenders, loans, or disclosure lapse. As the first proviso to Section 147 applied, the reasons had to independently establish the statutory condition for reopening and could not be supplemented later by notices, objections orders, or affidavits. On the material available, the loans were documented, routed through banking channels, and repaid, so the Section 148 notice was quashed.

---

---

Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 for A.Y. 2013-14, after expiry of four years from the end of the assessment year and following a scrutiny assessment under Section 143(3), was valid in the absence of a disclosed failure by the assessee to fully and truly disclose all material facts necessary for assessment.

Analysis: The assessee had been subjected to scrutiny assessment, and the assessing officer had specifically called for details of unsecured loans, which were furnished and accepted in the assessment framed under Section 143(3) without any addition. The reasons recorded for reopening merely referred to information from a survey, alleged bogus unsecured loans, and an escape of income, but did not identify the specific lenders, the particular loans said to be bogus, or the material showing failure of disclosure. As the reopening was beyond four years, the first proviso to Section 147 applied, and reopening could be sustained only if escapement resulted from failure to disclose fully and truly all material facts. The reasons had to stand on their own and could not be improved by later notices, objections orders, or affidavits. On the material placed, the loans had in fact been documented, routed through banking channels, and repaid.

Conclusion: The notice under Section 148 was unsustainable and was quashed. The challenge succeeded in favour of the assessee.

---