Reassessment beyond four years fails when recorded reasons omit full disclosure failure and rest on an incorrect factual basis.

Reopening beyond four years under the Income-tax Act, 1961 requires the recorded reasons to expressly show the assessee's failure to fully and truly disclose all material facts necessary for assessment. Where the original assessments were completed under section 143(3) and the section 148 notices were issued after four years, absence of that jurisdictional assertion in the recorded reasons rendered reopening invalid. The defect was compounded because the reopening was based on an incorrect factual premise that no return had been filed and no scrutiny assessment existed, although the record showed otherwise. The reassessment proceedings were quashed for both years.

---

---

Issues: Whether reassessment proceedings initiated beyond four years from the end of the relevant assessment years were valid when the recorded reasons did not state failure by the assessee to fully and truly disclose all material facts, and when the reopening was founded on an incorrect factual premise.

Analysis: The assessments had originally been completed under section 143(3) of the Income-tax Act, 1961, and the notices under section 148 were issued after the expiry of four years. In such a situation, the first proviso to section 147 required the reasons recorded to specifically disclose the assessee's failure to make a full and true disclosure of all material facts necessary for assessment. The recorded reasons contained no such assertion. The reasons also proceeded on the incorrect basis that no return had been filed and no scrutiny assessment existed, although both facts were contrary to the record. The defect went to the root of jurisdiction for reopening.

Conclusion: The reassessment proceedings were invalid and were quashed for both years, while the remaining grounds were left open.

Final Conclusion: The assessee succeeded on the jurisdictional challenge to reopening, and the connected appeals were disposed of as partly allowed.

Ratio Decidendi: For a reopening beyond four years under section 147 of the Income-tax Act, 1961, the recorded reasons must expressly show failure to disclose fully and truly all material facts, and reopening based on an incorrect factual foundation is without valid jurisdiction.

---