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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether reassessment notice issued beyond four years from the end of the relevant assessment year was valid when the assessee had disclosed the exempt income and all material particulars in the original assessment, and whether the reopening was based merely on a change of opinion.
Analysis: The original return and the assessment under section 143(3) of the Income-tax Act, 1961 had already brought on record the dividend income, long-term capital gain claim, and the assessee's explanation in relation to the proposed disallowance under section 14A read with Rule 8D(2) of the Income-tax Rules, 1962. No new tangible material was shown to justify reopening. In such circumstances, and since the notice under section 148 was issued after expiry of four years from the end of the relevant assessment year, the proviso to section 147 barred reassessment in the absence of failure by the assessee to fully and truly disclose all material facts. The reopening was therefore founded on a mere change of opinion, which is impermissible.
Conclusion: The reassessment notice was invalid and liable to be quashed; the decision is in favour of the assessee.
Ratio Decidendi: Reassessment beyond four years under section 147 of the Income-tax Act, 1961 is impermissible unless the Revenue establishes both escapement of income and the assessee's failure to fully and truly disclose all material facts; a mere change of opinion cannot confer jurisdiction.
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