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Issues involved:
The judgment involves issues related to the reopening of assessment u/s 147/148 of the Income-tax Act, 1961, the validity of the notice issued by the Assessing Officer, the requirement of recording reasons before issuing notice u/s 148, and the jurisdiction of the Assessing Officer to initiate proceedings after the expiry of 4 years from the end of the relevant assessment year. Reopening of Assessment u/s 147/148: The petitioner challenged the notice issued by respondent No.1 for reassessment of income for the assessment year 1995-96, issued after the expiry of 4 years from the end of the relevant assessment year. The Assessing Officer had issued a second notice under section 148, based on certain adjustments made in the return submitted by the assessee. Recording of Reasons for Reopening: The judgment emphasized the importance of recording reasons before issuing a notice u/s 148. The Assessing Officer failed to provide the reasons recorded by him when challenged, which is essential for determining the validity of the assumption of jurisdiction. Jurisdiction of Assessing Officer: The Assessing Officer's reasons for reopening the assessment were found to be based solely on his opinion about the net profit rate of the liquor business, lacking any nexus with the failure of the assessee to disclose all material facts necessary for assessment. The judgment highlighted that subjective satisfaction of the Assessing Officer must be based on relevant material. Decision: The High Court allowed the appeal, setting aside the judgment under appeal and quashing the impugned notices under section 148. The court held that the Assessing Officer lacked jurisdiction to reopen the assessment after the expiry of 4 years from the relevant assessment year. The decision did not affect the orders passed under reassessment proceedings, leaving room for remedial measures against Tribunal orders. No costs were awarded in the case.
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