In absence of any allegation in notice u/s. 148 (of Income Tax Act, 1961) that there was any failure on part of assessee to disclose truly and fully all material facts necessary for assessment, considering first proviso to S. 147, assumption of jurisdiction was absolutely improper.

Held So far as the reopening of the assessment beyond the period of 4 years is concerned, at the outset it is required to be noted that the assessment can be reopened beyond the period of 4 years, if an only if the income chargeable to tax has escaped assessment by reason of failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment for that assessment year, even if the Assessing Officer is authorized to make reassessment in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the first proviso to Section 147 (of Income Tax Act, 1961), assessment can be reopened under Section 147 (of Income Tax Act, 1961) after expiry of 4 years only if the assessee had failed to make a return under Section 139 (of Income Tax Act, 1961) or in response to the notice issued under Section 142(1) (of Income Tax Act, 1961) or Section 148 (of Income Tax Act, 1961), he failed to disclose truly and fully all material facts necessary for the assessment. Once all the primary facts were before the Assessing Authority, no further assistance is required by way of disclosure. Once the case of the assessee is covered by the first proviso to Section 147 (of Income Tax Act, 1961), the reassessment proceedings beyond the period of 4 years from the end of the relevant year would be without any jurisdiction and bad in law, if all material facts were furnished and there remained no omission or failure on the part of the assessee to disclose truly and fully all material facts. (Para 8.2) In the present case, a perusal of the reasons recorded show that there is not even a whisper to the effect that income has escaped assessment on account of any failure on the part of the petitioner assessee to disclose fully and truly all material facts necessary for its assessment. (Para 8.3) Under the circumstances and in absence of any allegation in the notice under Section 148 (of Income Tax Act, 1961) that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, considering first proviso to Section 147 (of Income Tax Act, 1961), the assumption of jurisdiction is absolutely wholly without jurisdiction and illegal. Under the circumstances, impugned notices under Section 148 (of Income Tax Act, 1961) beyond the period of 4 years cannot be sustained on the aforesaid ground alone and the same deserve to be quashed and set aside. (Para 8.5) Now, so far as the initiation of impugned reassessment proceedings and the impugned notices under Section 148 (of Income Tax Act, 1961) within 4 years is concerned, it appears that the reopening has taken place only on one ground that the assessee has paid price of sugarcane more than the SMP. It is required to be noted that in all these cases the assessments were completed under Section 143(3) (of Income Tax Act, 1961) after holding necessary inquiry by the Assessing Officer. It also appears that the inquiry was made and the issue was gone into detail. It is also required to be noted that in some of the cases the practice of paying more prices to the cane growers than the SMP declared by the Government has been consistently followed since many years and the same has been accepted and no objection has been raised at any point of time earlier. It appears that the reason to believe and/or formation of the opinion by the Assessing Officer that the income chargeable to tax has escaped assessment is on the ground that the assessee has paid more price than the price determined / declared by the Government and therefore, the same is nothing but distribution of profits and/or passing of profit.However it is required to be noted that once at the time of original assessment under Section 143(3) (of Income Tax Act, 1961) the Assessing Officer after applying the mind accepted the return, thereafter reopening of the assessment can be said to be on mere change of opinion of the Assessing Officer and as per the catena of decisions of the Hon’ble Supreme Court as well as High Court mere on change of opinion of the Assessing Officer, reassessment proceedings are not permissible. (Para 9.0) Mere payment of cane price paid in excess to the SMP cannot by ipso facto and/or per se can be said to be distributing the profits. There must be tangible material available with the Assessing Officer, such as the amount or cane price paid to the cane growers in excess to the SMP either is exorbitant or too excessive and is not justifiable at all and on the basis of the material available with the Assessing Officer with respect to the cane price paid by other societies it is found that amount of cane price paid by a particular assessee/cooperative society is not justifiable at all, as either it is exorbitant and/or unreasonable, then and then only it can be said that such excess payment of cane price is nothing but distributing the profits and/or passing of the profits. However, for that and for reopening of the assessment on the aforesaid ground, there must be some tangible material available with the Assessing Officer to have a reasonable belief and/or form su such an opinion and in that case only the reassessment is permissible. (PARA 9.2) Control Order provides for additional price for sugarcane purchased and it also further provides that no additional price determined under sub-clause (2) or sub-clause (3) of Section 5A (of Income Tax Act, 1961) shall become payable by a producer of sugar who pays a price higher than the minimum sugarcane price fixed under Clause (3) to the sugarcane growers, provided that the price so paid shall in no case be less than the total price comprising the minimum sugarcane price fixed under clause (3) and the additional price determined under sub-clause (2) or sub-clause (3) as the case may be of Clause 5A. Therefore, even in the Control Order itself there is a reference to the additional purchase price which can be more than the purchase price fixed under clause (3). However, as observed hereinabove, in a given case after holding inquiry if it is found that the purchase price paid in excess to the SMP is so exorbitant and/or unreasonable it can be said to be distributing the profits and/or passing of the profits. However, for that purpose there must be some further inquiry and/or tangible material with the Assessing Officer. (PARA 9.4) Under the circumstances, the impugned notices under Section 148 (of Income Tax Act, 1961) to reopen the proceedings beyond 4 years and within 4 years on the aforesaid ground i.e. on the ground that the payment of purchase price in excess to the SMP has escaped the assessment cannot be sustained and the same deserves to be quashed and set aside. (PRARA 9.5)