Reassessment under section 147 needs tangible nexus to the assessee; a vague third-party statement alone is insufficient.

Reopening of assessment under section 147 requires tangible material giving a rational nexus with the assessee's case and supporting a bona fide reason to believe that income has escaped assessment. A third-party statement that does not name the assessee or otherwise link the assessee to the alleged escapement is too vague and general to satisfy that statutory threshold. On the stated facts, the reassessment had no legal foundation and was not sustainable in law.

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Issues: Whether reassessment proceedings could validly be initiated under section 147 of the Income-tax Act, 1961, on the basis of a general statement that did not mention the assessee by name or otherwise furnish any specific material connecting the assessee with escapement of income.

Analysis: The reassessment was founded solely on the statement of a third party, and that statement contained no reference to the assessee. The material on record was therefore found to be too general and lacking in tangible nexus with the assessee's case. In such circumstances, the statutory requirement of reason to believe, supported by relevant material, was not satisfied. The reopening was thus held to be without legal foundation.

Conclusion: Reassessment proceedings under section 147 were invalid and not sustainable in law.

Ratio Decidendi: Reopening of assessment requires tangible material having a rational nexus with the assessee's case; a vague or general third-party statement, unconnected to the assessee, cannot by itself furnish reason to believe that income has escaped assessment.

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