Assessment reopening is valid where the officer independently forms belief, even if audit information triggers scrutiny.

Reopening of assessment under section 147(b) was valid because the Assessing Officer independently applied his mind to the material and formed his own belief that the earlier set-off of business loss was not proper. The court distinguished cases where reassessment rests merely on an audit party's opinion, and accepted the finding that the officer did not act mechanically on the audit note. The businesses had been closed long before the relevant assessment year, and that factual position supported the conclusion that reassessment was permissible.

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Issues: Whether the reopening of the assessment under section 147(b) of the Income-tax Act, 1961 was valid when the assessing officer relied on audit information, or whether the reopening was vitiated as being based solely on such information.

Analysis: The assessee's businesses had been found to have been closed long before the relevant assessment year, and the Income-tax Officer reopened the assessment after independently applying his mind to that factual position. The court distinguished a case where reassessment is founded merely on an audit party's opinion, and accepted the Tribunal's finding that the officer had not acted mechanically on the audit note but had formed his own conclusion that the set-off earlier allowed was not proper. The reopening was also consistent with the earlier decision involving the same assessee on the availability of business loss set-off where the businesses had been closed long back.

Conclusion: The reopening under section 147(b) was held valid and the question was answered in the affirmative, against the assessee.

Final Conclusion: The reassessment was upheld because the material showed an independent formation of belief by the assessing officer that the earlier allowance of set-off was not permissible.

Ratio Decidendi: Reopening of assessment under section 147(b) is valid where the assessing officer independently applies his mind to the material and forms his own belief, even if the trigger for scrutiny arises from audit information.

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