Valid service of reassessment notice and live nexus in recorded reasons can sustain reopening under income tax law.

Service of a section 148 notice sent by registered post to the correct address may be presumed valid unless rebutted by cogent material, and surrounding conduct can support inference of knowledge of reassessment proceedings. On the facts noted, the objection to non-service was rejected. Recorded reasons for reopening must disclose a live nexus with escapement of income; reliance on later-year material and specific credits was treated as fresh material rather than a mere change of opinion. The reasons were therefore considered sufficient in law, and the reassessment proceedings were sustained.

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Issues: (i) Whether the notice under section 148 was validly served on the assessee so as to sustain reassessment proceedings. (ii) Whether the recorded reasons furnished a valid basis for reopening the assessment under section 147.

Issue (i): Whether the notice under section 148 was validly served on the assessee so as to sustain reassessment proceedings.

Analysis: Notice under section 148 is a jurisdictional notice and must be served in the manner contemplated by section 282 of the Income-tax Act, 1961. Service by post attracts the statutory presumption under section 27 of the General Clauses Act, 1897 and the evidentiary presumption under section 114 of the Indian Evidence Act, 1872. On the facts, the notice was sent to the correct address by registered post and was not returned unserved. The assessee did not raise the objection before the Assessing Officer during the reassessment proceedings and the surrounding material, including the subsequent conduct in relation to notices under section 142(1), supported the inference that the assessee had knowledge of the proceedings. The objection to non-service was, therefore, not accepted.

Conclusion: The notice under section 148 was held to be validly served and the challenge to jurisdiction failed.

Issue (ii): Whether the recorded reasons furnished a valid basis for reopening the assessment under section 147.

Analysis: The recorded reasons referred to the disallowance of interest in the immediately succeeding assessment year and to credits shown as agricultural income and gift. The material before the Assessing Officer provided a live nexus with the belief that income had escaped assessment. A subsequent year's findings could be relied upon as fresh material, and the formation of belief was not treated as a mere change of opinion. The reasons were found sufficient to justify initiation of reassessment proceedings.

Conclusion: The reasons for reopening were upheld as valid and sufficient in law.

Final Conclusion: The reassessment proceedings were sustained in law, and the assessee's appeal failed.

Ratio Decidendi: Service of a notice under section 148 sent by registered post to the correct address can be presumed unless rebutted by cogent material, and reassessment can be validly initiated where the recorded reasons disclose a live nexus with escapement of income.

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