Reassessment jurisdiction under section 147 fails without a live nexus between recorded reasons and escaped income for the relevant year.

Reassessment under section 147 requires the recorded reasons to show a definite, relevant and live nexus between the material relied upon and a belief that income chargeable to tax for the relevant year has escaped assessment. Vague or non-specific material cannot confer jurisdiction, especially where the reasons do not identify any document showing escapement for the year in question. On the facts discussed, the search material only reflected a combined revenue figure, part of which related to another business period, while the assessee had not commenced business during the relevant year and had no revenue for that year. The reopening was therefore held invalid and the assessment under section 143(3) read with section 147 was quashed.

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Issues: Whether the reopening of assessment under section 147 was valid when the recorded reasons did not disclose any basis to believe that income chargeable to tax for the relevant year had escaped assessment.

Analysis: The assessment was reopened on the basis of search material said to show that the assessee carried on business in India through an Indian company and had a permanent establishment. The recorded reasons, however, did not identify any specific document showing escapement of income for the relevant previous year. The material relied upon at the assessment stage showed only a combined revenue figure for calendar year 2001, part of which related to the Indian company's Singapore branch and part to the assessee after its business commenced later in the year. The evidence showed that the assessee had not commenced business during the relevant period and therefore had no revenue for the year under consideration. Reasons for reopening must disclose a clear and unambiguous basis having a direct nexus with the belief that income had escaped assessment, and vague or indefinite material cannot sustain jurisdiction under section 147.

Conclusion: The reopening was invalid and the assessment made under section 143(3) read with section 147 was quashed in favour of the assessee.

Ratio Decidendi: Reassessment under section 147 is not valid unless the recorded reasons disclose a definite, relevant and live nexus between the material relied upon and a belief that income chargeable to tax for the relevant year has escaped assessment; vague or non-specific material cannot confer jurisdiction.

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