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Issues: Whether the notice issued for reopening the assessment under section 148 was without jurisdiction for want of valid material and reason to believe.
Analysis: The return had only been processed under section 143(1), and the Assessing Officer acted on information received through governmental exchange under article 26 of the Indo-Japanese double taxation arrangement that the assessee had received a sum not reflected in the assessment record. At the stage of recording reasons, the Assessing Officer was not required to conclusively establish escapement of income, but only to form a bona fide prima facie belief on the basis of tangible material. Information received from a governmental agency can constitute relevant material for such belief, and the court will not examine the sufficiency of the material so long as it is not mere suspicion, gossip, or rumour. The contention that the reopening rested on borrowed satisfaction or on an impermissible improvement of the recorded reasons was rejected.
Conclusion: The notice under section 148 was held to be valid and within jurisdiction.
Final Conclusion: The writ petition challenging reassessment was rejected, and the reopening proceedings were permitted to continue.
Ratio Decidendi: Information received from a governmental authority under a tax treaty can constitute tangible material for reopening an assessment if it gives rise to a bona fide prima facie belief of escapement of income; the sufficiency of that material is not justiciable at the notice stage.
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