Reassessment notice rules clarified: Board approval alone suffices after eight years, and Tribunal observations may support section 147(a) action.

Reassessment notices issued after four years and beyond eight years were treated as distinct categories under the then-section 151: approval of the Commissioner applied to the former, while Board approval alone sufficed for the latter, with no cumulative approval requirement. A notice otherwise time-barred under section 147(b) could not be saved by section 150(1) read with Explanation 3 to section 153 unless the affected person had notice and an opportunity of hearing on the earlier finding or direction. Tribunal observations may nonetheless furnish sufficient material for the Assessing Officer's reason to believe under section 147(a), leaving the truth of the escaped-income allegation to reassessment proceedings.

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Issues: (i) Whether prior approval under section 151 of the Income-tax Act, 1961 required both the Board and the Commissioner for a notice issued after eight years; (ii) whether the notice could be sustained under section 147(b) in view of limitation and the saving provisions in section 150(1) read with Explanation 3 to section 153; (iii) whether the Tribunal's observations constituted relevant material establishing the jurisdictional facts for action under section 147(a).

Issue (i): Whether prior approval under section 151 of the Income-tax Act, 1961 required both the Board and the Commissioner for a notice issued after eight years.

Analysis: Section 151 then in force treated the cases of reopening after four years and after eight years as distinct categories. For notices beyond four years but within eight years, approval of the Chief Commissioner or Commissioner was required, while for notices beyond eight years approval of the Board was required. The provision did not impose a cumulative requirement of approval by both authorities. Once approval of the Board was obtained, no further approval of the Commissioner was necessary.

Conclusion: The contention was rejected and the notice was not invalid on this ground.

Issue (ii): Whether the notice could be sustained under section 147(b) in view of limitation and the saving provisions in section 150(1) read with Explanation 3 to section 153.

Analysis: A notice under section 147(b) was time-barred because it was issued beyond four years from the end of the relevant assessment year. The Revenue could rely on section 150(1) read with Explanation 3 to section 153 only if the earlier finding or direction had been made after giving the affected person an opportunity of hearing. As no notice or hearing was given to the petitioner before the Tribunal's observation, the saving provision could not apply. The notice therefore could not be justified under clause (b).

Conclusion: The notice was not sustainable under section 147(b) and had to be treated as one issued under section 147(a).

Issue (iii): Whether the Tribunal's observations constituted relevant material establishing the jurisdictional facts for action under section 147(a).

Analysis: For action under section 147(a), the Assessing Officer had to have reason to believe that there had been omission or failure to disclose fully and truly all material facts and that income chargeable to tax had escaped assessment. The Tribunal's observations in the related appeal were adequate material for such belief. The sufficiency and ultimate truth of the allegation were matters for reassessment proceedings and not for interference at the stage of notice.

Conclusion: The jurisdictional facts were present and the initiation of reassessment proceedings under section 147(a) was upheld.

Final Conclusion: The writ petition failed because the reassessment notice was valid as a notice under section 147(a), and the challenge to its issuance was rejected.

Ratio Decidendi: A reassessment notice issued beyond eight years is supported by section 151 if Board approval is obtained, and Tribunal observations may constitute sufficient material for the Assessing Officer's belief under section 147(a) even where section 150 and Explanation 3 to section 153 are unavailable for want of notice to the affected person.

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