Reopening on search material is independent of block assessment and may proceed under reassessment where reasons to believe exist.

Search material indicating possible undisclosed income of an assessee may support reopening under Section 147 on reasons to believe, even where the information emerges from a search connected with another person. The reassessment route under Section 147 operates independently of the special block assessment procedure in Chapter XIV-B, and the two mechanisms are treated as separate statutory remedies. On that basis, the Assessing Officer may proceed under either route according to the facts, and the jurisdictional challenge to reopening was rejected in the text.

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Issues: Whether the Assessing Officer could reopen the assessment under Section 147 of the Income-tax Act, 1961 by issuing notice under Section 148 of the Income-tax Act, 1961 on the basis of material found in a search, or whether the case had to be proceeded with only under Chapter XIV-B of the Income-tax Act, 1961.

Analysis: Material found during the search of another person's premises showed possible receipt of undisclosed income by the assessee. The statutory scheme under Section 147 of the Income-tax Act, 1961, which permits reopening where income has escaped assessment on reasons to believe, operates independently of the special block assessment provisions in Chapter XIV-B of the Income-tax Act, 1961. The provisions governing undisclosed income in search cases do not exclude recourse to reassessment under Section 147 of the Income-tax Act, 1961. The Court treated the two remedies as analogous in procedure and held that the Assessing Officer had a choice to proceed under either route depending on the facts.

Conclusion: The reopening under Section 147 of the Income-tax Act, 1961 was valid, and the challenge to jurisdiction failed.

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