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Issues: Whether the Income-tax Officer was justified in initiating reassessment proceedings under section 34(1A) of the Indian Income-tax Act, 1922.
Analysis: The validity of reopening depended on the material actually before the Income-tax Officer (Central) when he formed the belief that income had escaped assessment. The memorandum recording reasons for reopening and seeking sanction was the primary evidence of that belief, but it was not produced. The record did not establish that the material gathered by the Income-tax Officer, Kolaba, or the statements subsequently relied upon, was before the Income-tax Officer (Central) at the relevant time. The Court therefore declined to sustain the Tribunal's speculative approach to the existence of the requisite belief.
Conclusion: The reassessment proceedings were not validly initiated, and the answer is in favour of the assessee.
Final Conclusion: The reference was answered against the Revenue on the reopening issue, and the remaining question was left unanswered as unnecessary.
Ratio Decidendi: Reassessment can be upheld only if the material that actually formed the basis of the Income-tax Officer's belief is shown to have existed and been available at the time of initiation; conjecture or post facto material cannot cure the absence of proof of a validly formed belief.
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