Reassessment under section 148 failed for lack of statutory basis, while territorial jurisdiction objections were rejected.

Delay and territorial jurisdiction objections were rejected because part of the cause of action arose within the Court's jurisdiction: the society was located there, the notice was served there, and records were called for there. The reopening notice under section 148 was held invalid because the statutory preconditions for reassessment were not satisfied; there had been no relevant failure to file a return or disclose material facts, and later appellate material did not establish a proper basis to believe income had escaped assessment under section 147. The reassessment proceedings and consequential requisition for records were struck down.

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Issues: (i) Whether the writ petition was liable to be rejected on the grounds of delay and want of territorial jurisdiction. (ii) Whether the notice issued for reopening the assessment under section 148 of the Income-tax Act, 1961, was valid in law.

Issue (i): Whether the writ petition was liable to be rejected on the grounds of delay and want of territorial jurisdiction.

Analysis: The petition was filed belatedly, but the Court declined to relegate the petitioners to the statutory remedy. It held that part of the cause of action arose within its territorial jurisdiction because the petitioner society was situated there, the notice was served there, and the books and documents were called for there. The objection based on absence of jurisdiction was therefore not accepted.

Conclusion: The preliminary objections based on laches and territorial jurisdiction were rejected.

Issue (ii): Whether the notice issued for reopening the assessment under section 148 of the Income-tax Act, 1961, was valid in law.

Analysis: The assessee had earlier been granted exemption and, after insertion of section 139(4A) of the Income-tax Act, 1961, had filed voluntary returns. For the relevant year, there was no failure to file a return where no statutory obligation existed earlier, and no failure to disclose material facts. The reopening also could not be sustained under section 147 because the later appellate and Tribunal decisions on the assessee's charitable status, based on binding Supreme Court authority, did not furnish the requisite reason to believe that income had escaped assessment in consequence of information in the officer's possession.

Conclusion: The reopening notice was invalid and could not be sustained.

Final Conclusion: The impugned reassessment proceedings were struck down, and the assessee succeeded in challenging the notice and the consequential requisition for production of records.

Ratio Decidendi: Reassessment cannot be initiated unless the statutory conditions under section 147 are strictly satisfied, including a valid basis to believe that income has escaped assessment, and a writ court may entertain the challenge where part of the cause of action arises within its jurisdiction.

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