Reassessment reopening fails when reasons rest on a factual error and an uncorroborated statement lacking evidentiary support.

Reassessment under section 147 requires recorded reasons based on relevant material with a live nexus to the belief that income has escaped assessment. The recorded reasons here were invalid because they incorrectly attributed the complaint to the assessee, when it was made by the assessee's daughter, and relied on a section 161 CrPC statement that was neither on oath nor tested by cross-examination or independent corroboration. On that material, the belief was treated as suspicion rather than legally sufficient grounds, showing lack of application of mind and absence of jurisdiction to reopen; the reopening was therefore invalid and the reassessment was quashed.

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Issues: Whether the reopening of the assessment under section 147 of the Income-tax Act, 1961 was valid when the recorded reasons proceeded on a factually incorrect premise and relied on an uncorroborated statement as the basis for belief that income had escaped assessment.

Analysis: Reassessment can be initiated only when the Assessing Officer records reasons to believe, supported by relevant material having a live nexus with the formation of belief. The recorded reasons attributed the complaint to the assessee, though the complaint had in fact been made by the assessee's daughter. The reopening was also founded on a statement recorded under section 161 of the Code of Criminal Procedure, 1973, which was neither on oath nor subjected to cross-examination, and was not independently corroborated. On these facts, the belief was held to rest on suspicion rather than material, showing lack of application of mind and absence of jurisdiction to reopen.

Conclusion: The reopening of the assessment was invalid and the reassessment was quashed.

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