Reassessment validity depends on recorded reasons showing escapement of income; a mere short inquiry notice was insufficient here.

Reassessment under section 147 must rest on reasons recorded by the Assessing Officer showing material to believe that income had escaped assessment, even where the return was only processed under section 143(1). A reopening notice based merely on a short inquiry summons, non-appearance within a brief time, and a need for further verification was insufficient where the recorded reasons did not independently establish escapement and the assessee's objection that the investment was already disclosed in audited accounts was not addressed. Reasons not contained in the recorded notice could not later be used to justify reopening, so the notice was invalid and liable to be set aside.

---

---

Issues: Whether the notice issued to reopen the assessment was valid when the recorded reasons were based on a short inquiry notice, did not independently demonstrate escapement of income, and did not deal with the assessee's explanation that the relevant investment was already reflected in the audited accounts.

Analysis: The validity of reassessment must be judged only on the basis of the reasons recorded by the Assessing Officer. Even where the original return was processed under section 143(1), the Assessing Officer must still have material giving rise to a reason to believe that income chargeable to tax had escaped assessment. The recorded reasons in the present case showed only that a summons had been issued, the assessee did not appear within the short time allowed, and therefore the investment required further verification. That was not enough to sustain reopening on the facts, particularly when the assessee pointed out that the investment was already disclosed in the audited accounts and the Assessing Officer did not address that contention while rejecting the objections. Reasons not found in the recorded notice could not later be used to support the reopening.

Conclusion: The notice for reopening the assessment was invalid and was liable to be set aside.

---