Reason to believe for reassessment fails where third-party search material only creates suspicion and prior scrutiny already examined the issue.

Reassessment under Section 148 of the Income-tax Act was invalid because the Assessing Officer did not independently form a reason to believe, on relevant material, that income had escaped assessment. The assessment for the year had already been completed under Section 143(3) read with Section 153A after search proceedings, and the on-money issue had been examined then; unsigned and undated third-party documents, which did not identify the assessee or the purchasers, could not support jurisdiction, and the Section 132(4A) presumption was inapplicable to material found in another person's search.

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Issues: Whether the notice under Section 148 of the Income-tax Act, 1961 reopening the assessment for Assessment Year 2008-09 was valid in law.

Analysis: The assessment for the relevant year had already been completed under Section 143(3) read with Section 153A after search proceedings, and the issue of on-money had been examined during those proceedings. The reopening was founded on information received from a third-party search and on documents that were unsigned, undated, and did not identify the assessee or the purchasers. The Assessing Officer did not independently examine the material to form a reasonable belief that income had escaped assessment. A presumption under Section 132(4A) could not be applied to the assessee when the documents were found in the search of a third party. The reopening was therefore based on suspicion rather than the statutory belief required for jurisdiction.

Conclusion: The notice under Section 148 was held to be without jurisdiction and the challenge to reopening failed in favour of the assessee.

Ratio Decidendi: Reassessment cannot be validly initiated unless the Assessing Officer independently forms a reason to believe, on relevant material, that income chargeable to tax has escaped assessment; third-party search material that merely creates suspicion is insufficient.

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