Reassessment must stay within the original notice and material; new issues cannot be added after initiation.

Reassessment under Section 21 must remain confined to the material that formed the original reason to believe and to the grounds covered by the sanction and notice. The assessing authority cannot enlarge the reassessment into a de novo exercise by introducing new issues or fresh material after initiation. On these facts, the item of turnover known as SSF was neither included in the recorded basis for reassessment nor mentioned in the show cause notice, so its assessment in reassessment proceedings was without jurisdiction. A later liberty to issue a fresh notice could not cure that foundational defect.

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Issues: Whether reassessment under Section 21 could be extended to an item of turnover not covered by the permission granted and the show cause notice, and whether the assessing authority could enlarge the reassessment beyond the material forming the basis of the recorded belief.

Analysis: The power of reassessment is conditioned on the formation of a reason to believe that turnover has escaped assessment, and that belief must be founded on material which is the very basis of the notice and the permission to reassess. The reassessment cannot become a de novo exercise or be expanded by introducing new grounds or new material after initiation. Since the issue of SSF was neither part of the material on which reassessment was sanctioned nor part of the notice issued to the assessee, the assessing authority had no jurisdiction to assess that item in the reassessment proceedings. The Tribunal's liberty to issue a fresh notice could not cure this foundational defect.

Conclusion: The reassessment relating to SSF was beyond jurisdiction and could not be sustained. The assessee succeeded.

Final Conclusion: Reassessment proceedings must remain confined to the specific grounds and material that justify their initiation, and any enlargement of those grounds without proper statutory foundation is impermissible.

Ratio Decidendi: Reassessment under Section 21 is valid only within the bounds of the material and grounds that formed the original reason to believe, and it cannot be expanded into a fresh assessment on new issues not covered by the notice or permission.

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