Reassessment without tangible material is invalid where reopening rests only on disclosed facts already before the tax officer.

Reassessment under section 147 was invalid because the reasons for reopening were founded on the same material already disclosed by the assessee in the computation of income and audit report, with no fresh or tangible material showing escapement of income. The requirement of a reason to believe must rest on a live link between material and belief, and that standard is not relaxed merely because the original return was processed under section 143(1). The reopening was therefore without jurisdiction, and the reassessment was cancelled in favour of the assessee.

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Issues: Whether the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 were valid in the absence of tangible material showing escapement of income.

Analysis: The assessee had disclosed the receipts in the computation of income and in the audit report, and had stated that the amounts did not fall within royalty or fees for technical services. The reasons recorded for reopening were based on the same disclosed material and there was no fresh information or other tangible material coming to the Assessing Officer's possession to create a live link with the belief that income had escaped assessment. The requirement under section 147 is a reason to believe based on tangible material, and that requirement is not diluted merely because the original processing was under section 143(1).

Conclusion: The reopening was held to be without jurisdiction and invalid, and the reassessment was cancelled in favour of the assessee.

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