Reopening of assessment without disclosed reasons or supporting material was held unsustainable and the notice was quashed.

Reopening of assessment under section 148 was held unsustainable where the revenue did not disclose the reasons or supporting material for forming the belief that income had escaped assessment. The original assessment had been completed under section 143(3) after enquiry and the trust had been treated as exempt under section 11, while repeated requests for the basis of reopening went unanswered. The absence of any return or record from the revenue, together with the related finding that no escapement had occurred, meant the reopening lacked substance. The notice was quashed.

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Issues: Whether notice for reopening assessment under section 148 of the Income-tax Act, 1961, could be sustained when the revenue did not furnish the reasons or material forming the basis for the belief that income had escaped assessment.

Analysis: The assessments had originally been completed after enquiry under section 143(3) and the trust had been treated as exempt under section 11. The impugned notices under section 148 were issued on the assertion of escaped assessment under section 147, but the assessing authority did not disclose the grounds or material despite repeated requests. In the absence of any return or supporting record from the revenue, the court found that reopening could not be justified. The subsequent finding in related proceedings that the income had not escaped assessment further supported the absence of any substance in the reopening action.

Conclusion: The notice for reopening was unsustainable and was quashed; the petition was allowed in favour of the petitioners.

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