Reassessment reopening needs recorded reasons showing escapement and failure to disclose, and later justifications cannot cure jurisdiction.

Recorded reasons for reassessment must themselves disclose a bona fide jurisdictional basis showing escapement of income and failure to fully and truly disclose material facts; new grounds cannot later be added to sustain jurisdiction. The text also explains that section 297(2)(d)(ii) did not revive a reassessment already barred under the repealed Act, although limitation was not fatal on the facts described because the notice proceeded under the new Act within the longer statutory period. The article concludes that reassessment depends on strict satisfaction of the reopening conditions and cannot rest on post hoc explanations.

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Issues: (i) Whether the notice for reassessment under section 148 was validly issued on the basis of recorded reasons showing reason to believe that income had escaped assessment due to failure to disclose material facts. (ii) Whether the notice was barred by time under the old and new income-tax enactments and whether section 297(2)(d)(ii) of the Income-tax Act, 1961 revived a time-barred reassessment.

Issue (i): Whether the notice for reassessment under section 148 was validly issued on the basis of recorded reasons showing reason to believe that income had escaped assessment due to failure to disclose material facts.

Analysis: The reopening power depended on the existence of recorded reasons showing a bona fide belief, based on relevant material, that income had escaped assessment because of the assessee's omission or failure to disclose fully and truly all material facts necessary for the original assessment. The recorded reasons here referred only to an informer's allegation, subsequent summons, and non-compliance by the assessee, but did not contain a prima facie finding that the transactions were bogus or that there had been failure of disclosure. The original assessment record, as accepted on the materials before the Court, showed disclosure of the primary facts relating to the jute transactions, and the assessing officer had made enquiries and completed the assessment. The Court also held that reasons could be explained or clarified, but new grounds not present in the recorded reasons could not be introduced to sustain the jurisdiction.

Conclusion: The reassessment notice was invalid for want of the jurisdictional conditions required under section 147(a) and section 148.

Issue (ii): Whether the notice was barred by time under the old and new income-tax enactments and whether section 297(2)(d)(ii) of the Income-tax Act, 1961 revived a time-barred reassessment.

Analysis: The Court held that section 297(2)(d)(ii) applied the new Act to certain pending or surviving escaped-income cases, but it did not revive a reassessment right already barred under the repealed Act. However, on the facts recorded in the notice and reasons, the Court found that the reopening was proceeded with under the new Act, the notice was issued within the longer time-limit applicable under section 149(1)(a)(ii), and the recorded reasons did not establish that the escaped income was below the threshold so as to negate jurisdiction on that ground alone. Accordingly, the Court rejected the contention that the notice was invalid merely by reason of limitation.

Conclusion: The plea of time-bar was rejected.

Final Conclusion: The Court ultimately quashed the reassessment notice because the statutory preconditions for reopening were not satisfied, and the appeal succeeded.

Ratio Decidendi: For reopening an assessment, the recorded reasons themselves must disclose a bona fide jurisdictional basis showing both escapement of income and failure of full and true disclosure, and the power cannot be sustained by adding new grounds later through affidavit or otherwise.

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