Reassessment invalid for missing prior sanction and borrowed satisfaction; independent reason to believe was not established.

Reassessment under sections 147 and 148 was invalid because the Assessing Officer did not obtain the mandatory prior sanction under section 151, a defect treated as foundational and incurable. The recorded reasons also failed to show an independent, bona fide reason to believe; they were based on borrowed satisfaction from superior information and lacked specific facts establishing a live nexus to alleged escapement of income. On both grounds, the reassessment was held void ab initio and the assessee succeeded.

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Issues: (i) Whether reopening of assessment under section 147 was invalid for want of the mandatory sanction under section 151 of the Income-tax Act, 1961; (ii) Whether the reasons recorded for reopening disclosed an independent, bona fide "reason to believe" or were based on borrowed satisfaction without a live nexus to escapement of income.

Issue (i): Whether reopening of assessment under section 147 was invalid for want of the mandatory sanction under section 151 of the Income-tax Act, 1961.

Analysis: The statutory scheme required prior satisfaction of the prescribed higher authority on the reasons recorded by the Assessing Officer before notice under section 148 could be issued. The record did not show that such approval had been obtained. Non-compliance with this precondition was treated as a foundational defect that could not be cured.

Conclusion: The reopening was invalid for want of the mandatory sanction under section 151 of the Income-tax Act, 1961, and this issue was decided in favour of the assessee.

Issue (ii): Whether the reasons recorded for reopening disclosed an independent, bona fide "reason to believe" or were based on borrowed satisfaction without a live nexus to escapement of income.

Analysis: The recorded reasons rested substantially on information from a superior authority and did not demonstrate independent application of mind by the Assessing Officer. The material lacked the necessary particulars regarding the alleged transfer, ownership, nature of the land, registered conveyance, and date of transfer. The reasons were therefore treated as insufficient to establish a rational nexus between material and belief, and the reopening was held to have been made on borrowed satisfaction rather than on a legally sustainable belief of escapement.

Conclusion: The reasons recorded did not constitute a valid "reason to believe" under section 147, and this issue was decided in favour of the assessee.

Final Conclusion: The reassessment proceedings were held void ab initio, and the assessee's appeals succeeded in full.

Ratio Decidendi: Reassessment under sections 147 and 148 is valid only when the Assessing Officer independently records a bona fide reason to believe, supported by a live nexus to escapement of income, and obtains the mandatory prior sanction where required under section 151.

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