Reopening of assessment upheld where Form 26AS mismatch and undisclosed material gave reason to believe income escaped assessment.

Reopening of assessment under Section 147 was upheld because the reassessment was founded on tangible material that had not been examined in the original assessment, including a mismatch between Form 26AS receipts and the profit and loss account, as well as material from the Justice M.B. Shah Commission report. The Court held that this was not a mere change of opinion, since no prior opinion had been formed on the issue now reopened, and that the discrepancy gave reason to believe income had escaped assessment. It also found that the assessee had not made full and true disclosure of material facts, so the challenge to the reassessment notices and rejection of objections failed.

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Issues: Whether the reopening of assessment under Section 147 of the Income-tax Act, 1961 was invalid for want of tangible material, for being a mere change of opinion, and for absence of failure by the assessee to fully and truly disclose material facts.

Analysis: The reopening was based on information that came to light after the assessee filed a rectification application, including a mismatch between the receipts reflected in Form 26AS and the receipts credited in the profit and loss account. The reassessment proposal was also supported by material arising from the Justice M.B. Shah Commission report concerning illegal mining and excess production. The Court found that this material had not been examined in the original assessment, and therefore no opinion had been formed earlier on the very issue now sought to be reopened. The Court further held that the mismatch in receipts and TDS particulars constituted tangible material giving rise to reason to believe that income had escaped assessment, and that the assessee had not made full and true disclosure of all material facts during the original assessment.

Conclusion: The reopening of assessment was held to be valid and the challenge to the reassessment notices and rejection of objections failed.

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