Invalid reassessment reopening defeats section 263 revision when recorded reasons lack a clear statutory basis.

Reassessment was invalid because the recorded reasons did not identify the precise Chapter XVII provision allegedly requiring tax deduction at source and did not establish, on their face, any statutory basis for disallowing transport payments. The reopening had to stand or fall on the reasons recorded at initiation, and it could not be supported later by external material or subsequent explanation. As the foundation for reassessment was held defective, the reassessments could not survive, and the consequential revision under section 263, being dependent on those proceedings, also failed.

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Issues: Whether the reassessment proceedings were invalid for want of a legally sustainable reopening basis and whether the consequential revision under section 263 could survive.

Analysis: The reassessment reasons did not specify the precise provision in Chapter XVII under which tax was required to be deducted at source and did not, on their face, establish the statutory basis for treating the transport payments as liable to disallowance. The reasons for reopening must be tested only on the basis recorded at the time of initiation and cannot be supplemented later by external material or subsequent explanation. Since the foundation of the reassessment was found wanting, the reassessments framed on that basis could not stand. Once the primary reassessment proceedings failed, the collateral revision action under section 263, which rested on those proceedings, also lost its footing.

Conclusion: The reassessment proceedings were quashed and the revision directions under section 263 could not survive.

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