Reassessment must stand on original reasons and material; later shifting grounds cannot cure an invalid reopening.

Reassessment under Sections 148A(b), 148A(d) and 148 must rest on the original reasons and foundational material available at initiation; those reasons cannot be substituted by a later, different basis in the final order. Here, the notice alleged fictitious trading losses, but the final order shifted to sham dividend transactions, making the reassessment unsustainable. The Court also reiterated that reopening requires tangible information with a live link to a belief that income has escaped assessment, and the Assessing Officer cannot cure an initial absence of material by adding new allegations later. The writ petition succeeded and the reassessment proceedings were quashed, with liberty to proceed afresh in accordance with law.

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Issues: (i) Whether reassessment action under Section 148A(d) could be sustained when the final order proceeded on reasons materially different from those in the notice under Section 148A(b); (ii) Whether the reassessment notice under Section 148 and the order under Section 148A(d) were vitiated for want of foundational material supporting the formation of belief that income had escaped assessment.

Issue (i): Whether reassessment action under Section 148A(d) could be sustained when the final order proceeded on reasons materially different from those in the notice under Section 148A(b).

Analysis: The notice under Section 148A(b) proceeded on an allegation of fictitious losses in equity and derivatives trading. The final order under Section 148A(d), however, shifted to a different basis by alleging that the dividend arose from sham transactions generated through colourable devices and was not a genuine dividend on appreciation of investment. The validity of reassessment must be judged on the basis of the reasons that formed the foundation of the initial notice, and those reasons cannot be replaced or improved upon by fresh reasoning at the stage of the final order.

Conclusion: The reassessment action could not be sustained because the final order rested on a changed and impermissible basis.

Issue (ii): Whether the reassessment notice under Section 148 and the order under Section 148A(d) were vitiated for want of foundational material supporting the formation of belief that income had escaped assessment.

Analysis: Reassessment jurisdiction requires tangible information with a live link to the belief that income has escaped assessment. The Court held that the relevant inquiry is confined to the material available at the time of initiation, and that the Assessing Officer cannot supplement the original reasons with new allegations at a later stage. On the facts, the reassessment initiation did not rest on tenable foundational material as required by the governing principles.

Conclusion: The notice and the order were unsustainable for want of valid foundational material.

Final Conclusion: The writ petition succeeded and the reassessment proceedings were quashed, while liberty was left open to take fresh proceedings in accordance with law.

Ratio Decidendi: Reassessment must stand or fall on the original reasons and material that existed at the time of initiation, and those reasons cannot be substituted, supplemented, or reshaped by later justifications.

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