Reassessment requires tangible material and fair opportunity before adverse additions based on third-party statements can stand.

Reassessment under sections 147 and 148 requires tangible material with a direct nexus to alleged escapement of income for the relevant year. Material drawn from an Investigation Wing excel sheet and third-party statements, without independent verification, was treated as borrowed and insufficient for forming the requisite belief. Where such material is used against the assessee, the underlying seized documents must be disclosed and a fair opportunity, including cross-examination of relied-upon persons, should be provided. In the stated analysis, the absence of a legally sustainable basis for reopening meant the reassessment and consequential addition could not stand.

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Issues: Whether the reassessment initiated under sections 147 and 148 of the Income-tax Act, 1961 was valid, and whether the consequential addition based on material from the Investigation Wing could survive.

Analysis: The reassessment was founded on an excel sheet prepared by the Investigation Wing and statements of persons from the Cosmos Group, without independent verification or tangible material establishing a live link between the alleged material and escapement of income for the relevant year. The reasons recorded did not disclose a sufficient factual foundation for formation of belief under section 147, and the material relied upon was treated as inadequate and borrowed in nature. The assessee had also sought the underlying seized material and cross-examination of the persons whose statements were used against it, but such opportunity was not granted. In the absence of legally sustainable jurisdiction for reopening, the reassessment order and the resulting addition could not be sustained.

Conclusion: The reassessment notice and the reassessment order were held invalid, and the addition was deleted as consequential.

Ratio Decidendi: Reassessment under section 147 requires tangible material having a direct nexus with escapement of income for the relevant year, and material relied upon against the assessee cannot sustain an adverse addition unless it is disclosed and subjected to fair opportunity, including cross-examination where statements are used as the basis of the action.

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