Recorded reasons before reassessment notice are mandatory; mechanical approval of another officer's report is insufficient.

Reopening under Section 147 read with Section 148 requires the Assessing Officer to record independent reasons showing that income chargeable to tax has escaped assessment before issuing notice. Mechanical endorsement of an Inspector's report is not a valid substitute for such reasons, and a bare reference to gross receipts without enquiry into expenditure or net income is insufficient to form the required belief. The text states that non-compliance with the mandatory requirement under Section 148(2) leaves the reassessment notice without legal foundation, rendering the reassessment proceedings invalid and the notice liable to be quashed.

---

---

Issues: Whether reassessment proceedings initiated under Section 147 read with Section 148 of the Income-tax Act, 1961 were valid when the Income-tax Officer had not recorded reasons before issuing notice under Section 148.

Analysis: The statutory requirement for reopening assessment is that the Income-tax Officer must record reasons showing that income chargeable to tax has escaped assessment before issuing notice. Merely endorsing the Inspector's report with a mechanical approval does not amount to recording independent reasons by the Income-tax Officer. A reference to substantial gross receipts, without enquiry into expenditure or net income, was insufficient to justify the belief that taxable income had escaped assessment. Since the mandatory condition under Section 148(2) was not satisfied, the reassessment notice was without legal foundation.

Conclusion: The reassessment proceedings were invalid and the notice under Section 148 was quashed; the assessee succeeded.

Ratio Decidendi: Recording of reasons by the Assessing Officer before issuing notice under Section 148 is a mandatory jurisdictional requirement, and mechanical adoption of another officer's report does not cure the absence of such reasons.

---