Reassessment jurisdiction fails when reopening rests on unsupported allegations and unreliable statements without objective material.

Reassessment under section 148 requires recorded reasons based on specific, reliable and relevant material objectively showing escapement of income; a tax evasion report or borrowed satisfaction, without corroboration, is insufficient. On the facts noted, the reopening failed because the alleged bank deposits were not substantiated and the attributed statement was incomplete and unreliable, so the reassessment was invalid. Additions made on the same unsupported material, including in later assessment years reopened on the same basis, also could not stand and were deleted.

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Issues: (i) Whether the reassessment proceedings initiated under section 148 of the Income-tax Act, 1961 were valid when the reasons recorded were based on a tax evasion report and an alleged statement lacking concrete supporting material; (ii) Whether the additions made in the reassessment, including those for the later assessment years on the same basis, could be sustained.

Issue (i): Whether the reassessment proceedings initiated under section 148 of the Income-tax Act, 1961 were valid when the reasons recorded were based on a tax evasion report and an alleged statement lacking concrete supporting material.

Analysis: The reasons recorded for reopening must disclose an objective basis for the Assessing Officer's belief that income chargeable to tax had escaped assessment. A mere report from an investigation authority or borrowed satisfaction, without concrete and relevant material connecting the alleged facts to escaped income, is insufficient. On the facts, the alleged allegations in the tax evasion report were not supported by additions or evidence, the stated bank deposits were not substantiated by available records, and the purported statement of the assessee was found to be incomplete and unreliable. The foundation for reopening therefore failed.

Conclusion: The reassessment under section 148 was invalid and was rightly quashed.

Issue (ii): Whether the additions made in the reassessment, including those for the later assessment years on the same basis, could be sustained.

Analysis: The additions were built on the same infirm foundation as the reopening itself, namely the unsupported allegations in the tax evasion report and the doubtful statement attributed to the assessee. Once the alleged statement was disregarded, no reliable material remained to justify the additions. As the subsequent assessment years were reopened and completed on the same pattern, the same defect attached to those orders as well.

Conclusion: The additions could not be sustained and were deleted for all the assessment years in question.

Final Conclusion: The reassessment orders and the resultant additions were annulled across all the appeals, leaving the assessee successful throughout.

Ratio Decidendi: Reassessment cannot be sustained unless the recorded reasons are based on specific, reliable and relevant material that objectively supports a reason to believe that income has escaped assessment; unsupported allegations or unreliable statements cannot confer jurisdiction or sustain additions.

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