Reassessment and notice service under income tax law sustained where supporting material and effective receipt of notice were established.

Reassessment under the Income-tax Act may be supported by a VDIS declaration and related departmental material even where the declaration is treated as ineffective for the scheme itself, provided the initiation is not based on mere suspicion. Service of notice under section 148 was treated as valid where notice was received by the assessee's employee and earlier receipt by family members supported effective service. An ex parte assessment under section 144 was not set aside because no sufficient ground for interference was shown once valid service was accepted and no error was found in the appellate order.

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Issues: (i) Whether reassessment proceedings under the Income-tax Act, 1961 could be initiated on the basis of the VDIS declaration and related material. (ii) Whether service of notice under section 148 of the Income-tax Act, 1961 was valid. (iii) Whether the ex parte assessment under section 144 of the Income-tax Act, 1961 was liable to be set aside for sufficient cause.

Issue (i): Whether reassessment proceedings under the Income-tax Act, 1961 could be initiated on the basis of the VDIS declaration and related material.

Analysis: The declaration was treated as a nullity only for the purposes of the VDIS scheme because tax had not been deposited, but that did not prevent the Assessing Officer from relying on it for limited reassessment purposes. The reassessment was not founded on the declaration alone; it was also supported by the departmental letter and the absence of a return for the later assessment year. The Court found that the initiation was not based merely on suspicion.

Conclusion: Reassessment on that basis was held to be valid and the contention was rejected.

Issue (ii): Whether service of notice under section 148 of the Income-tax Act, 1961 was valid.

Analysis: Service on the assessee's employee was not disputed, and prior service on family members receiving notices for the assessee was relied upon as supporting valid service. The Court accepted that personal service on the assessee was not mandatory in the circumstances and distinguished the authority relied upon by the assessee.

Conclusion: Service of notice was held to be valid.

Issue (iii): Whether the ex parte assessment under section 144 of the Income-tax Act, 1961 was liable to be set aside for sufficient cause.

Analysis: In view of the findings on service of notice and the absence of any error in the appellate order, no sufficient ground was found to interfere with the ex parte assessment.

Conclusion: The ex parte assessment was held not liable to be set aside.

Final Conclusion: The reassessment proceedings, the service of notice, and the ex parte assessment were upheld, leaving no surviving ground for interference.

Ratio Decidendi: A reassessment may be sustained where it is supported by material beyond the impugned declaration, valid service can be effected on a person who in fact receives the notice, and an ex parte assessment will not be disturbed absent a legally sufficient ground.

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