Reassessment jurisdiction fails when the sole reopening basis is deleted on appeal and no surviving escapement remains.

Reassessment under section 147 was invalid where it was initiated solely on the alleged taxability of management charges as fees for technical services under the India-UK DTAA, and the very addition made on that basis was later deleted in appeal. Once the income that triggered the reopening was held not taxable and that deletion attained finality, the jurisdictional foundation for reassessment disappeared. The reassessment order was therefore quashed in favour of the assessee.

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Issues: Whether the reopening of assessment under section 147 of the Income-tax Act, 1961 was valid when the sole basis for reopening was the alleged taxability of management charges as fees for technical services, but the addition made on that basis was deleted in appeal.

Analysis: The reassessment was initiated only on the belief that the management charges received by the assessee had escaped assessment as fees for technical services under the India-UK DTAA. The assessment order also made the very addition that formed the basis of reopening. In appellate proceedings, the addition was deleted on merits. Once the very income which prompted the reopening was held not to be taxable and the deletion attained finality, the foundation for the reassessment disappeared. The Court followed the principle that reassessment cannot survive where the original reason for reopening fails and no valid basis remains to sustain the jurisdiction under section 147.

Conclusion: The reopening of assessment was held to be invalid and the reassessment order was quashed, in favour of the assessee.

Ratio Decidendi: Where reassessment is founded solely on a specific alleged escapement and that very addition is deleted in appeal, the reassessment lacks a surviving jurisdictional basis under section 147 of the Income-tax Act, 1961.

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