Reopening of assessment requires objective basis and independent sanction; mechanical approvals and bypassing show-cause procedure invalidate notices.

Reopening assessments beyond the three-year period is impermissible where the AO and sanctioning authorities failed to record, on objective material, that escaped income is represented by identifiable assets, specified expenditure or book entries meeting the statutory threshold; mechanical concurrence by higher authorities without independent application of mind negates jurisdiction to reopen. Where earlier reassessment proceedings were dropped on acceptance of return, issuing a fresh reassessment notice on the same material without following the Section 148A show-cause and consideration procedure is procedurally invalid. Consequential reassessment notices and orders were therefore quashed for lack of jurisdiction and procedural non-compliance.

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Issues: (i) Whether notices issued under Section 148 (and consequent reassessments) beyond three years from the end of the relevant assessment years are valid where the Assessing Officer and specified authorities failed to satisfy and record the conditions in Section 149(1)(b) and where sanction/approval under Section 151/148B was accorded mechanically without application of mind; (ii) Whether a second notice under Section 148 issued after the Assessing Officer dropped earlier reassessment proceedings can be issued without following the procedure under Section 148A.

Issue (i): Validity of notices under Section 148 issued beyond three years vis-a -vis Section 149(1)(b) and validity of sanction/approval under Section 151/148B if recorded mechanically.

Analysis: The material relied upon for reopening consisted largely of data and excel workbooks seized from the personal premises of a third person (senior accounts manager) and consolidated group-level cash records; those records were not shown to constitute identifiable assets, specified expenditure, or entries in the assessee's books of account for the relevant years. The reasons recorded for reopening did not identify asset(s) or book entries nor perform necessary year- and entity-specific allocation to demonstrate escapement exceeding the statutory threshold. The approval/sanction forms evidence concurrence by higher authorities but lack independent reasons or application of mind and thus are mechanistic endorsements. Established principles require that sanctioning authorities record satisfaction based on objective material and not by mere formality; mechanical approvals negate jurisdiction to reopen beyond the three-year period where Section 149(1)(b) criteria are not met.

Conclusion: Notices issued under Section 148 for the relevant years are void and quashed because the preconditions of Section 149(1)(b) were not satisfied and the sanction/approval under Section 151/148B was granted in a mechanical manner without application of mind. The reopening therefore lacked jurisdiction.

Issue (ii): Validity of second Section 148 notice issued after earlier reassessment proceedings were dropped without following Section 148A procedure.

Analysis: The first reassessment proceedings pursuant to an initial Section 148 notice were dropped by the Assessing Officer (acceptance of return/closure). No fresh material or change in facts was shown before issuance of the second notice. The statutory scheme of Section 148A requires the Assessing Officer to issue a show-cause notice under Section 148A(b), consider the response, and pass an order under Section 148A(d) before initiating a fresh Section 148 proceeding in such circumstances. Bypassing the Section 148A process and issuing a second Section 148 notice on the same material without complying with the mandated procedure renders the second notice invalid.

Conclusion: The second notice under Section 148 issued after dropping the earlier proceedings is invalid and quashed for failure to follow the procedure under Section 148A.

Final Conclusion: The reassessment notices and consequential assessment orders for the challenged assessment years are quashed for want of jurisdiction and procedural non-compliance; the appeals are allowed.

Ratio Decidendi: Reopening of assessment beyond three years under Section 148/147 is invalid unless the Assessing Officer possesses and records, with objective basis, material demonstrating that escaped income is represented by an asset, specified expenditure or entries in the assessee's books amounting to the statutory threshold, and any sanction/approval required under Section 151/148B must reflect independent application of mind rather than mechanical endorsement; where an earlier reassessment is dropped, any fresh reopening must comply with Section 148A procedural safeguards.

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