Reassessment beyond three years needs material showing statutory threshold escapement; reopening on incorrect information was held without jurisdiction.

Reassessment beyond three years under section 149(1)(b) requires material showing escapement of income of the statutory threshold amount or more. Where the reopening was based on information suggesting cash deposits, term deposits and interest income, but the completed assessment resulted in an addition far below that threshold, the extended limitation could not be invoked. Reliance on incorrect or non-existent information meant the notice under section 148 suffered from a jurisdictional defect. The reassessment notice was therefore invalid and the consequential assessment was quashed.

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Issues: Whether the notice issued for reassessment beyond three years from the end of the relevant assessment year was valid when the material relied upon did not show escapement of income of Rs. 50 lakhs or more under section 149(1)(b).

Analysis: The reassessment record showed that the reopening was initiated on the basis of information suggesting cash deposits, term deposits and interest income, but the completed assessment ultimately made an addition of only Rs. 17,17,597/-. The material actually relied upon did not establish escapement of income of Rs. 50 lakhs or more, and the basis for invoking the extended limitation under section 149(1)(b) was found to rest on incorrect or non-existing information. Since the case did not satisfy the statutory condition for reopening beyond three years, the notice under section 148 was held to suffer from a jurisdictional defect.

Conclusion: The reassessment notice was invalid, and the consequent assessment was liable to be quashed in favour of the assessee.

Final Conclusion: The appeal succeeded because the reopening was held to be barred by limitation under the extended reassessment provision, rendering the assessment unsustainable.

Ratio Decidendi: Where reassessment is initiated beyond three years, the Revenue must possess material revealing escapement of income of the statutory threshold amount or more, and reopening founded on incorrect or non-existent information is without jurisdiction.

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