Reassessment without fresh material fails where reopening rests only on records already examined in original assessment.

Reassessment under section 147 was held invalid where the reopening was based only on balance sheet, profit and loss account, and other material already examined in the completed scrutiny assessment. As no fresh or tangible material came to the Assessing Officer after the original section 143(3) assessment, the belief that income had escaped assessment was treated as a mere reappraisal of existing records and suspicion, which was insufficient to satisfy the jurisdictional requirement of a valid reason to believe. The reassessment notice and resulting assessment order were quashed in favour of the assessee.

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Issues: Whether reassessment initiated under section 147 on the basis of material already available on record, without any new or tangible material, was valid.

Analysis: The reasons recorded for reopening rested only on the balance sheet, profit and loss account, and details already filed during the completed scrutiny assessment. No fresh material came into the possession of the Assessing Officer after the original assessment under section 143(3). The assessee followed the Project Completion Method and had capitalised the entire interest cost to closing work-in-progress, so no deduction of the disputed interest expenditure was claimed in the relevant year. In these circumstances, the belief that income had escaped assessment was formed merely on reappraisal of existing records and on suspicion, which could not satisfy the jurisdictional requirement of a valid reason to believe.

Conclusion: The reassessment proceedings were invalid and bad in law, and the reassessment notice and assessment order were quashed in favour of the assessee.

Final Conclusion: The appeal succeeded on the jurisdictional challenge, and the remaining grounds were left undecided as academic.

Ratio Decidendi: Reassessment under section 147 cannot be sustained where it is founded solely on material already considered in the original assessment and is unsupported by any new or tangible material giving rise to a valid reason to believe that income has escaped assessment.

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