Reassessment reopening requires correct facts, tangible material, and valid sanction; suspicion alone cannot justify section 147 action.

Reassessment under section 147 was held unsustainable where the recorded reasons were based on incorrect facts, including wrong return particulars, assessment year, and alleged bank transactions, and the sanction under section 151 was not duly signed. The analysis emphasised that reopening requires reason to believe founded on tangible, live material and independent application of mind to the assessee's material; a mere suspicion or possibility of escapement is insufficient. On that basis, reassessment proceedings were treated as without jurisdiction and quashed.

---

---

Issues: Whether the reassessment initiated under section 147 of the Income-tax Act, 1961 was valid in the absence of proper approval under section 151 and where the recorded reasons were found to be based on incorrect facts, suspicion rather than tangible material, and non-application of mind.

Analysis: The reassessment was examined on the basis of the recorded reasons and the material relied upon by the Assessing Officer. The recorded reasons contained multiple factual errors, including incorrect particulars of the return, assessment year and alleged bank transactions, and the approval under section 151 was not duly signed. The reasons also proceeded on information from an external source without an independent application of mind to the assessee's own material, and the belief formed was treated as resting on suspicion rather than a legally sustainable belief. The legal requirement under section 147 is the existence of reason to believe, supported by relevant and live material, not a mere possibility of escapement or a fishing enquiry.

Conclusion: The reassessment proceedings were invalid and were quashed.

Ratio Decidendi: Reassessment under section 147 cannot be sustained unless the Assessing Officer records reasons founded on correct facts and tangible material, applies independent mind, and obtains valid sanction under section 151; a reopening based on suspicion or incorrect facts is without jurisdiction.

---