Reassessment limitation under section 149(1)(b) fails where estimated unaccounted income is outside statutory asset-expenditure-entry categories.

Reopening beyond three years from the end of the assessment year is valid only if the case strictly satisfies section 149(1)(b), requiring material showing escaped income in the form of an asset, expenditure linked to a transaction or event, or an entry in the books, together with the statutory monetary threshold. On the stated facts, the reassessment rested on estimated business income from alleged unaccounted transactions, which did not fall within those categories. The notice under section 148 and the reassessment proceedings were therefore treated as invalid and liable to be quashed.

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Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961, and the reassessment proceedings based on it were valid when issued after three years from the end of the relevant assessment year and the material relied upon did not satisfy section 149(1)(b).

Analysis: The reassessment was initiated beyond three years from the end of the relevant assessment year. The condition for invoking the extended limitation period under section 149(1)(b) requires that the Assessing Officer possess books of account, other documents or evidence revealing income escaping assessment represented in the form of an asset, expenditure in relation to a transaction or event, or an entry in the books of account, and the escaped income must meet the statutory monetary threshold. On the facts recorded, the addition was based on estimated business income from alleged unaccounted transactions, which did not fall within the statutory categories required by section 149(1)(b). The basis for reopening therefore failed to meet the mandatory jurisdictional requirements for issuing notice under section 148 after expiry of the normal limitation period.

Conclusion: The notice under section 148 and the reassessment proceedings were invalid and liable to be quashed, with the result that the assessee succeeded.

Final Conclusion: The challenge to reopening succeeded on limitation and jurisdictional grounds, and the assessment sustained by the first appellate authority was set aside.

Ratio Decidendi: Where notice under section 148 is issued beyond three years, the reopening is valid only if the case strictly falls within section 149(1)(b); an estimate of unaccounted business income unconnected with an asset, expenditure, or book entry does not satisfy that condition.

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