Reassessment for unexplained property investment upheld where the original return was only processed and sanction was recorded.

Reassessment under Sections 147 and 148 was considered sustainable where tangible material indicated undisclosed investment in immovable property and unexplained cash payment, and the original return had only been processed under Section 143(1). Disclosure of the property transaction in a wealth tax return did not amount to disclosure of the source of funds for income-tax purposes. The matter was treated as falling within Explanation 2(b) to Section 147 because income chargeable to tax was seen as having escaped assessment. Prior approval under Section 151 was treated as duly obtained where the Principal Commissioner recorded sanction on the reasons proposed by the Assessing Officer.

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Issues: Whether reassessment under Sections 147 and 148 of the Income-tax Act, 1961 could be sustained on the basis of undisclosed investment in immovable property and unexplained cash payment, and whether prior approval under Section 151 was duly obtained.

Analysis: The return had been processed under Section 143(1) and not scrutinised under Section 143(3). On the material available, the Assessing Officer found a substantial mismatch between the income disclosed and the investment made in the property, including cash payment exceeding Rs. 1.02 crores. Disclosure of the transaction in the wealth tax return did not amount to disclosure of the source of funds or the investment for income-tax purposes. The case fell within Explanation 2(b) to Section 147, since income chargeable to tax was noticed as having escaped assessment. The approval recorded by the Principal Commissioner was treated as sufficient compliance with Section 151.

Conclusion: The reassessment notice and the order rejecting objections were upheld, and the challenge to reopening failed.

Ratio Decidendi: Where tangible material shows possible unexplained investment and the original return was only processed under Section 143(1), reassessment is permissible under Section 147 read with Explanation 2(b), and prior sanction under Section 151 is sufficient if recorded on the reasons proposed by the Assessing Officer.

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