Reassessment for undisclosed property funding remains valid despite wealth-tax disclosure when income-tax records do not reveal the source.

Reassessment may be initiated where an income-tax return was only processed under Section 143(1) and the disparity between disclosed income and property investment supports a prima facie belief of escaped income. Disclosure of property purchase in a wealth-tax return does not establish disclosure in the income-tax return of the funding source or the transaction's true nature. Explanation 2(b) to Section 147 applies where no assessment was made and understated income is detected. The Principal Commissioner's recorded satisfaction that the case was fit for notice was treated as sufficient approval under Section 151, validating the reassessment notice.

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Issues: Whether the notice for reassessment based on unexplained investment and cash payment towards purchase of immovable property was valid despite disclosure of the purchase in the wealth-tax return, and whether the statutory approval for issuing the notice was valid.

Analysis: The return had only been processed under Section 143(1), without scrutiny assessment under Section 143(3). The disparity between the disclosed income and the substantial investment in property, including cash payment exceeding Rs. 1.02 crore, constituted material supporting a prima facie belief that income had escaped assessment. Disclosure of the transaction in the wealth-tax return did not amount to disclosure in the income-tax return of the source of funds and the true nature of the transaction. Explanation 2(b) to Section 147 applied where no assessment had been made and understated income was noticed. The recorded reasons and the Principal Commissioner's recorded satisfaction that the case was fit for issuance of notice constituted sufficient compliance with Section 151.

Conclusion: The reassessment notice and the approval for its issuance were valid; the challenge was decided against the assessee.

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