Reassessment notice validity turns on prima facie material, settlement scope, jurisdiction, and proper service.

For reopening under the income-tax law, a notice is valid if the officer has relevant material giving rise to a bona fide prima facie belief that income has escaped assessment; the court will not test the sufficiency of that material at the notice stage. The prior settlement did not bar reassessment because it covered only specified concealed income and years, while the impugned notice related to later escaped income not shown to be included. Jurisdictional objections based on the earlier Patna assessment and the Commissioner's directions failed, and service of notice through the petitioner for the alleged association of persons was not invalid.

---

---

Issues: (i) whether the notices issued under sections 147 and 148 of the Income-tax Act, 1961 were jurisdiction because there was no material for a reasonable belief that income had escaped assessment or that an association of persons existed; (ii) whether the prior settlement under section 34(1B) of the Indian Income-tax Act, 1922 barred reassessment proceedings; (iii) whether the Income-tax Officer, Special Investigation Circle, New Delhi lacked jurisdiction in view of the earlier assessment at Patna and the Commissioner's order; and (iv) whether the notice addressed through the petitioner to the association of persons was invalid under section 282 of the Income-tax Act, 1961.

Issue (i): Whether the reassessment notices were jurisdiction for want of material supporting reason to believe and the existence of an association of persons.

Analysis: The statutory condition under section 147 is only that the Income-tax Officer must have reason to believe, founded on relevant material, that income chargeable to tax has escaped assessment. At the stage of issuance of notice, the court does not test the sufficiency of the material or undertake a reappraisal of the evidence. The record disclosed detailed facts relating to acquisition and concealment of assets, the alleged controlled group activity, and other circumstances from which the officer could form a prima facie belief both that income had escaped assessment and that an association of persons existed.

Conclusion: The notices were validly issued and the objection to jurisdiction on this ground failed.

Issue (ii): Whether the earlier settlement under section 34(1B) of the Indian Income-tax Act, 1922 barred the initiation of proceedings under sections 147 and 148 of the Income-tax Act, 1961.

Analysis: The settlement covered concealed income only for the assessment years expressly brought within it, and the proposed reassessment related to income alleged to have escaped assessment for a subsequent period. The settlement also contained a saving clause preserving the department's right to tax concealed income not considered or covered by the settlement if it surfaced later. The items sought to be assessed in the notices were not shown to be included in the settlement schedule.

Conclusion: The settlement did not operate as a bar to the reassessment proceedings.

Issue (iii): Whether the Income-tax Officer, Special Investigation Circle, New Delhi lacked jurisdiction because the petitioner had earlier been assessed at Patna and the Commissioner's order did not authorise the notice.

Analysis: Jurisdiction under the Act is determined in accordance with the Commissioner's directions, and the question of the proper assessing officer had already been decided by the Commissioner against the petitioner's objection. In the absence of any rebuttal to that order, the challenge to the competence of the officer issuing the notice could not be sustained.

Conclusion: The officer had jurisdiction to issue the notices.

Issue (iv): Whether the notice addressed to the association of persons through the petitioner was invalid under section 282 of the Income-tax Act, 1961.

Analysis: The notice to an association or body of individuals may be addressed to a member where the person is treated as such by the department. Since the petitioner was regarded as a member of the alleged association, service or address of the notice through him did not violate the statutory mode of notice.

Conclusion: The notice was not invalid on this ground.

Final Conclusion: The challenge to the reassessment notices failed on every substantial ground, and the writ petitions were rightly dismissed.

Ratio Decidendi: For reopening under section 147, the existence of relevant material giving rise to a bona fide prima facie belief is sufficient, and the court will not examine the adequacy or sufficiency of that material at the notice stage.

---