Reassessment notice upheld where later material showed original acceptance was based on non-genuine lender and hundi evidence.

Reassessment under section 148 is permissible where subsequent information gives the assessing officer reason to believe that income escaped assessment because the earlier acceptance of the claim rested on false or non-genuine material, and the bar against a mere change of opinion does not apply in that situation. Although the assessee had produced accounts, balance-sheets, lender lists, confirmation letters and, in some instances, discharged hundis at the original stage, later material suggesting that some lenders were name-lenders and that the hundi transactions were not genuine supported reopening. The notice was therefore valid and the challenge failed.

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Issues: Whether the notice for reassessment under section 148 of the Income-tax Act, 1961 was valid on the ground that the assessee had failed to disclose fully and truly all material facts, or whether it amounted merely to a change of opinion on facts already before the assessing officer.

Analysis: The assessee had produced the relevant accounts, balance-sheet, list of lenders, confirmation letters and, in some cases, discharged hundis at the original assessment stage. Even so, the governing test for reopening is whether the assessing authority had reason to believe that income had escaped assessment because of failure to make a full and true disclosure of material facts. Subsequent information that some alleged lenders were mere name-lenders and that the hundi transactions were not genuine supplied material for such belief. Where the later information shows that the basis on which the original assessment was accepted was false or incorrect, the reopening is not barred merely because the earlier officer had accepted the claim on the materials then before him.

Conclusion: The notice under section 148 was valid and the challenge failed. The reopening was upheld in favour of the Revenue.

Ratio Decidendi: If subsequent information gives the assessing officer reason to believe that a claim accepted in the original assessment was founded on non-genuine or false material, reassessment is permissible where the case falls within the statutory requirement of failure to fully and truly disclose material facts.

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