Reassessment and notice service upheld where recorded material showed reasonable grounds and due diligence in affixation service.

Reassessment under section 147 was sustained because the recorded materials went beyond mere suspicion and showed a rational basis for believing that primary facts had not been fully disclosed, so writ interference was unwarranted. Service of the section 148 notice was also upheld because repeated personal attempts, affixation when the assessee could not be found, and despatch by registered post together showed due diligence; service by affixation complied with Order 5 Rule 17 CPC and the fact-sensitive service challenge was not fit for writ review. The reassessment proceedings and notice service were therefore both maintained.

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Issues: (i) Whether the reopening of the assessment under section 147 of the Income-tax Act, 1961, was without jurisdiction for want of reasonable grounds or materials; (ii) Whether the notice under section 148 of the Income-tax Act, 1961, was duly served within the prescribed time in accordance with law.

Issue (i): Whether the reopening of the assessment under section 147 of the Income-tax Act, 1961, was without jurisdiction for want of reasonable grounds or materials.

Analysis: The reasons recorded by the Income-tax Officer disclosed prior assessments under the 1922 Act, subsequent investigation into bank credits, enquiries regarding fixed deposits standing in various names, and efforts to verify the genuineness of the transactions. The materials showed more than mere suspicion and indicated a rational basis for believing that there had been non-disclosure of primary facts relevant to under-assessment. In writ jurisdiction, the sufficiency of the reasons was not for examination so long as some reasonable grounds existed for the belief that reassessment was warranted.

Conclusion: The challenge to the reopening failed, and the initiation of proceedings under section 147 was upheld.

Issue (ii): Whether the notice under section 148 of the Income-tax Act, 1961, was duly served within the prescribed time in accordance with law.

Analysis: The evidence showed repeated attempts at personal service, attempted service at the business premises, affixation when the assessee could not be found, and subsequent despatch by registered post. The Court held that the attempts must be viewed cumulatively to determine whether reasonable diligence had been exercised. On the facts, the service by affixation complied with Order 5, Rule 17 of the Code of Civil Procedure, 1908. Although service by registered post was received after the limitation date, the earlier service was treated as sufficient. The Court also held that where the validity of service depends on factual adjudication, the matter is ordinarily not fit for writ interference; in any event, proper service had been made.

Conclusion: The service challenge failed, and the notice under section 148 was held to be validly served within time.

Final Conclusion: The assessment-reopening notice and the service of notice were both sustained, so the writ application was liable to fail in full.

Ratio Decidendi: In a challenge to reassessment proceedings under article 226, the Court will interfere only where the recorded material shows no reasonable basis for the belief of non-disclosure or where admitted facts establish non-service within the prescribed time; reasonable attempts at service by affixation will suffice where due diligence is shown.

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