Reasonable belief governs reassessment validity; later reduction in escaped income does not by itself invalidate reopening.

Reassessment jurisdiction depends on the assessing officer's reasonable belief, formed on the material available at the time of issuing notice, that escaped income is likely to exceed the statutory threshold. A later reassessment resulting in a lower escaped-income figure does not by itself invalidate the original notice or the competence to reopen. The commentary also notes that a challenge based on the old law's lapse-of-time bar fails where the reopening is governed by the applicable statutory framework permitting action on the requisite belief as to escaped income. The controlling point is the basis for initiation, not the final assessed quantum.

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Issues: Whether reassessment proceedings were validly initiated where, at the time of issuing notice, the Income-tax Officer had a reasonable basis to believe that the escaped income exceeded the statutory threshold, even though the income ultimately assessed as escaped was below that figure, and whether the reopening could be denied on the ground that the old law had already barred reopening.

Analysis: The jurisdiction to issue notice for reassessment depends on the Income-tax Officer's rational and reasonable belief at the time of initiation, based on the material then available. If the estimated escaped income was reasonably believed to be above the statutory limit, the notice is not invalid merely because later scrutiny reduces the finally assessed escaped income below that limit. The court also accepted that the reopening provisions were attracted on the footing that the escaped income was likely to exceed the prescribed threshold, and the subsequent reassessment figure did not destroy the original competence to reopen. The challenge based on lapse of time under the old Act was rejected on the basis that the proceedings were governed by the statutory framework that permitted reopening on the requisite belief as to the amount likely to have escaped assessment.

Conclusion: Reassessment proceedings were validly initiated and the lower final escaped income did not invalidate the notice or the assessment.

Final Conclusion: The reference was answered in favour of the Revenue, and the assessee's challenge to the reopening failed.

Ratio Decidendi: The validity of reassessment turns on the Income-tax Officer's reasonable belief, formed on the material available at the time of initiation, that the escaped income met the statutory threshold; later reduction in the finally assessed escaped income does not by itself vitiate the reopening.

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