Reassessment reopening requires material-based reason to believe; unsupported reasons for escaped income made the notices invalid.

Reopening under section 147(a) required the Income-tax Officer to hold, in good faith and on material with a rational connection to the belief, that income had escaped assessment. The recorded reasons referred generally to unsecured loans and alleged name-lending transactions, but the supporting material was not disclosed in the reasons or departmental affidavit, and the alleged statement was not shown to relate to the assessee or to have been before the officer when the notices were issued. The statutory condition precedent for jurisdiction was therefore not satisfied, and the reopening notices were invalid.

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Issues: Whether the notices issued under section 148 of the Income-tax Act, 1961 for reopening the assessment for assessment year 1961-62 were valid in the absence of material showing reason to believe that income had escaped assessment.

Analysis: Reopening under section 147(a) requires the Income-tax Officer to have in good faith reasons to believe that income has escaped assessment, and those reasons must rest on material having a rational connection with the formation of that belief. The recorded reasons referred generally to unsecured loans and alleged name-lending transactions, but the materials on which that belief was formed were not disclosed in the reasons or in the departmental affidavit. The alleged statement relied upon was not shown to relate to the assessee or to have been available to the concerned officer when the notices were issued. On these facts, the statutory condition precedent for assumption of jurisdiction was not satisfied.

Conclusion: The reopening notices were invalid and the challenge to the reassessment proceedings succeeded.

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