(A) Income Tax Act, 1961 - Sections 147 and 148 - Reopening of assessment - "Reason to believe" - Meaning and scope - The expression means cause or justification and does not require the assessing officer to have finally ascertained facts by legal evidence at the initiation stage - The officer must possess tangible material providing a rational connection or live link to the belief that income has escaped assessment - Such belief must be that of an honest and reasonable person based on reasonable grounds, not on mere suspicion, gossip, or rumour - While the court cannot investigate the sufficiency or adequacy of the reasons, it can examine whether the reasons are relevant and have a bearing on the matters for which the belief is required. (Paras 38, 41)

(B) Income Tax Act, 1961 - Sections 147 and 148 - "Change of opinion" - Conceptual difference between power to review and power to reassess - A mere change of opinion cannot be a reason to reopen an assessment - The concept serves as an in-built test to prevent abuse of power - For a plea of change of opinion to be sustainable, there must have been a conscious application of mind and formation of an opinion during original assessment proceedings - If the original assessment order is non-speaking, cryptic, perfunctory, or a bare acceptance of the returned income, no opinion can be attributed to the assessing officer - Similarly, an intimation under Section 143(1) is not an order of assessment; thus, a change of opinion cannot arise in such cases. (Paras 43, 44, 53)

Facts of the case:
Appellants sold shares of two companies and claimed deductions under Section 54F of the Act. Original assessments were completed under Section 143(3) and Section 143(1) respectively. Subsequent to the assessments, an investigation report was received indicating that the shares were overvalued relative to the cost of land and building and that sale proceeds were used to purchase property. Based on this report, notices under Section 148 were issued after four years to reopen assessments for two assessment years. The appellants challenged the notices as being based on a mere change of opinion and lacking a valid "reason to believe."

Findings of Court:
The court found that the notices were issued based on reasons duly recorded and supported by tangible material, namely the report of the investigation unit. The report provided a rational nexus and a live link to the belief that income had escaped assessment. Since one assessment was merely an intimation and the other was a non-speaking order of acceptance, no previously formed opinion existed on the specific issue of share valuation, rendering the plea of change of opinion untenable.

Issues: Whether the notice issued under Section 148 for reopening assessments for the relevant assessment years satisfied the anvil of "reason to believe" under Sections 147 and 148 of the Act and was thus valid.

Ratio Decidendi: The court ruled that the validity of a reopening is tested on the existence of tangible material that forms a live link to the belief of escapement of income. Fresh information exposing the untruthfulness of previously disclosed facts or bringing new facts to light justifies reassessment and does not constitute a mere change of opinion. In the absence of a consciously formed opinion in the original assessment—evidenced by non-speaking orders or Section 143(1) intimations—the revenue is not precluded from reopening the assessment upon the discovery of material suggesting escapement of income.

Result: Appeals dismissed.