Full disclosure of prior depreciation is essential; omission can justify reassessment under escaped-assessment provisions.

A notice for reassessment was upheld because the assessee did not fully and truly disclose all material facts necessary for assessment when claiming depreciation. The prior allowance of initial depreciation was a material fact directly affecting the statutory ceiling on further depreciation under the Income-tax Act, 1922, and its omission from the disclosure meant the assessing officer was not shown to have knowledge of it. Full disclosure extended beyond the return form and covered all facts needed to support the claim. On that basis, reopening under the escaped-assessment provisions was valid.

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Issues: Whether a notice under section 148 could validly be issued on the ground that excessive depreciation had been allowed because the assessee failed to disclose fully and truly all material facts necessary for the assessment.

Analysis: The allowance of initial depreciation in earlier years was a material fact bearing directly on the ceiling imposed by proviso (c) to section 10(2)(vi) of the Income-tax Act, 1922. The exclusion of initial depreciation from the written down value for the purposes of that clause did not absolve the assessee from disclosing, in the assessment proceedings, that such depreciation had already been allowed when it claimed further depreciation. The duty to make full and true disclosure extended beyond the form of the return and covered all facts necessary to support the claim. The Income-tax Officer was not shown to have knowledge of the earlier allowance, and no presumption of such knowledge arose on the record.

Conclusion: The assessee failed to disclose fully and truly all material facts necessary for the assessment, and the notice under section 148 was valid.

Ratio Decidendi: When an assessee claims depreciation, it must disclose all facts materially affecting the statutory limit on the allowance, and failure to disclose a prior allowance of initial depreciation permits reopening of the assessment under the escaped-assessment provisions.

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