Reassessment requires failure to disclose primary facts; reopening was invalid where depreciation records were already before the tax officer.

Reassessment under section 147(a) requires escapement of income to result from the assessee's failure to disclose primary facts fully and truly; the duty does not extend to drawing inferences from those facts. Where the earlier allowance of initial depreciation was already on record and the Income-tax Officer had applied his own mind in the original assessment, no omission by the assessee can be inferred merely because the officer later took a different view. On those facts, the reopening was invalid and the reference was answered in favour of the assessee.

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Issues: Whether the reassessment was valid under section 147(a) of the Income-tax Act, 1961 on the ground that the assessee had failed to disclose fully and truly all material facts necessary for the assessment by not pointing out earlier allowance of initial depreciation.

Analysis: The governing test under section 147(a) is not merely whether income has escaped assessment, but whether such escapement was attributable to the assessee's omission or failure to disclose fully and truly all primary facts necessary for assessment. The obligation of the assessee extends only to disclosure of primary facts, while the drawing of inferences from those facts lies with the Income-tax Officer. The earlier grant of initial depreciation was already part of the income-tax record, and the Officer, while making the original assessments, applied his own mind, rejected the assessee's claim as filed, and computed depreciation independently on the basis of material on record. On those facts, no failure to disclose material facts could be attributed to the assessee.

Conclusion: The reopening under section 147(a) was invalid, and the question referred was answered in the affirmative in favour of the assessee.

Ratio Decidendi: Reassessment under section 147(a) is permissible only where escapement of income is caused by the assessee's failure to disclose primary facts fully and truly; there is no such failure where the relevant facts are already on record and the Income-tax Officer draws or fails to draw the correct inference from them.

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