Full disclosure in reassessment matters required a clear finding on balance-sheet disclosure before the reference could be answered.

The Tribunal's treatment of accrual under section 41(2) of the Income-tax Act, 1961 was incomplete because it did not record a categorical finding on whether the assessee had consistently disclosed the written down value of the assets and the compensation received in its balance-sheets. That omission was material because reopening under section 147(a) depended on whether there had been full and true disclosure of all material facts. The High Court therefore held that the reference could not be satisfactorily answered on the existing statement of the case and directed the Tribunal to submit a further statement after recording the disclosure finding.

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Issues: Whether the Tribunal's order could be finally answered without a categorical finding on whether the assessee had disclosed the written down value of the assets and the compensation received in its balance-sheets, and whether a further statement of the case was .

Analysis: The Tribunal had dealt with the question of accrual under section 41(2) of the Income-tax Act, 1961, but had not recorded a clear finding on the assessee's consistent disclosure of the written down value of the assets taken over and the compensation received from time to time. That omission was material because the question of reopening under section 147(a) depended on whether there had been full and true disclosure of all material facts. In the absence of such a finding, the reference could not be satisfactorily answered on the existing statement of the case.

Conclusion: The Tribunal was directed to submit a further statement of the case after recording a finding on the disclosure issue.

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