Full disclosure of primary facts governs reassessment where escaped income emerges from later correlation of assessment materials.

An assessee must make a full and true disclosure of all primary facts material to assessment; where plant, machinery or buildings are sold above written down value, the excess as deemed profits should be clearly disclosed, and merely filing sale documents or figures is not enough if the taxable result must be worked out by the tax officer. The note also explains that reassessment under section 34(1)(b) may be sustained where post-assessment information or later correlation of existing materials reveals escaped income, but not on a bare review of patent facts.

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Issues: (i) Whether the assessee-company had omitted or failed to disclose fully and truly all material facts necessary for its assessment for the assessment year 1952-53; (ii) Whether the reassessment could be sustained under section 34(1)(b) of the Indian Income-tax Act, 1922.

Issue (i): Whether the assessee-company had omitted or failed to disclose fully and truly all material facts necessary for its assessment for the assessment year 1952-53.

Analysis: The statutory scheme required the assessee to make a full and true disclosure of all material facts for assessment. Where plant, machinery and buildings were sold for a price exceeding the written down value, the resulting excess constituted deemed profits under section 10(2)(vii) and ought to have been clearly disclosed in the return, at least in the section meant for income claimed to be not taxable. Mere production of sale documents, resolutions and cost or depreciation figures did not amount to disclosure of the material fact that the sale price exceeded the written down value. The burden was not satisfied by leaving the Income-tax Officer to discover the taxable result by working out the figures from scattered material on record.

Conclusion: The assessee-company failed to make a full and true disclosure of all material facts, and the reassessment was validly initiated under section 34(1)(a).

Issue (ii): Whether the reassessment could be sustained under section 34(1)(b) of the Indian Income-tax Act, 1922.

Analysis: For action under section 34(1)(b), the Income-tax Officer must have information in his possession after the original assessment, leading to the belief that income has escaped assessment. Information may include a subsequent realization of the correct legal or factual position, but it must arise after the assessment and not merely amount to a bare review of clearly patent facts. On the facts, the excess of sale price over written down value was not plainly or clearly on the record in the original assessment, and the correct factual position emerged only after correlating the documents and ascertaining the resultant position after the assessment.

Conclusion: The reassessment was also sustainable under section 34(1)(b).

Final Conclusion: Both questions were answered in favour of the department, and the reassessment proceedings were upheld.

Ratio Decidendi: An assessee must itself disclose all primary facts material to assessment, and reassessment may be justified where escaped income is later ascertained from information obtained after the original assessment, even if that information is derived by correlating materials already on record.

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