Reassessment under section 147(a) needs failure to disclose material facts; later events cannot create reopening jurisdiction.

Section 147(a) requires escapement of income to result from the assessee's omission or failure to disclose fully and truly all material facts necessary for assessment. Where the assessee had disclosed the relevant facts and the reopening was triggered only by a later sale of machinery, that subsequent event could not retrospectively create the jurisdictional basis for reassessment. The commentary also notes that, if the Revenue sought withdrawal of development rebate because of later sale, the statute provided a specific remedy under section 35(11) of the 1922 Act rather than reassessment under section 147(a).

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Issues: Whether reassessment under section 147(a) of the Income-tax Act, 1961, was valid where the assessee had disclosed all material facts and the alleged basis for reopening arose only from subsequent sale of the machinery.

Analysis: Section 147(a) applies only where income has escaped assessment by reason of the assessee's omission or failure to disclose fully and truly all material facts necessary for the assessment. The machinery in question had been installed during the relevant accounting year, and the later sales on which the reopening was founded had not occurred, and could not have been known, when the return was filed. On those facts, there was no failure by the assessee to disclose material facts. The judgment also noted that, if the Revenue sought to withdraw development rebate because of later sale, the Act provided a specific remedy under section 35(11) of the Indian Income-tax Act, 1922, rather than resort to section 147(a).

Conclusion: Reopening under section 147(a) was not attracted, and the reassessment was unsustainable.

Final Conclusion: The reference was answered against the Revenue on the reopening issue, while the second question was left unanswered.

Ratio Decidendi: Reassessment for escaped income cannot be founded on section 147(a) unless the escapement resulted from the assessee's omission or failure to disclose fully and truly all material facts; later events occurring after the return cannot retrospectively supply that jurisdictional defect.

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