Reopening of assessment and reference jurisdiction failed where no challenge was raised to the finding of incomplete disclosure.

Reopening of assessment under section 147(a) of the Income-tax Act was upheld where the assessee had already failed to dislodge the finding that there was no full and true disclosure of material facts. The High Court noted that the reopening issue had earlier been decided against the assessee in writ proceedings, and the Tribunal had acted on that basis in refusing reference under section 256(1). Applying CIT v. Lakhiram Ramdas, the Court held that no direction under section 256(2) could be made because the assessee had not mounted an appropriate challenge to the basic factual finding. The authorities cited by the assessee were distinguished on facts, and the application was rejected.

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Issues: Whether the reopening of the assessment under section 147(a) of the Income-tax Act, 1961 was legal and valid, and whether a reference under section 256(2) could be directed when the assessee had not challenged the Tribunal's basic finding that there had been no full and true disclosure of all material facts.

Analysis: The question on reopening had been decided against the assessee in an earlier proceeding under Article 226 of the Constitution of India. The Tribunal had also proceeded on the basis of that decision and rejected the assessee's request under section 256(1) of the Income-tax Act, 1961. The Court held that the matter had not become purely academic, but, following the Supreme Court's decision in CIT v. Lakhiram Ramdas, found that the assessee had not raised an appropriate challenge to the basic finding that there was no full and true disclosure of all material facts necessary for assessment. The authorities relied on by the assessee were distinguished on facts.

Conclusion: The application under section 256(2) was rejected and the challenge failed against the assessee.

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