Reassessment for excess depreciation fails where the officer's own error, not taxpayer nondisclosure, caused the alleged escapement.

Reassessment under section 147(a) is sustainable only where income escapes assessment because the assessee failed to disclose fully and truly all material facts. Where excess depreciation arose from the Income-tax Officer's own mistake in applying the depreciation limit, and not from any omission by the assessee, reopening could not be justified. The revisional order upholding reassessment was therefore treated as illegal and unsustainable, and the assessee succeeded.

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Issues: Whether the order under section 264(1) of the Income-tax Act, 1961, upholding reassessment based on alleged excess depreciation could stand when the excess arose from the Income-tax Officer's own error and not from any omission or failure by the assessee to disclose fully and truly all material facts.

Analysis: The Court applied the principle that reassessment under section 147(a) requires escapement of income by reason of the assessee's omission or failure to make full and true disclosure of material facts. It noted that the excess depreciation resulted from the Income-tax Officer's failure to ensure that aggregate depreciation did not exceed the original cost, and that the assessee could not be blamed for that remissness. The Court followed the earlier High Court view and the Supreme Court's later approval of the same legal position, holding that detection of the officer's own mistake could not justify reopening under section 147(a).

Conclusion: The order dismissing the revision petitions was illegal and unsustainable, and the assessee succeeded.

Final Conclusion: The impugned revisional order was quashed, and the matter was directed to be dealt with in accordance with the governing law on reassessment based on excess depreciation.

Ratio Decidendi: Reassessment under section 147(a) cannot be sustained where excess depreciation is allowed the Income-tax Officer's own mistake in applying the law and not because of any omission or failure by the assessee to disclose material facts fully and truly.

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