Reassessment cannot rest on later creditor confessions without a nexus to nondisclosure of primary facts under income-tax law.

Reassessment under section 147(a) requires a reasonable belief that income escaped assessment because the assessee failed to disclose fully and truly all primary facts. Subsequent confessional statements by alleged creditors did not establish a specific nondisclosure by the assessee, especially where the books and hundis had been produced and examined during the original assessment. Later material that only supports a different view of the same facts cannot justify reopening. The Calcutta HC therefore held that the reassessment was not valid and that the original assessment could not be reopened on the material relied on by the revenue.

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Issues: Whether the reassessment for the relevant assessment year could be sustained under section 147(a) of the Income-tax Act, 1961 on the basis of subsequent information that the alleged creditors had confessed to being name-lenders, and whether the assessee had failed to disclose fully and truly all material facts necessary for the original assessment.

Analysis: Reassessment under section 147(a) requires a reasonable belief that income has escaped assessment because of the assessee's omission or failure to disclose fully and truly all material facts. The duty of disclosure extends to primary facts within the assessee's knowledge, but not to inferences, legal conclusions, or facts that come into existence only later. The information relied on by the department consisted of subsequent confessional statements by creditors, but those statements were not shown to relate specifically to the assessee's loans in a manner that established nondisclosure of any material fact existing at the time of the original assessment. The assessee had placed the books and hundis before the assessing officer, and the materials then available were examined. On those facts, the reopening amounted to an impermissible change of opinion rather than a valid invocation of reassessment jurisdiction.

Conclusion: The reassessment was not justified under section 147(a) of the Income-tax Act, 1961, and the question was answered in the negative in favour of the assessee.

Final Conclusion: The reference was disposed of by holding that the original assessment could not validly be reopened on the material relied upon by the revenue.

Ratio Decidendi: Subsequent information can justify reassessment only if it has a rational nexus with a specific failure by the assessee to disclose primary facts fully and truly; a later change of opinion or reliance on post-assessment confessional material, without such nexus, does not satisfy section 147(a).

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