Full and true disclosure of primary facts defeats reassessment based on change of opinion and alleged non-disclosure.

Reassessment proceedings cannot be sustained where the assessee has already disclosed all primary facts relevant to the transaction. The text states that the memorandum and articles, balance-sheet, and correspondence about the loan and share-transfer arrangement were furnished during the original assessment, and the officer had examined the arrangement and taxed the interest receipts on that basis. Once primary facts were disclosed, the assessee had no duty to state the inferences to be drawn from them. The later reopening, based on the same alleged escapement and an unsupported claim of non-disclosure, was therefore treated as lacking jurisdiction and the reassessment notices were struck down.

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Issues: Whether the reopening notices issued under the reassessment provisions were without jurisdiction for failure of the assessee to disclose fully and truly all material facts, and whether the impugned notices were issued in good faith.

Analysis: The assessee had already furnished the memorandum and articles of association, the world balance-sheet, and the correspondence relating to the loan and share-transfer arrangement long before the impugned notice. The assessment records and contemporaneous correspondence showed that the Income-tax Officer had discussed the nature of the transaction with the assessee's representative during the original assessment proceedings and had taxed the interest receipts on the basis of the arrangement then disclosed. The later reassessment attempt rested on the same alleged escapement of income, with an additional and unsustainable allegation that the memorandum and articles had not been disclosed. On the facts, the company's object clause did not convert the financing arrangement into an independent money-lending business, and the earlier factual findings upheld by the Supreme Court established the bona fide character of the transaction. Once the primary facts were disclosed, the assessee was not bound to instruct the officer on the inferences to be drawn from them.

Conclusion: The reassessment notices were not supported by a valid jurisdictional foundation and were struck down; the issue is answered in favour of the assessee.

Final Conclusion: The impugned reopening and consequential notices could not be sustained and the assessee obtained quashing of the reassessment proceedings.

Ratio Decidendi: For reassessment, the assessee's duty is confined to full and true disclosure of primary facts; once those facts are disclosed, the Income-tax Officer must draw the legal and factual inferences himself, and a reassessment notice cannot stand on a mere change of opinion or on an unsupported allegation of non-disclosure.

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