Reassessment for non-disclosure of material facts upheld where undisclosed wealth and unexplained investments supported a bona fide belief.

Reassessment under section 34 of the Income-tax Act, 1922 required the Income-tax Officer to form a bona fide belief that income had escaped assessment because the assessee failed to fully and truly disclose all material facts. Mere production of account books did not necessarily satisfy that duty. On the materials described, undisclosed accretion in wealth and unexplained investment increases were treated as prima facie grounds for reopening, so the notices were valid. The matter was not treated as a mere change of opinion, and the sufficiency of the material supporting the belief was not to be re-examined in writ proceedings.

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Issues: Whether the notice for reassessment under section 34 was valid and whether the Income-tax Officer had jurisdiction to reopen the completed assessments on the basis of non-disclosure of material facts by the assessee.

Analysis: Reassessment under section 34 of the Income-tax Act, 1922 required the Income-tax Officer to have reason to believe that income had escaped assessment by reason of the assessee's omission or failure to disclose fully and truly all material facts necessary for assessment. Mere production of account books or statements did not by itself discharge that duty. On the affidavits and materials, the undisclosed accretion in wealth and the unexplained increase in investments provided prima facie grounds for the belief that material facts had been withheld. The case was therefore not one of a mere change of opinion, and the adequacy of the grounds for belief was not open to reappraisal in writ proceedings.

Conclusion: The reassessment notices were valid, and the challenge to the reopening failed.

Ratio Decidendi: For reopening under section 34, it is enough if the Income-tax Officer has a bona fide, rationally connected reason to believe that income escaped assessment because material facts were not fully and truly disclosed; the court may examine the existence of that belief, but not the sufficiency of the material on which it was formed.

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