Reassessment on nondisclosure of existing facts fails where taxable income had not yet arisen; later compensation award cannot cure limitation.

Reassessment under section 147(a) depends on failure to disclose an existing material fact at the time of the original assessment; where interest on enhanced compensation had not yet arisen and only enhancement proceedings were pending, there was no nondisclosure and reassessment failed for the earlier years. For assessment year 1981-82, the enhanced award had already been made and the taxable income had accrued before completion of the original assessment, so reassessment was sustained. Section 153(3)(ii) did not extend limitation by treating the later award as a finding or direction, and objections based on unsigned notices, service on legal representatives, or sanction were not established.

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Issues: (i) Whether reassessment under section 147(a) was valid for assessment years 1973-74 and 1977-78 to 1980-81 on the ground of failure to disclose fully and truly all material facts; (ii) Whether reassessment under section 147(a) was valid for assessment year 1981-82; (iii) Whether section 153(3)(ii) extended the time limit for initiating or completing the reassessments; (iv) Whether the reassessment notices and supporting objections failed for want of signature, want of service on all legal representatives, or mechanical sanction.

Issue (i): Whether reassessment under section 147(a) was valid for assessment years 1973-74 and 1977-78 to 1980-81 on the ground of failure to disclose fully and truly all material facts.

Analysis: For these years, the interest on enhanced compensation had not come into existence when the original assessments were completed, and the pendency of enhancement proceedings was not treated as a material fact requiring disclosure. A fact arising after the original assessment cannot support action under section 147(a), and mere pendency of proceedings for enhancement of compensation was held not to amount to nondisclosure of material facts.

Conclusion: Reassessment under section 147(a) was invalid for assessment years 1973-74 and 1977-78 to 1980-81 and was against the Revenue.

Issue (ii): Whether reassessment under section 147(a) was valid for assessment year 1981-82.

Analysis: For this year, the award enhancing compensation had already been made before the assessment was completed, and the assessee had become entitled to taxable interest during the relevant period. The resulting income had come into existence before completion of the original assessment and was not disclosed to the Assessing Officer.

Conclusion: Reassessment under section 147(a) was valid for assessment year 1981-82 and was in favour of the Revenue.

Issue (iii): Whether section 153(3)(ii) extended the time limit for initiating or completing the reassessments.

Analysis: The exception in section 153(3)(ii) applies where an assessment, reassessment, or recomputation is already open and is being made to give effect to a finding or direction in a specified order. It does not authorize reopening of concluded assessments, and the award enhancing compensation did not amount to a finding or direction necessary for the disposal of the assessee's income-tax assessments.

Conclusion: Section 153(3)(ii) did not enlarge the limitation and the Revenue could not rely on it.

Issue (iv): Whether the reassessment notices and supporting objections failed for want of signature, want of service on all legal representatives, or mechanical sanction.

Analysis: The plea regarding unsigned notices was not established on the record. On the legal-representative objection, the person served had represented the estate and the assessee had not shown that the Assessing Officer was put on notice of other necessary representatives. The challenge to sanction was also unsupported by material or argument.

Conclusion: These objections were rejected and did not invalidate the reassessments.

Final Conclusion: The reassessments were annulled for the earlier years where no failure to disclose material facts was shown, but were sustained for assessment year 1981-82. The ancillary procedural objections did not afford independent relief.

Ratio Decidendi: A reassessment under section 147(a) can be sustained only where the assessee failed to disclose an existing material fact at the time of the original assessment, and section 153(3)(ii) cannot be used to validate a reassessment by treating a later external finding as a jurisdictional substitute for the statutory conditions governing reopening.

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