Reassessment notices fail where jurisdictional preconditions and full disclosure breach are not proved, with adverse inference for withheld records.

Reassessment under section 34(1)(a) of the Indian Income-tax Act, 1922 required the Income-tax Officer to have reason to believe, on relevant material, that income had escaped assessment because the assessee failed to disclose fully and truly all material facts. The recorded reasons and the Central Board of Revenue's satisfaction were jurisdictional prerequisites. As the department withheld the officer's report and the Board's order without adequate explanation, an adverse inference was drawn. On the material produced, the statutory conditions precedent for reopening were not affirmatively established, so the notices were invalid.

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Issues: Whether the notices issued under section 34(1)(a) of the Indian Income-tax Act, 1922 were valid and whether the jurisdictional conditions for reopening the assessments were satisfied.

Analysis: Before issuing notice under section 34(1)(a), the Income-tax Officer had to have reason to believe, on relevant material, that income had escaped assessment because of the assessee's omission or failure to disclose fully and truly all material facts. The reasons recorded by the Income-tax Officer and the satisfaction of the Central Board of Revenue were crucial to establishing jurisdiction. The department failed to produce the report made by the Income-tax Officer and the order of the Central Board of Revenue, and no satisfactory explanation was given for withholding the records that were within its control. An adverse inference was therefore warranted. On the material available, it was not possible to hold that the statutory conditions precedent for reopening had been met.

Conclusion: The notices under section 34(1)(a) were invalid and the challenge to them succeeded.

Ratio Decidendi: Reassessment under section 34(1)(a) can be sustained only if the statutory preconditions of reason to believe, based on relevant material, and failure of full and true disclosure are affirmatively established; if the department withholds material records bearing on jurisdiction, an adverse inference may be drawn and the notice must fail.

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