Full and true disclosure in reassessment requires primary facts to identify taxable surplus before related reference questions can be answered.

For reassessment, the assessee must disclose primary facts needed to identify taxable income, and mere production of account books is not enough if the assessing officer would have to discover the material facts by due diligence. Here, disclosure of the sale transaction alone did not amount to full and true disclosure because the surplus over written down value, and the written down value itself, were not stated. The reference questions also could not be answered until it was first determined whether any part of the sale proceeds constituted profits under section 10(2)(vii), since that issue was foundational to the reassessment controversy.

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Issues: Whether, for the purpose of reassessment, the assessee had failed to disclose fully and truly all material facts necessary for assessment, and whether the reference questions could be answered without first deciding whether the sale proceeds of the assets constituted profits under section 10(2)(vii).

Analysis: The assessee had disclosed the sale transaction, but had not shown either the surplus realised over the written down value or the written down value itself. The Court held that disclosure of account books or other material from which the assessing officer might, with due diligence, discover the facts does not amount to full and true disclosure within the meaning of the reassessment provision. If any part of the sale price was taxable as deemed profit under section 10(2)(vii), the assessee was bound to place the essential facts before the Income-tax Officer. The Court also held that the reference could not be answered unless the Tribunal first decided whether any portion of the sale proceeds fell within section 10(2)(vii), because that question was foundational to the reassessment controversy.

Conclusion: The assessee had not made a full and true disclosure of all material facts if the surplus on sale was taxable as profit under section 10(2)(vii), and the reference questions could not be answered without first determining that foundational issue.

Final Conclusion: The appeal was allowed and the matter was sent back to the Tribunal to decide first whether any part of the sale price constituted profits under section 10(2)(vii), and then to deal with the remaining questions accordingly.

Ratio Decidendi: For reassessment, the assessee must disclose the primary facts necessary to assess tax liability, including facts essential to identify taxable surplus, and a reference cannot be answered on related legal questions until the foundational factual-tax issue is first decided.

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