Reassessment for bogus cash credits falls under nondisclosure, not mere change of opinion, under the Income-tax Act framework.

Section 34(1)(a) of the Income-tax Act, 1922 applies where escaped income results from the assessee's omission or failure to fully and truly disclose material facts necessary for assessment, while section 34(1)(b) covers escapement discovered from information already in the officer's possession without such nondisclosure. Mere production of books or entries is not enough if later found cash credits were fictitious or not genuine. In that situation, the original acceptance of the credits does not amount to full disclosure, and reopening is valid under section 34(1)(a). A later change of opinion by the assessing officer does not alter the statutory basis where the underlying facts show nondisclosure.

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Issues: Whether reassessment of the escaped income was governed by section 34(1)(a) or section 34(1)(b) of the Income-tax Act, 1922.

Analysis: Section 34(1)(a) applies where income has escaped assessment because the assessee omitted or failed to disclose fully and truly all material facts necessary for the assessment, whereas section 34(1)(b) applies where escapement is discovered on the basis of information in the officer's possession and there was no such omission or failure. Mere production of books or entries does not, by itself, amount to full and true disclosure of material facts if the cash credits later found in the accounts are not genuine. If the original assessment proceeded on an acceptance of such credits and they are subsequently found to be bogus, the case falls within nondisclosure of material facts and reassessment can be initiated under section 34(1)(a). A mere change of opinion by a later assessing officer does not by itself govern the statutory character of the reopening where the underlying facts show nondisclosure.

Conclusion: Section 34(1)(a) was held applicable, and the reopening of the assessment was valid on the facts of the case.

Ratio Decidendi: Where an assessee's cash credits are later found to be fictitious or not genuine, mere production of the accounts does not constitute a full and true disclosure of material facts, and reassessment lies under section 34(1)(a) of the Income-tax Act, 1922.

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