Full and true disclosure in reassessment: mere under-valuation of house construction cost did not justify reopening.

Reassessment under section 147(a) was held unjustified where the assessee had disclosed the house construction in the return and the Department relied only on alleged under-valuation of the construction cost. The fact of construction was not treated as a material fact requiring separate disclosure in the absence of a specific query during assessment. Even if material, disclosure in Part III of the return was regarded as sufficient. A mere difference between the amount disclosed and the later estimate by the Income-tax Officer did not establish failure to make a full and true disclosure of material facts; the duty to investigate the correct cost lay with the assessing authority.

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Issues: Whether reassessment under section 147(a) of the Income-tax Act, 1961 was valid when the assessee had disclosed the construction of the house in the return but the Department alleged under-valuation and non-disclosure of the correct cost of construction.

Analysis: The fact of construction was not shown to be a material fact requiring disclosure in the absence of any specific query in the assessment proceedings. Even assuming it was material, the disclosure in Part III of the return was held to be sufficient. A mere difference between the amount disclosed by the assessee and the amount later estimated by the Income-tax Officer did not amount to failure to make a full and true disclosure of material facts. The responsibility to investigate and determine the correct cost rested with the assessing authority.

Conclusion: Reassessment under section 147(a) was not justified; the assessee had not failed to make a full and true disclosure of material facts.

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