Reassessment for nondisclosure fails where the tax department already knew the primary facts and concealment is unsupported by evidence.

Reassessment under section 34(1)(a) of the Income-tax Act, 1922 could not be sustained because escaped income must result from the assessee's omission or failure to disclose fully and truly all material facts necessary for assessment. The relevant interest income had already been shown in the son's account in earlier years, and the department had material indicating that it was being assessed in the father's hands. The finding of deliberate concealment was unsupported by evidence and was perverse, as the department already knew the primary facts and had proceeded on a different assessment basis. The reassessment was therefore unjustified and the reference was answered in favour of the assessee.

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Issues: Whether the reassessment under section 34(1)(a) of the Income-tax Act, 1922 was justified where the interest income had earlier been assessed in the hands of the father under section 16(3), and whether there had been any omission or failure by the assessee to disclose fully and truly all material facts.

Analysis: Section 34(1)(a) requires that income must have escaped assessment by reason of the assessee's omission or failure to make a return or to disclose fully and truly all material facts necessary for assessment. On the facts found, the income had been shown in the son's account in earlier years, and the Income-tax Officer had material before him indicating that the interest income was being treated as assessable in the father's hands. The Tribunal's inference of deliberate concealment was found unsupported by evidence and perverse in law, because the father could not be said to have withheld material facts when the department itself had knowledge of the relevant circumstances and had proceeded on a different assessment basis.

Conclusion: The reassessment under section 34(1)(a) was not justified, and the answer to the reference was in the negative, in favour of the assessee.

Final Conclusion: The department could not invoke reassessment on the footing of nondisclosure of material facts, and the original assessment could not be sustained under section 34(1)(a).

Ratio Decidendi: Reassessment under section 34(1)(a) cannot stand unless the escaped income is attributable to the assessee's failure to disclose fully and truly all material facts necessary for assessment; where the department already has the relevant primary facts, a finding of nondisclosure unsupported by evidence is erroneous in law.

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