Reassessment jurisdiction under the Income-tax Act turns on full disclosure of primary facts, not a mere change of opinion.

Reassessment under section 34(1)(a) of the Income-tax Act, 1922 is valid only where the taxing authority has reason to believe that income escaped assessment because the assessee failed to disclose fully and truly all primary facts necessary for assessment. The assessee's duty extends to disclosure of primary facts, while drawing inferences from those facts remains the function of the assessing authority. On the stated analysis, where the relevant capital receipt, statements and facts showing accrual of interest had been disclosed, reopening could not rest on a mere change of opinion or suspicion. Once a reassessment is validly reopened, however, it proceeds de novo and other escaped items of income may also be examined.

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Issues: (i) whether reassessment proceedings under section 34(1)(a) of the Income-tax Act, 1922 were validly initiated for want of disclosure of material facts; (ii) whether, once reassessment is validly reopened, the assessing authority may include other escaped items of income in the reassessment.

Issue (i): whether reassessment proceedings under section 34(1)(a) of the Income-tax Act, 1922 were validly initiated for want of disclosure of material facts.

Analysis: Reopening under section 34(1)(a) requires the Income-tax Officer to have reason to believe both that income has escaped assessment and that such escapement occurred by reason of the assessee's omission or failure to disclose fully and truly all material facts necessary for the assessment. The duty of the assessee extends only to disclosure of primary facts; the drawing of inferences from those facts is for the assessing authority. Where the assessee had placed before the original assessing authority the relevant capital receipt, the connected statements, and the facts showing the accrual of interest over the years, the later reassessment could not rest on a mere change of opinion or on suspicion about the source of capital. On the materials on record, there was no failure to make full and true disclosure of the primary facts necessary for the assessment.

Conclusion: The reassessment proceedings under section 34(1)(a) were not validly initiated and the finding is in favour of the assessee.

Issue (ii): whether, once reassessment is validly reopened, the assessing authority may include other escaped items of income in the reassessment.

Analysis: Once an assessment is validly reopened, the reassessment proceeds de novo and the assessee is under an obligation to disclose the total income for that year. In such reassessment, the authority is not confined to the item that initially prompted reopening and may assess other escaped items also.

Conclusion: Yes, in a valid reassessment the authority may include other escaped items of income.

Final Conclusion: The reopening failed for lack of the statutory preconditions, so the reassessment could not stand and the assessee succeeded on the principal question.

Ratio Decidendi: Reassessment under section 34(1)(a) is permissible only when there is material showing both escapement of income and a failure by the assessee to disclose primary facts fully and truly; a mere change of opinion or suspicion about the inferences drawn from disclosed facts cannot confer jurisdiction.

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