Reopening for non-disclosure requires omission of primary facts, not later inference from already disclosed transactions.

Section 34(1)(a) of the Indian Income-tax Act, 1922 permits reopening only where the assessee failed to disclose fully and truly all primary facts material to the original assessment; it does not extend to later inferences drawn from facts already disclosed. The assessments had proceeded on the credited amounts, the relevant statements had been recorded, and the later sale deed and enquiries about land value were only post-assessment materials that could suggest the credits were unreal. That kind of subsequent inference cannot amount to a jurisdictional non-disclosure under section 34(1)(a). The reopening notices were therefore invalid and without jurisdiction.

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Issues: Whether notices issued under section 34(1)(a) of the Indian Income-tax Act, 1922, for reopening completed assessments were without jurisdiction on the ground that there had been no failure to disclose fully and truly all material facts necessary for the assessments.

Analysis: Clause (a) of section 34(1) applies only where the assessee has omitted or failed to disclose fully and truly all material facts existing up to the time of assessment, and such non-disclosure must relate to primary facts, not to inferences or conclusions drawn from those facts. The assessments in question had already proceeded on the disclosed credits, the statements of the persons concerned had been recorded, and the dispute before the taxing authorities was whether those credits represented genuine deposits and conversion charges or hidden income. The later sale deed and subsequent enquiries as to land value were post-assessment materials and could at most give rise to an inference that the earlier credits were not genuine. Such subsequent inference cannot be treated as a non-disclosure of material facts within the meaning of section 34(1)(a). The jurisdictional condition for reopening was therefore not satisfied.

Conclusion: The notices were invalid and without jurisdiction, and the assessee succeeded in challenging the reassessment proceedings.

Ratio Decidendi: Reassessment under section 34(1)(a) cannot be founded on a later inference that disclosed transactions were sham if the assessee had already disclosed all primary facts material to the original assessment.

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