Reassessment beyond four years requires failure of disclosure; notices based only on earlier cancellation were invalid.

Reopening beyond four years under section 147(1)(a) required the Income-tax Officer to have reason to believe that income escaped assessment because of the assessee's omission or failure to return income or to disclose fully and truly all material facts. The notices under section 148 were founded only on the earlier cancellation of the assessments under section 33B of the old Act, and no material was shown to establish any failure of disclosure in the original proceedings. The argument that returns filed before an officer lacking jurisdiction were a nullity was rejected as, at most, an irregularity. The statutory preconditions for reassessment were therefore not satisfied, and the notices were liable to be quashed.

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Issues: Whether the notices under section 148 of the Income-tax Act, 1961, issued for the assessment years 1956-57 to 1959-60 were valid when they were founded only on the cancellation of the original assessments under section 33B of the Indian Income-tax Act, 1922, and whether the statutory conditions for reopening under section 147(1)(a) had been satisfied.

Analysis: For notices issued beyond four years from the end of the relevant assessment years, reopening could be sustained only if the Income-tax Officer had reason to believe that income had 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. The materials placed before the Court showed that the sole basis for reopening was the earlier cancellation of the assessments by the Commissioner under section 33B of the old Act. There was no disclosed material indicating any failure of disclosure in the original proceedings. The contention that the returns filed before an officer lacking jurisdiction were a nullity was rejected, the filing being treated at most as an irregularity. The revenue also did not support reopening on the footing of any failure within the second limb of section 147(1)(a).

Conclusion: The statutory preconditions for invoking section 147(1)(a) were not met, and the notices under section 148 for the assessment years 1956-57 to 1959-60 were jurisdiction and liable to be quashed in favour of the assessee.

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