Reopening for escaped income upheld where disclosure was not full and true and prior void reassessment gave no protection.

Reopening under section 147(a) was upheld because the assessee had not made a full and true disclosure of all material facts, and the material before the Income-tax Officer was sufficient to form a belief that income had escaped assessment. The court accepted that references to concealment and benami entries provided a valid basis for reopening, and the fact that related appellate findings existed in other years did not undermine that belief. It also held that a void reassessment under the repealed Act could not be treated as a valid pending proceeding for the saving provision, so section 297(2)(d)(ii) did not bar notice under section 148.

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Issues: (i) Whether the notice under section 148 could be sustained where the earlier reassessment under section 34(1)(a) of the repealed Act was held to be without jurisdiction; (ii) whether the material relied upon by the Income-tax Officer furnished a valid basis for reopening under section 147(a); (iii) whether the assessee had made a full and true disclosure of all material facts in the original assessment; (iv) whether the pendency of the proceeding under section 34 of the repealed Act barred recourse to section 147 under the 1961 Act.

Issue (i): Whether the notice under section 148 could be sustained where the earlier reassessment under section 34(1)(a) of the repealed Act was held to be without jurisdiction.

Analysis: The prior reassessment was treated as void for want of jurisdiction, so nothing done in that proceeding could be given legal effect. On that footing, the income now sought to be assessed could not be said to have escaped assessment merely because the earlier invalid proceeding failed to bring it to tax.

Conclusion: The challenge on this ground failed and the notice was not invalid on that account.

Issue (ii): Whether the material relied upon by the Income-tax Officer furnished a valid basis for reopening under section 147(a).

Analysis: The officer relied on material indicating concealment of income and benami entries in the assessee's accounts. The court held that the material was not merely suspicious but could validly support the formation of the requisite belief for reopening. The appellate findings in related years did not negate that basis.

Conclusion: The notice was supported by sufficient material and the objection was rejected.

Issue (iii): Whether the assessee had made a full and true disclosure of all material facts in the original assessment.

Analysis: Disclosure must be both full and true. The court held that a disclosure which is not true to the factual position cannot satisfy the statutory requirement. The assessee was therefore not entitled to rely on the mere production of accounts or names of constituents to defeat jurisdiction under section 147(a).

Conclusion: There was no full and true disclosure of material facts, so reopening was permissible.

Issue (iv): Whether the pendency of the proceeding under section 34 of the repealed Act barred recourse to section 147 under the 1961 Act.

Analysis: Section 297(2)(d)(ii) was read as applying only to proceedings under section 34 that could validly exist in law. A proceeding that was void for want of jurisdiction was not the kind of pending proceeding protected by that saving provision.

Conclusion: The statutory saving did not bar issuance of the notice under section 148.

Final Conclusion: The court upheld the reopening notice and declined to interfere with the reassessment proceedings, resulting in dismissal of the petition.

Ratio Decidendi: For reopening to be barred, the assessee must have made a full and true disclosure of all material facts and the saving provision for pending proceedings applies only to proceedings valid in law, not to proceedings void for want of jurisdiction.

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