Reassessment cannot rest on a change of opinion where all primary facts were already disclosed to the tax authority.

Reassessment under section 34(1)(a) is sustainable only where income escaped assessment because the assessee failed to disclose fully and truly all material primary facts; the assessee is not required to supply the inference the department may later draw from those facts. Where all primary facts were already before the original assessing authority, a later change of opinion or fresh inference cannot justify reopening. On the facts, the transaction and receipt were already disclosed, and the later information did not establish any omission by the assessee, so the reopening notice was invalid.

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Issues: Whether the reopening notice under section 34(1)(a) was justified on the facts and circumstances of the case.

Analysis: The governing principle is that reassessment under section 34(1)(a) can be sustained only where the Income-tax Officer had reasonable grounds to believe that escapement of income occurred because the assessee failed to disclose fully and truly all material facts necessary for assessment. The assessee's duty is confined to disclosure of primary facts; the assessee is not bound to draw or disclose the inference that the department may later draw from those facts. If all primary facts were before the assessing authority at the original assessment, a later change of opinion or a different inference from the same material cannot justify reopening under section 34(1)(a). On the record, the material facts concerning the transaction and the receipt of Rs. 3,05,000 were already before the original assessing authority, who had even recorded suspicion about the transaction but chose not to draw an adverse inference at that stage. The subsequent information obtained from another officer could not convert a completed assessment into a case of omission or failure by the assessee to disclose material facts.

Conclusion: The reopening notice under section 34(1)(a) was not valid and was not justified on the facts; the issue is answered in favour of the assessee.

Ratio Decidendi: Reassessment under section 34(1)(a) cannot be founded on a mere change of opinion or on a later inference from primary facts already disclosed; jurisdiction arises only when there was, in truth, non-disclosure of material primary facts by the assessee and the belief of escapement is formed bona fide on that basis.

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