S. N. ANDLEY, J. ( 1 ) COMMON questions of law and fact arise in Civil Writs Nos. 67 to 78 and they will be disposed of by this judgment. ( 2 ) THE writ petitions have been filed to quash the several notices dated 23/3/1962 issued by respondent No. 3 under Section 3 (1) (a) of the Indian Income Tax, 1922, for reopening assess- ments for the assessment years 1942-43 to 1953-54 and also for prohibiting the respondents from proceedings further with assessment proceedings in pursuance of the aforesaid notices. The several letters under cover of which these several notices were sent bear the date 23/3/1962\24/3/1962. The notices were, according to the respondents, sent in three sets-one set by registered acknow- ledgment due post to one address of the petitioners; another set also by registered acknowledgment due post to another address of the petitioners and third set by messenger. It is not disputed that the notices which were sent by registered acknowledgment due post were received by the petitioners on 11/4/1962, i. e. after the commencement of the Income Tax Act, 1961. In so far as the notices sent by messenger are concerned, the petitioners deny service thereof while it is the case of the respondents that these were served according to law by affixation on 30/3/1962 i. e. , before the commencement of the Income Tax Act, 1961. ( 3 ) THE first petitioner is the assessee and it was assessed as a Hindu Uadivided Family. The second petitioner is the present Karta of this family. It is not disputed that the first petitioner carried on extensive business, infer alia, as forest contractors and had considerable income from such business. The forest business was in respect of forests which were situate in Nepal. Contractors were employed by the petitioners for felling the trees, converting them into logs and floating them down a river in Nepal to reach Indian territory and for all this the Contractors were paid what have been described as conversion charges. ( 4 ) THE petitioners had, originally, filed their returns under Section 22 (1) of the Indian Income Tax Act, 1922 for all the assessment years from 1942-43 to 1953-54 and assessment orders were made by the Income Tax Officer which were finalized either in. appeals to the Tribunal or by the Appellate Assistant Commissioner. With regard to the assessments years 1943-44 to 1949-50. appeals to the Tribunal or by the Appellate Assistant Commissioner. With regard to the assessments years 1943-44 to 1949-50. the final assessments were made in pursuance of an agreement or settlement dated 18/10/1954 arrived at between the petitioners and the Deputy Director of Inspection (Investigation), New Delhi. ( 5 ) THERE are two main items with respect to which it is the contention of the respondents that the petitioners did not disclose fully and truly all material facts necessary for assessment in the assessment years in question. The first item is an item of deposits which stood in the names of Ram Anand Nar Singh; Rana Judh Nar Singh and Rana Ek Nar Singh of Nepal, hereinafter REFERRED TO to as "the Ranas", and the contention of the respondents, generally speaking, is that these deposits were not deposits or loans as contended by the petitioner but were merely the secreted profits of the petitioners themselves. The second item is the item of conversion charges shown as an expense relating to the business of the petitioner in respect of which the contention of the respondents is that the conversion charges shown in the returns and claimed by the petitioners were inflated and these also represent to a large extent the secreted profits of the petitioners. On the other hand, the contention of the petitioners is that the aforesaid three Ranas were really creditors of the petitioners and they advanced various loans to the petitioners from time to time on interest paying deposits. Further, it is the case of the petitioners that conversion charges which were payable to Rana Anand Nar Singh were not wholly paid and the unpaid amount of the conversion charges were credited to him. The details of these deposits and conversion charges are given in paragraph 8 of the counter-affidavit of respondent No. 3 and this is what is stated:- (A) Following cash credits appeared in the accounts of the three Ranas of Nepal, who were brothers-in-law of Shri Dan Singh Bist, Karta of the H. U. F. (B) in addition to the cash credits and interest thereon mentioned above, the assessee H. U. F. had credited the account of Rana Anand Nar Singh on account of expenses alleged to have been incurred in connection with its timber business. Credits appearing in this account were as under:- THERE is no dispute that these deposits were discussed by the Income-tax authorities in question with reference to the assessment years relating to this petition. Not only that, the Income-Tax authorities even disallowed the claim of the petitioners with reference to certain deposits while, ultimately, the conversion charges as claimed by the petitioners were allowed. It will be enough if a reference is made in this judgment only to the agreement or settlement dated 18/10/1954 which was arrived at between the petitioners and the Deputy Director of Inspection (Investigation), New Delhi, with reference to the assessment years 1943-44 to 1949-50. Investigation was made by the aforesaid Deputy Director of Inspection (Investigation) into the probable suppression of profits and the following terms of settlement were arrived at which were given effect to by the various Income-Tax authorities - "1. For the various assessment years 194344 to 1948-49, the business profits will be computed by adding the following amounts as extra sale-proceeds of timber sold to the public :- 2. The additions made in the above assessments, since set aside by the A. A. C. , on account of deposits, interest on deposits, inflation in conversion charges and sale of gold will be excluded. 3. The following losses falling to the share of Rana Anand Narsingh Rana and allowed by the I. T. O. in the respective assessments shall be disallowed: 1944. htm 4. As a result of these changes and after making certain other adjustments (e. g. , a mistake of under-totalling made in the assessment order to the extent of Rs. 1,07,714) the profits liable to E. P. T. , total incomes liable to Income-tax and Supertax and the taxes payable will be as per the enclosed Schedule. 5. For the assessment year 1949-50, the present assessment will be revised by deleting therefrom the disallowances of conversion charges, interest on deposits and by substituting Rs. 2,42,594 for suppression of sales as against Rs. 2,75,000. The revised figures are given in the Schedule. THESE figures disclose a B. P. T. liability of Rs. 20,367 for the C. A. P. ending 31/3/1949 and the assessee agrees not to raise any technical objection regarding time-limit against this assessment. A penalty of Rs. 2,42,594 for suppression of sales as against Rs. 2,75,000. The revised figures are given in the Schedule. THESE figures disclose a B. P. T. liability of Rs. 20,367 for the C. A. P. ending 31/3/1949 and the assessee agrees not to raise any technical objection regarding time-limit against this assessment. A penalty of Rs. I lac will be imposed under Sec. 28 (l) (c) for the assessment year 1949-50 but no penal interest should be charged for any year. THE assessment for 1949-50 pending in appeal before the A. A. C. will be got set aside and completed afresh, or, modified, accordingly. 6. The sum of Rs. 1 lac fixed as penalty will be paid within 15 days of the passing of the necessary order under Section 28. So also, the B. P. T. demand will be paid within 15 days of the assessment order. 7. The E. P. T. demand as per the Schedule will be paid by 20/3/1955. 8. The balance of the outstanding taxes, after giving credit for all the previous payments by, and refund due to the assessee shall be paid by him in two equal instalments falling due on 20/3/1956 and 20/3/1957. " ( 6 ) IT is, therefore, obvious that the Income-tax authorities had gone into the validity or otherwise of the claims of the petitioners with reference to deposits, interest on deposits, and inflation of conversion charges. ( 7 ) IT is also not disputed that the statements of these Ranas were recorded by the Income-Tax authorities with reference, inter alia to deposits and conversion charges. The case of the petitioner is that these statements were recorded with reference to the assessment years from 1943-44 to 1949-50 which were the subject matter of the settlement whereas it is urged on behalf of the respondents that these statements were in respect of one particular assessment year only. Whatever it be, there is no doubt that the Income-Tax authorities, while making the various assessments took into consideration all material facts which were made available to them in coming to the conclusion that they did with respect to the deposits and the conversion charges. ( 8 ) BY 1955, the amount due to the Ranas was to the tune of 47 lacs rupees by way of deposits, interest on deposits and balance of conversion charges. ( 8 ) BY 1955, the amount due to the Ranas was to the tune of 47 lacs rupees by way of deposits, interest on deposits and balance of conversion charges. It was on 10/5/1955 that a sale-deed was executed by the petitioners in favour of Rana Nar Singh and his brother Rana Lav Nar Singh for a consideration of Rs. 47,10,000. The property conveyed by the sale-deed was, according to the petitioners, "valuable agricultural and forest lands as also buildings and equipments, Kolhus and crushers etc. appurtenant thereto. The land that was sold measured about 8,000 and odd nalis. It is alleged by the respondents that some time thereafter specific information came to the notice of the Income-Tax Officer via the Minister for Home Affairs and the Directorate of Inspection (Investigation ). This information was that a bogus sale-deed was executed in favour of the Nepalese relations of the then Karta of petitioner No. 1" with a view to convert concealed income of the petitioner No. 1, of the tune of Rs. 47,10,000 earned between the years 1940 to 1954, into the capital of the petitioner No. 1. . . . . . in respect of property which did not exceed Rs. 40,000 in value and which property was till then (December 1961) under the possession of the petitioners," and that "the income from the said property did not exceed Rs. 2,000 from the tenants and Rs. 100 per year from the land under personal possession of the petitioners. " Thereupon enquiries were conducted into the allegations as a result of which the Income-Tax Officer was led to believe that the credits appearing in the names of the Ranas were not genuine. It is further alleged that the result of the enquiries showed that the land which was the subject matter of the sale deed was 3531 nalis; that the prices worked out to Rs. 1,339 per nali or Rs. 26,610 per acre; that the prevalent rate of sale in the area was about Rs. 100 per nali; that several other sale-deeds had been executed by the petitioners at about that time at prices varying from Rs. 31 to Rs. 100 per nali or Rs. 620 to Rs. 2,000 per acre and that the lands alleged to have been sold could not be ascertained and the vendees had not entered into possession till then. 100 per nali; that several other sale-deeds had been executed by the petitioners at about that time at prices varying from Rs. 31 to Rs. 100 per nali or Rs. 620 to Rs. 2,000 per acre and that the lands alleged to have been sold could not be ascertained and the vendees had not entered into possession till then. It is on the basis of these facts gathered from the information and the enquiries that the Income-Tax Officer had reason to believe that the income of petitioner No. 1 had escaped assessment or had been under assessed and that the credits in the names of the Rana s were false. Further enquiries were made from the vendees themselves by a letter dated 9/10/1961\10/10/1961 from the Income Tax Officer to Rana Nar Singh in which a request was made to furnish particulars of the properties purchased; annual income from these properties mode of payment of the consideration and the name of the recipient of the consideration. Rana Nar Singh replied to this letter by his own letter dated December 15, 1961. He confirmed that he and his brother Rana Lav Nar Singh purchased property consisting of several farms, villages, house structures and machinery etc. from the petitioners. The particulars asked for were supplied in these words :- "1. Complete description of particulars of properties purchased by us have been mentioned in detail in the sale deed dated10/5/1955. 2. Annual income has been varying according to season, area cultivated, yield of crop and working etc. 3. Rs. 10,000 (Rupees ten thousand only) was paid in cash to the sellers in India as earnest money for the purchase of the properties. The rest was paid in cash in Kathmandu and/or by adjustment in running account to Rana Anand Nar Simha, Judh Nar Simha and Ek Nar Simha in payment of their outstandings against the sellers as per details given hereunder: - 1945. htm FORMAL receipts were obtained from these parties and sent to Thakur Dan Singh Mohan Singh Bist of Nainital before the properties sold out to us were mutated in our names as stipulated in the sale-deed. htm FORMAL receipts were obtained from these parties and sent to Thakur Dan Singh Mohan Singh Bist of Nainital before the properties sold out to us were mutated in our names as stipulated in the sale-deed. " ( 9 ) THE first and main contention is with reference to the jurisdiction of the Income-Tax Officer in issuing and the validity of the notices issued by him under section 34 (1) (a) and it is contended that the Income-Tax Officer had no reason to believe that by reason of the failure on the part of the assessee to disclose all material facts necessary for making the assessment, any income had escaped assessment; that the proposed enquiry was a roving enquiry and his belief was a mere pretence. ( 10 ) BEFORE I deal with this contention, I would like to mention the other contentions that were sought to be raised on behalf of the petitioners on which we have not heard the parties. These contentions are:- (1) That a notice under section 34 cannot be issued where there is an agreed assessment and the only remedy of revenue is by way of suit to set aside the agreement. This contention is based upon the aforesaid agreement or settlement dated 18/10/1954 relating to assessment years 1943-44 to 1949-50 to which I have REFERRED TO above. (2) A notice under section 34 must not only be issued but also be served on the assessee before 31/3/1962 to apply section 34 (l) (a) of the Indian Income Tax Act, 1922. For this contention, the petitioners relied upon the fact that the notices served by registered acknowledgment due post were served upon them on 11/4/1962 and they denied the service by affixation as alleged by the respondents. (3) That the satisfaction of the Central Board of Revenue or the Commissioner of Income Tax was obtained mula fide and without disclosing to them the facts that assessment for the year 1942-43 had been examined by the Tribunal who made no addition for undisclosed income; that assessments for the years 1943 44 to 1949-50 were under agreement for settlement with the De- puty Director of Inspection and assessments for 1950-51 to 1953- 54 were made on the finding that the conversion charges claimed were reasonable. It is further contended that the petitioners had a right to look into the report of the Income Tax Officer which was made to the Central Board of Revenue and the Commissioner of Income Tax for obtaining their satisfaction. (4) That the satisfaction of the Central Board of Revenue and of the Commissioner of Income Tax was accorded without any application of mind and was void. (5) That the satisfaction of the Central Board of Revenue and the Commissioner of Income Tax had not been authenticated by the person authorised in that behalf. (6) That the facts of the case fell within the purview of section 34 (1) (b) of the 1922 Act and the notices, were, therefore, barred by time. (7) That the Income Tax Officer was acting in pursuance of section 297 (2) (d) (i) and (ii) of the 1961 Act and these provisions were ultra vires and Violated Article 14 of the Constitution and being provisions of a saving statute could not affect substantive rights. ( 11 ) I may further mention that respondent No. 3, has raised two objections in the nature of preliminary objections. The first objection is that the writ petitions are belated and the second objection is that there are adequate and effective remedies by way of appeal etc. and, therefore, this Court should decline to interfere on petitions filed under Article 226 of the Constitution. No arguments were, however, addressed to us by Mr. Narasa Raju or Mr. A. N. Kirpal, learned counsel appearing for the respondents, when we called upon the respondents to reply to the first contention. and, therefore, this Court should decline to interfere on petitions filed under Article 226 of the Constitution. No arguments were, however, addressed to us by Mr. Narasa Raju or Mr. A. N. Kirpal, learned counsel appearing for the respondents, when we called upon the respondents to reply to the first contention. ( 12 ) COMING back to the first and the only contention with which we are dealing, the broad facts are that the amounts of deposits standing to the credit of the Ranas and the amount of conversion charges standing to the credit of Rana Anand Nar Singh were disclosed as such to the Income Tax Officer during the assessment proceedings for each assessment year in question; all the material that was available with the petitioners was disclosed; the Ranas were examined; on the factsdisclosed, the contention of the petitioners was that the amounts standing to the credit of the three Ranas or to the credit of Rana Anand Nar Singh represented deposits or loans and credit on account of conversion charges remaining payable to Rana Anand Nar Singh; there was no non-disclosure of these incomings into the books of the petitioners but the contention raised was that they did not constitute the income of the petitioners; the contention of the Income-Tax Officer was that these credits on account of deposits or conversion charges were false credits and were in reality and truth the income of the petitioners subject to tax; these respective contentions were urged before the authorities and were adjudicated upon; there were proceedings and enquiries were held to decide the respective contentions and the respective contentions were determined by adjudication with respect to assessment years 194243 and 1950-51 to 1953-54 and with respect to assessment years 1943-44 to 1949-50 by agreement or settlement. ( 13 ) IN so far as these writs are concerned, for the application of clause (a) of sub-section (1) of section 34 of the 1922 Act, it is necessary that (a) the Income Tax Officer should have had reason to believe that (b) the assessee has omitted or failed to disclose fully and truly all material facts necessary for his assessment as a result of which (c) income. . . . . . . . . chargeable to income-tax has escaped assessment or has been under-assessed. . . . . . . . . chargeable to income-tax has escaped assessment or has been under-assessed. ( 14 ) FROM the language employed, it is clear that clause (a) of sub-section (1) of section 34 contemplates a case of deliberate omission or failure on the part of an assessee in making a full and true disclosure as to all material facts necessary for the assessment, while clause (b) of section 34 (1) covers cases of errors or omissions resulting in escapement etc. notwithstanding a full and true disclosure of all material facts necessary for the assessment. It follows from the language employed in clause (a) that the disclosure is to be with regard to material facts and, therefore, must necessarily be in respect of such facts which exist at all material times between, the filing of the return and the order of assessment. A material fact which is not in existence right upto the time of assessment cannot possibly be disclosed. Therefore, a fact which comes into existence subsequent to the making of the assessment cannot, in my view, be a material fact within the purview of clause (a) of section 34 (1 ). ( 15 ) ASSESSMENTS are made in pursuance of section 23 of the 1922 Act. Under sub-section (1), the Income-Tax Officer may accept a return as filed and make an assessment accordingly or he may, as authorised by subjection (2) require the assessee to produce evidence. On the date fixed for assessment such evidence is heard and such other evidence as the Income-Tax Officer may require is produced and then the Income-Tax Officer makes an order of assessment under sub-section (3 ). The scheme of this section, therefore, contemplates a fullfledged inquiry providing for the production of evidence and a hearing and the purpose of such an inquiry is to determine the validity of the contentions that may be raised by the assessee with reference to the material which is placed before the Income Tax Officer. If in spite of this hearing, a mistake appears in the order of assessment, power has been given to the Income-tax authorities by Section 35 to rectify the mistake. If in spite of this hearing, a mistake appears in the order of assessment, power has been given to the Income-tax authorities by Section 35 to rectify the mistake. But if the case does not fall under section 35, resort can be had to clause (b) of sub-section (1) of section 34 if any income has escaped assessment or has been under-assessed or assessed at too low a rate or has been made the subject of excessive relief or excessive loss or depreciation allowance has been computed. ( 16 ) MATERIAL facts as contemplated by clause (a) of sub-section (1) of section 34 must not only be existing up to the time of assessment but it must also be a case where such material facts have not been disclosed fully and truly. A mere erroneous decision by the authorities based upon erroneous inferences drawn from the material facts Will not by itself bring a case within the purview of clause (a ). This clause requires a disclosure of only such material facts as are necessary for assessment for a particular year. This clause has been interpreted on more than one occasion by the Supreme Court. The leading case on the subject is the case of the Calcutta Discount Company Ltd. reported in XLI I. T. R. 191. The facts of this case were that the assessee realised profits by the sale of shares in the assessment years 1942- 43, 1943-44 and 1944-45, which were not assessed to tax. The amounts had been shown as incomings of the company but it was contended that these amounts were not assessable to tax. This contention was accepted by the Income-Tax Officer when he made the initial assessment. Later, proceedings under section 34 were initiated on the allegations that the result of the company s trad- ing from year to year showed that it had been systematically carrying on a trade in the sale of investments and that as such the company had failed to disclose the true intention behind the sale of shares. It was further averred that in the assessments for the years 1945-46 and 1946-47 profits earned by the sale of shares were included in the total assessable income of the company upon the finding that it was in fact carrying on the business of selling shares contrary to its earlier representations. It was further averred that in the assessments for the years 1945-46 and 1946-47 profits earned by the sale of shares were included in the total assessable income of the company upon the finding that it was in fact carrying on the business of selling shares contrary to its earlier representations. Two points clearly emerge from these facts- (1) that there was a disclosure with a contention that the incoming was not assessable as income and (2) there was an acceptance of that contention in the original assessment proceedings. Upon writs being filed for quashing the notices issued under section 34 and upon the matter coming E before the Supreme Court it was held by the majority that:- "it was the duty of the assessee company to disclose all the facts which had a bearing on the question; but whether the assessee had the intention to make a business profit as distinguished from the intention to change the form of the investments was really an inference to be drawn by the assessing authority from the material factis taken in con- junction with the surrounding circumstances. The law did not require the assessee to state the conclusion that could reasonably be drawn from the primary facts. The question of the assessee s intention was an inferential fact and so the assessee s omission to state its "true intentions behind the sale of shares" could not be considered to be a failure or omission to disclose any material fact within the mea- ning of section 34. " ( 17 ) THEREFORE, so long as the material facts existing right up to the time of assessment are disclosed, there cannot be acase for invoking section 34 (1) (a) merely because the assesses has ^ raised a \vrong contention which has been accepted. Inferences or conclusions that can reasonably be drawn from the primary facts are not to be stated by the assessee. It is important to notice that this decision was given notwithstanding the fact that in the assessments for the assessment years 1945-46 and 1946-47, the contention of the assessee with regard to the nature of these receipts was not accepted and it was held that the assessee was in fact carrying on the business of selling shares contrary to its earlier representations. The case has been followed in all subsequent cases whether of the Supreme Court or of the various High Courts. The next case of the Supreme Court which was cited is reported in 63 I. T. R. 219 in re: S. Narayanan and others vs. commissioner of lncome-Tax, Bangalore. The principles which were settled in the Calcutta Discount Company s case were reaffirmed. This was a case in which the assessee did not file any return nor did he comply with the notice issued under sub-sections (2) and (4) of section 22 of the 1922 Act with respect to assessment year 1951-52. The Income-tax Officer completed the assessment on such material as was available to him and assessed the income at Rs. 36,068. Subsequently, while making assessment for the assessment year 1955-56, the assessee filed a wealth statement from which it appeared that the assessee had made investments of Rs. 39,000 during the assessment year 1951-52. Bank accounts were also produced and from a scrutiny of the wealth statement and the bank account and from the extensive nature of the business carried on by the assessee, the Income-tax officer ascertained a better that the income of the year 1951-52 had been under-assessed and he issued a notice under section 34 (1) (a ). This. therefore, was a clear case of non-disclosure and the Supreme Court came to the conclusion that the proceedings for re-assessment initiated under section 34 (l) (a) could not be challenged. ( 18 ) THE facts on which reliance is placed by the respondents to make out a case of non-disclosure under section 34 (1) (a) are, firstly, the sale-deed dated 10/5/1955 executed by the then Karta of petitioner No. 1 and petitioner No. 2 in favour of Rana Nar Singh and his brother Rana Lav Nar Singh for a consideration of Rs. 47,10,000 after all assessments for the assessment years 1942-43 to 1949-50 had been completed and, secondly, the inquiries with respect to the value of the lands which were the subject matter of this sale deed conducted in the year 1961 onwards. Both these facts obviously were non-existent right up to the time of the original assessments. Therefore, they were incapable of disclosures at the relevant time and for that reason, it is contended by the petitioner that clause (a) of sub-section (1) of section 34 cannot beinvoked. Both these facts obviously were non-existent right up to the time of the original assessments. Therefore, they were incapable of disclosures at the relevant time and for that reason, it is contended by the petitioner that clause (a) of sub-section (1) of section 34 cannot beinvoked. ( 19 ) TO meet this argument it is first contended by the respondents that there may be a case where a material fact comes into existence after the order of assessment and yet it may relate back to the time between the filing of the return and the order of assessment. For example, supposing a document is executed by the assessee himself after the order of assessment containing a clear and categorical admission that the incomings shown in the return had not in fact represented genuine deposits or loans or cash credits but represented the income of the assessee. In such. a case, it is contended, even though the fact in the shape of the document containing the admission comes into existence after the order of assessment, it relates back to the period between the filing of the return and the making of the order of assessment because it would then be a fact existing at that time thereby rendering the disclosure neither full nor true. It may be so. But even assuming that such a subsequent fact, if I may call it that, is a material fact, it must be taken at its face value and it would be permissible to raise an inference from that and describe such inference as a material fact as contemplated by section 34 (l) (a ). ( 20 ) NOW, if taken at its face value, the sale-deed is in support of the assessee s case rather than destruction of it because the sale-deed confirms that the amounts standing to the credit of the three Ranas represent either deposits or loans or the unpaid amounts of the conversion charges. The Income Tax Officer, even made inquiries from the vendees, who it may be mentioned were different from the Ranas, and the vendees confirmed the sale-deed and also confirmed that they had paid the amount of Rs. 47,00,000 to the Ranas as stated in the sale-deed and obtained receipts therefor. These facts cannot by any stretch of language make the sale-deed ex-fade a bogus document. 47,00,000 to the Ranas as stated in the sale-deed and obtained receipts therefor. These facts cannot by any stretch of language make the sale-deed ex-fade a bogus document. The Income Tax Officer wants to go further in these cases and, upon the basis of the consideration mentioned in the sale-deed; the fact that only Rs. 10,000 were paid to the petitioners while Rs. 47. 00,000 are stated to have been paid to the three Ranas and the value, arrived at by him as a result of his own subsequent enquiries, of the land which was the subject-matter of the saledeed, he wants to contend as an inference or conclusion that the sale-deed is bogus and the credits shown in previous years were income. Therefore, the Income-Tax Officer wants to equate his inference or conclusion from subsequent facts and enquiries to material or primary facts within the meaning of clause (a ). This, in my opinion, cannot be done. ( 21 ) THIS sale-deed would have been a material fact if it had been executed at any time prior to the assessment because then its disclosure either in the return or at the time of assessment would have been necessary for the assessment for that year as the credits standing in the names of the Ranas would have to be adjusted. Its non-disclosure at the time of assessment would certainly amount to a disclosure which is neither full nor true, if the assessee does not show an adjustment of the aforesaid credit entries. If such a sale-deed is produced in the relevant assessment year, it is open to the Income-Tax Officer to hold that it represents a bogus or sham transaction and he may arrive at this conclusion or inference after or even without holding an inquiry such as is contemplated by section 23 (3 ). . This conclusion will be an inference and nothing more. On the other hand, he may, after or without such an inquiry, come to a conclusion, that the sale-deed represents a genuine transaction and make an assessment accordingly. . This conclusion will be an inference and nothing more. On the other hand, he may, after or without such an inquiry, come to a conclusion, that the sale-deed represents a genuine transaction and make an assessment accordingly. A different inference or conclusion at a later time whether it is arrived at upon the facts disclosed or on fresh facts gathered as a result of a further inquiry will not justify action under section 34 (l) (a) if the fresh facts are not primary facts which existed at the time of assessment and which the assessee was under duty to disclose. ( 22 ) MR. Narasa Raju, learned counsel appearing for the respondents then contended that even if it may be said in the present case that a "full" disclosure was made, there was a failure to make a "true" disclosure and for this contention he relies upon the words "fully and truly" as appearing in clause (a ). On account of the use of the word truly -it is his contention-it is the obligation of the assessee even in a case of full disclosure to indicate the true nature of the incomings and, therefore, in the instant case since the assessee failed to say that the deposits, loans and cash credits appearing in the names of the three Ranas were really the income of the firm, he has been guilty of a disclosures which is not true even if it may be full. In other words the argument goes to this extent that in every case where a contention raised by the assessee with regard to the nature of the incoming has been accepted in the original order of assessment, it is open later on to invoke section 34 (l) (a) for the purpose of re-assessment if the Income Tax Officer comes to the conclusion that the assessee s contention should not have been accepted. This argument cannot be accepted in view of the decision of the Supreme Court in the case of the Calcutta Discount Company Limited because if this argument were correct, then there was no reason why a writ should have been issued in that case upon the Income-Tax Officer coming to a conclusion in the subsequent assessment proceedings that the said Company had always been carrying on the business of sale of shares regularly. ( 23 ) MR. ( 23 ) MR. Narasa Raju, however, relies upon a decision of the Andhra Pradesh High Court reported in 66 I. T. R. 55 in re: Sowdagar Ahmad Khan v. Income-tax Officer Nellore which according to him, has been approved by the Supreme Court in its decision dated 21/11/1967, in Civil Appeals 265-271 of 1967. The report of the judgment of the Andbra Pradesh High Court does not give the material facts which were not disclosed by the assessee. All that is stated in the judgment is that in the course of the assessment for the year 1957-58, the assessing authority detected that several cash credits in the names of the petitioner s near relations appeared to be bogus and, therefore, he issued notices under section 34 (l) (a) with respect to the assessments for the assessment years 1943-44 to 1949-50 because further investigation led him to believe that there was concealment of income and that the petitioner had not disclosed fully and truly all the material facts. The main argument in this case really centered round the questions whether it was section 34 (1a) or section 34 (1) (a) which was applicable and whether the previous decision of the assessing authority was not binding. The facts, however, do appear in the judgment of the Supreme Court in appeal It is stated in this judgment that:- "in the course of assessment proceedings for the assessment year 1957-58, the Income-Tax Officer found that the assessee had a current account in the Imperial Bank of India in the name of his father-in-law till the latter s death. This fact came to the notice of - the Income-Tax Officer when the assessee was asked to explain a cash credit of Rs. 40,000 found in the assessment year 1950-51. Similarly, a sum of Rs. 70,000 was advanced by the assessee to Jagamani Pictures on 9/1/1946, which the assessee failed to disclose in the course of the assessment proceedings for the relevant assessment year. When later on Jagamani Pictures could not meet this debt the assessee got their distribution rights in lieu of the amount advanced and exploited the films. It was also detected by the Income-Tax Officer that in the relevant returns the assessee had not shown income from property in the names of his sons, wife and daughter, though many of the properties were purchased by him in their names. It was also detected by the Income-Tax Officer that in the relevant returns the assessee had not shown income from property in the names of his sons, wife and daughter, though many of the properties were purchased by him in their names. " ( 24 ) IT is obvious from a mere recital of these facts that this was a clear case of non-disclosure of what I may call existing material facts during the assessment years 1943-44 to 1949-50 and that was the reason why the Andhra Pradesh High Courtand, on appeal, the Supreme Court repelled the contentions which had been raised on behalf of the assessee. This case throws further light upon the duty of the assesee in respect of the disclosure of material facts. It is observed:- "that the assessee does not discharge his duty to disclose fully and truly material facts necessary for the assessment of the relevant year by merely jprodwing the books of account or other evidence. He has to bring to the notice of the Income-Tax Officer particular items in the books of account or portions of documents which are relevant. " ( 25 ) THE duty of the assessee with reference to a true disclosure has not been stated to be that he must go further and state that the particular items in the books of account or documents which are relevant represent bogus transaction. ( 26 ) APPLYING these principles to the facts of the case before me, the belief at which the Income-Tax Officer has arrived is no more than an inference or a conclusion from subsequent facts. Such inferences drawn from the fact of the execution of the sale-deed or its recitals or from the facts elicited as a result of subsequent enquiries relating to the market value of the lands which were the subject-matter of the sale-deed cannot, in my opinion, amount to material facts which should have been disclosed as required by section 34 (1) (a ). One of the conditions precedent to the issue o i a. notice under section 34 (1) (a) is, therefore not satisfied and the notices are, therefore, without jurisdiction. One of the conditions precedent to the issue o i a. notice under section 34 (1) (a) is, therefore not satisfied and the notices are, therefore, without jurisdiction. ( 27 ) IN the result, these writs are allowed, the impugned notices dated 23/3/1962 issued under section 34 (i) (a) for re-assessment proceedings relating to assessment years 1942-43 to 1953-54 arc quashed and the respondents are restrained by a writ of lnandamlls from taking any further proceedings in pursuance thereof. The petitioners will have their costs of these petitions. As there was a common hearing, counsel s fee for all the petitions is fixed at Rs. 250. S. N. Shanker. J.-1 agree.