DIPAK KUMAR SEN, J.

( 1 ) AT the instance of Sri Panchanan Hati, the assessee, the Income-tax Appellate Tribunal proceeding under Section 256 (1) of the Income-tax Act, 1961, has drawn up a statement of case and has referred the following question to this court as a question of law arising out of its order dated the 19th July, 1975 :"whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessment could be reopened under Section 147 (a) of the Income-tax Act, 1961, for the assessment year 1960-61 ?"

( 2 ) THE relevant facts found and/or admitted in these proceedings are of short compass. The assessee is an individual and was assessed to income- tax in the assessment year 1960-61, the relevant previous year being 1366 H. S. , under Section 23 (3) of the Indian Income-tax Act, 1922. The assessment order was passed on the 20th December, 1961.

( 3 ) THEREAFTER, the assessment was sought to be reopened under Section 1,47 of the Income-tax Act, 1961, and a notice under Section 148 was issued and served on the assessee on the 31st March, 1969. The ground for reopening as recorded was as follows :"it was revealed in the course of investigation at subsequent stages that there were cash credits in the assessee's books of hundi loans in the accounts of bogus parties who by their confession made before the department at subsequent stages had stated that they had acted as name-lenders for third parties' accounts. This material fact necessary for assessment was kept concealed by the assessee at the original assessment stage. "

( 4 ) IN compliance with the said notice another return of income was filed. The assessee, however, challenged the legality of the proceedings on the ground that there was no omission or failure on his part to disclose all material facts fully and truly in the course of original assessment proceedings. The contentions of the assessee were rejected by the ITO who completed the reassessment and made an addition of Rs. 15,000 to the assessee's income.

( 5 ) BEING aggrieved, the assessee preferred an appeal before the AAC, who upheld the reassessment. The assessee went up on a further appeal before the Income-tax Appellate Tribunal. It was contended before the Tribunal that the ITO who made the original assessment had full knowledge of the hundi loans and that the books of account relating to the relevant period had been placed before him. In connection with the interest payable on such loans the ITO had scrutinised the hundis in question. It was submitted that the ITO thereafter proceeded to reopen the assessment on a mere change of opinion. It was contended on behalf of the revenue on the other hand that in the original assessment proceedings the ITO had not made any enquiry into the genuineness of the transactions nor had the assessee filed confirmation letters from his creditors.

( 6 ) THE Tribunal found that in the course of the original assessment proceedings the assessee had not disclosed fully and truly all material facts necessary for the assessment. At that stage, the assessee produced the books of account, and in connection with the claim for allowance of interest produced the discharged hundis. The Tribunal found that the ITO was aware of the loans taken on hundis but did not apply his mind on the genuineness thereof. The Tribunal found further that subsequent to the completion of the original assessment information was made available to the ITO "that the hundi bankers from whom the assessee claimed to have obtained loans confessed before the ITO assessing them that the loans alleged to have been advanced by them were not genuine as they acted as name-lenders for others for acting as false creditors". The Tribunal held that such information constituted reasonable ground for the formation of a belief that the assessee in the course of the original assessment proceedings failed to disclose fully and truly all material facts necessary for his asse

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