1981 (6) TMI 12 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income Tax Officer (ITO) to reopen assessments under section 34(1)(a) of the Indian Income Tax Act, 1922.
2. Whether there was a full and true disclosure of all material and relevant facts by the assessee during the original assessment.

Detailed Analysis:

1. Jurisdiction of the ITO to Reopen Assessments under Section 34(1)(a):

The primary issue was whether the ITO had the jurisdiction to reopen the assessments for the years 1950-51 and 1951-52 under section 34(1)(a) of the Indian Income Tax Act, 1922. The assessments were initially completed on March 14, 1955, and March 13, 1956, respectively, and had become final by the orders of the ITAT and AAC.

The ITO reopened the assessments upon discovering that the assessee had concealed income particulars during the original assessments. The ITO secured approval from the Central Board of Revenue (CBR) and issued notices under section 34(1)(a), which were served on March 22, 1962. The Tribunal upheld the ITO's action, stating that the reasons for initiating reassessment proceedings were duly recorded and the CBR was satisfied that it was a fit case for issuing the notice under section 34(1)(a).

2. Full and True Disclosure of Material Facts:

The crux of the case hinged on whether the assessee had disclosed all material and relevant facts fully and truly during the original assessments. The assessee contended that it had disclosed all necessary details, including balance sheets, lists of balances, statements of accounts, and the specific accounts in question (Balkishenlal Jankiprasad, Liquidator, Madras account, and Radhakishen Balkishenlal, Narayanganj account).

The AAC initially found that the assessee had made a full disclosure of all relevant facts and that the ITO could have asked for more details if needed. The AAC concluded that the assessee was not guilty of non-disclosure of material facts.

However, the Tribunal disagreed, noting that there was no discussion with the ITO during the original proceedings regarding the nature of the accounts. The Tribunal held that the assessee had failed to disclose fully and truly all material and relevant facts necessary for the assessment, leading to income escaping assessment.

The High Court agreed with the Tribunal, stating that the question of whether there had been a full and true disclosure of all material and relevant facts is essentially a question of fact. The court emphasized that the obligation to make a full disclosure depends on the facts and circumstances of each case. The court cited the Supreme Court's observation that it is the duty of the assessee to bring to the notice of the ITO particular items in the books of account or portions of documents which are relevant.

The High Court concluded that the Tribunal's finding that there had not been a full disclosure of all relevant and material facts was not perverse or without evidence. Therefore, the Tribunal was justified in upholding the action of the ITO under section 34(1)(a).

Conclusion:
The High Court answered the question in the affirmative, in favor of the Revenue, and held that the Tribunal was justified in upholding the ITO's action under section 34(1)(a) of the Indian Income Tax Act, 1922. The parties were directed to pay and bear their own costs.