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2016 (10) TMI 96 - HC - Income TaxReopening of assessment - assessee company had borrowed huge loans - Held that:- There is a thin line between the disclosure which disguises a material fact and therefore would be in terms of the proviso read with explanation 1 would amount to failure of disclosure and one where it would be the duty of the Assessing Officer on the basis of primary facts disclosed by the assessee to draw further inferences on facts and or in law. Significantly, explanation 1 refers to discovery by the Assessing Officer while exercising due diligence. In the present case, what formed part of the record was that the assessee company had borrowed huge loans from said two persons. What did not form part of the record was whether on such loans any interest was paid or not, a fact which could not have been evident or visible to the Assessing Officer unless he had made further inquiries. Undoubtedly, the Assessing Officer could have made further inquiries and ascertained for his satisfaction whether on such borrowings any interest was paid or not and had he done so, as is referred to in explanation 1 to Section 147, he would have discovered a material fact viz. of the company not paying interest on sizeable borrowings. In fact, the fact that the said two lenders were the Directors of the Company is not appearing in the annexures `D' and `E to the audit report where the figures of loans are mentioned. Thus, the assessing officer would have to correlate different documents only upon which, if at all, he would learn that the two directors had advanced huge loans to the company. Thus, this case clearly fell within the scope of explanation to Section 147 of the Act. This would not therefore prevent the assessing officer from reopening the assessment beyond a period of four years from the reign of assessment year. - Decided against assessee
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