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Issues Involved:
1. Reopening of assessment under section 147(a) of the Income-tax Act, 1961. 2. Addition of unexplained investment under section 69 of the Income-tax Act, 1961. 3. Jurisdiction and powers of the Assessing Officer. 4. Compliance with procedural requirements for reopening assessments. 5. Obligations of the assessee to disclose material facts. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147(a): The assessee challenged the reopening of the assessment by the Assessing Officer (AO) under section 147(a) of the Income-tax Act, 1961, arguing that the AO did not have the jurisdiction to reopen the assessment. The AO formed a reasonable belief that the assessee's income for the assessment year 1975-76 had escaped assessment due to the assessee's failure to disclose fully and truly all material facts necessary for the assessment. The AO issued a notice under section 148 and reopened the assessment. The Appellate Commissioner affirmed the AO's action but restricted the addition to Rs. 5,50,000 from Rs. 9,47,000. 2. Addition of Unexplained Investment under Section 69: The AO added Rs. 9,47,000 to the assessee's income as unexplained investment under section 69, which was later reduced to Rs. 5,50,000 by the Appellate Commissioner. The assessee argued that the construction of the godowns commenced after the close of the previous year relevant to the assessment year 1975-76, and thus, there was no obligation to disclose such facts in the return of income. The assessee also contended that the payment to the contractors was made through account payee cheques and that the AO did not provide reliable evidence to establish that the assessee spent more than Rs. 2,66,000 on the construction. 3. Jurisdiction and Powers of the Assessing Officer: The assessee's counsel argued that the AO did not have the jurisdiction to reopen the assessment under section 147(a) as the assessee did not fail to disclose material facts. The AO's reopening action was based on the Appellate Commissioner's order for the assessment year 1976-77, which stated that the unexplained investment related to the financial year 1974-75. The assessee contended that the case, at most, fell under section 147(b), which was barred by limitation as per section 149. 4. Compliance with Procedural Requirements for Reopening Assessments: The assessee's counsel argued that the reopening was invalid as the AO did not mention or give any reasons in the notice under section 148. The AO's action was based on the provision of section 147(a) and not section 147(b), which was barred by limitation. The assessee filed a return in compliance with the notice under section 148, declaring the same income as in the original return. The AO was not satisfied with the assessee's explanation and made an addition after due enquiry. 5. Obligations of the Assessee to Disclose Material Facts: The Tribunal examined whether the assessee had an obligation to disclose the investment made in the subsequent previous year ending 30-6-1975, which fell within the financial year 1974-75 relevant to the assessment year 1975-76. The Tribunal referred to various provisions of the Income-tax Act, including sections 139, 142, and 143, and concluded that the assessee was not obliged to disclose any information other than what was required in the prescribed form of return. The Tribunal cited the Supreme Court's decision in V. D. M. RM. M. RM. Muthiah Chettiar, which held that the Act and the Rules do not impose an obligation on the assessee to disclose information relating to income of any other person by law taxable in his hands. Conclusion: The Tribunal concluded that the non-disclosure of inferential facts could not attract the provision of section 147(a), and the AO was not justified in reopening the assessment for the assessment year 1975-76. The Tribunal vacated the impugned order of the Appellate Commissioner and quashed the assessment made by resorting to section 147(a) as being without jurisdiction. The appeal was allowed.
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