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TMI Blog1990 (5) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... ad escaped assessment to the extent of Rs. 38,90,240 for the asst. year 1979-80 within the meaning of section 147(a). Issue notice u/s. 148. " In compliance with the same, the assessee filed a return and in making the revised assessment on 27-3-1985, the Income-tax Officer brought to the tax the additional price on levy sugar of Rs. 38,90,240 and he also withdrew an amount of Rs. 33,86,872 which was stated to be excess depreciation allowed. 2. The assessee appealed and the first submission before the C.I.T.(A) was that there was no omission or failure on the part of the assessee in fully and truly disclosing all material facts and, therefore, invoking the provisions of sec. 147(a) was without jurisdiction. 3. To support the contention, the assessee relied on the fact that the amount of Rs. 38,90,240 stood included under the head 'Current liabilities & Provision' and further there was specific mention of this amount in the Auditor's Report as well as the Directors' Report. According to the assessee, therefore, all material facts had been disclosed. 4.The C.I.T.(A) in particular referred to the contents of the Directors' Report which in substance stated that the loss was arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in regard to the assessability of the income. 11. The learned Departmental Representative placed great emphasis on the wording of Explanation 2 to section 147 which reads as under :-- " Production before the Income-tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section. " He also relied on the ratio of two decisions of the Supreme Court, the first being that in the case of Kantamani Venkata Narayana & Sons v. First Addl. ITO [1967] 63 ITR 638 where at page 644, the Supreme Court has stated as under :-- " It is clearly implicit in the terms of sections 23 and 34 of the Income-tax Act that the assessee is under a duty to disclose fully and truly material facts necessary for the assessment of the year, and that the duty is not discharged merely by the production of the books of account or other evidence. It is the duty of the assessee to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter decision of the Supreme Court also referred to the decisions in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 and Calcutta Discount Co. Ltd. [1961] 41 ITR 191. The learned Departmental Representative also sought to refer to a judgment of the Calcutta High Court in CIT v. Hoosen Kasam Dada (India) Ltd. [1973] 91 ITR 453. 12. Based on the ratio of the aforesaid judgments, the learned Departmental Representative took us through the balance-sheet of the year and according to him, the exhibiting of certain amounts under the head 'Current Liabilities' would not absolve the assessee of the duty of bringing to the notice of the I.T.O. that the amount of Rs. 38,90,241 was taxable. He submitted that if the current liabilities were exhibited at page 16 at a figure of Rs. 2,81,06,248 and the details in Schedule 'E' gave the break-up, and other liabilities were shown at Rs. 45,34,854 up to this stage, he submitted, by a perusal of the figures, one could not discern that there was an amount of Rs. 38,90,241 which was not offered for taxation though, according to him, it clearly formed part of the sale receipts. His submission was that mere mention of this amount in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has pointed out in the case of Kantamani Venkata Narayana & Sons that the duty of the assessee was not merely discharged on the production of books of accounts but it is the duty of the assessee to bring to the notice of the I.T.O. particular items in the books of accounts which are relevant. The question, therefore, which survives is whether the assessee has satisfied the requirement of bringing to the notice of the I.T.O. the particular items in the assessee's books of accounts which merited his consideration. 16. We proceed to examine whether the requirement to which we have referred in the preceding paragraph has been satisfied. The assessee is a company and the Auditor's Report and the Directors' Report form an integral part of the Annual Report and the contents of these reports have necessarily to be perused by every person who wants to be acquainted with the figures depicted in the balance-sheet and profit and loss account, be he a shareholder, an Income-tax Officer or any other person who would like to know the affairs of the company. The Auditor's Report states as under at page 12 :-- " (iii) Other liabilities under Current Liabilities & Provisions include Rs. 38,90,241 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dras High Court have been stayed. The writ petition filed in respect of the 1977-78 levy price notification has not yet been taken up by the Madras High Court for disposal. As an interim measure, as stated in the report of last year, the company was allowed to collect certain price which was higher than the notified price against furnishing bank guarantee. Up to 16th August, 1978, i.e., date of decontrol, the company had collected amounts aggregating to Rs. 38.90 lakhs by way of additional price pursuant to the interim orders of the Court. The company has kept this amount in fixed deposit with the company's bankers who had given a guarantee to the High Court. " The aforesaid note refers to the report of the earlier year. If we go to the report of the earlier year, i.e, the year ended 30-9-1977, the note forming part of the account shows under item (2) 'CONTINGENT LIABILITIES', the following :-- " (a) Difference in price collected in excess of levy sugar sales pursuant to the interim orders of the Tamil Nadu High Court Rs. 2,21,122 and Rs. 9,83,041 during the years 1975-76 and 1976-77 respectively. " What we found was that for the year ended 30-9-1976 (asst. year 1977-78), the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Calcutta Discount Co. Ltd. are fully satisfied. Therefore, in the present case, an analysis of the facts showed that there was no omission or failure on the part of the assessee to disclose fully and truly all material facts. 17. The accounts of this year further refer to the position of the accounts for the earlier year. We have looked into that position and what we have found is that while in the assessment year 1977-78 the assessee had offered a similar amount for taxation, in the assessment year 1978-79 though the amount was offered for taxation originally, it was claimed as exempt. Such claim was processed and negatived by the I.T.O. and confirmed by the C.I.T.(A). The processing and negativing of the claim by the I.T.O. on 15-9-1981 for the assessment year 1978-79 was prior to the date of the original assessment for this year which was on 18-11-1982. Viewed from this angle also, it cannot be said that there was any omission or failure on the part of the assessee to disclose fully and truly any material facts because the matter for the earlier year was also the subject of specific processing on a date anterior to the date when the I.T.O. recorded reasons for his belief tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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