9911796707
TMI Blog1971 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... n that account and were then transferred to Porbandar. The asessee had also a current account with the firm, Shamji Kalidas & Company at Bombay and in this account Messrs. Shamji Kalidas & Company had paid interest to the assessee. The assessee being a non-resident, tax at the maximum rate was deducted by Messrs. Shamji Kalidas & Company in respect of the interest paid to the assessee under section 18(3A) of the Income-tax Act, 1922. The assessee disclosed those facts to the Income-tax Officer and contended that since the assessee had no business in the taxable territories nor any income taxable in the taxable territories (other than the income from Messrs. Shamji Kalidas & Company in respect of which there were certificates showing deduction at the maximum rate), the assessment proceedings initiated by the Income-tax Officer be discharged. The Income-tax Officer upheld the contention and made an order on December 30, 1948, for the assessment years 1947-48 and 1948-49 observing that there was no source of income taxable in British India and that the proceedings started should be dropped. In the assessment year 1949-50, the Income-tax Officer also passed au order that the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but this is only for recovering from the merchants dues in respect of goods delivered at Porbandar. Bank pass books are produced. It appears that the cheques that are received from the merchants are credited in this account and subsequently transferred to Porbandar. The assessee has, however, got a current account with Shamji Kalidas & Co., and receives interest on the amounts deposited in this firm. Mr. Deshpande, however, produces certificates of the taxes deducted at the maximum rate under section 18(3A) on interest received by the non-resident. The tax is regularly paid up to 1948-49 assessment years. As there is no source of income taxable in British India, I drop the proceedings already started. " In the proceeding for assessment of income for the assessment year 1949-50 the assessee submitted a blank return stating : " With reference to your above, we have to return herewith the forms sent by you and have to inform that the income-tax is always paid by us at maximum scale in British India and that we have no other income ; therefore, and hence, the forms sent by you are returned herewith with a request to cancel the same. " After considering the representation the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars about how the delivery was given " and " the all important question about the price of the goods was not mentioned ", that on that account the statement must be regarded as incomplete ; that it was the duty of the assessee's representative to disclose " the profits embedded in the price, but the sequence of the several statements was such that the assessee wished to show thereby that there was no office or agency in British India and whatever was done was done at Porbandar that the question of receipt of sale proceeds in British India was thus bypassed " ; that the Income-tax Officer was informed about the interest paid to the assessee but no question was raised of any possible liability of the assessee to tax on other account ; that " all the statements taken together contained such a meagre presentation of the facts, that it was difficult to consider that there was a full and true disclosure of material facts " ; and that " the material facts were not disclosed, whatever was disclosed was not fully disclosed, and in that sense there was no true disclosure ". The Tribunal then observed : " This is not a case where the Income-tax Officer drew a wrong legal inference fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that " the question of receipt of sale proceeds was bypassed " cannot be accepted as correct. The statement that the cheques were " subsequently transferred to Porbandar " only means that the amounts realized by encashment of the cheques were sent to Porbandar, and not that the cheques were sent to Porbandar. We do not think that any more detailed disclosure was necessary to comply with the requirements that the assessee had fully and truly disclosed all the material facts necessary for the purpose of assessment. The Income-tax Officer may, if he is satisfied that on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, income has escaped assessment, he may assess or reassess the income. But when the primary facts necessary for assessment are fully and truly disclosed, he is not entitled on change of opinion to commence proceedings for reassessment. The Income-tax Officer was apprised of all the primary facts necessary for assessment, and he proceeded to " drop the assessment proceedings ". He may have raised a wrong legal inference from the facts disclosed but on that account he was not competen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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